Growing up, my parents always warned me about how bad they were with money in their younger years and how I should avoid the same fate.
They told me the woes of credit cards and debts of any sort. They made sure I had a savings account from an early age and received an allowance that I could practice budgeting with.
But despite their efforts, there were still some crucial financial lessons that I learned way too late. Things I wish I’d been taught in school or encouraged to do by my peers, but instead figured out as an adult.
I like to think I’m pretty good with money now, but it’s been a learning curve. As most of my funds comes from freelance work, it’s more important than ever that I know how to properly manage my sporadic income. And as more and more young people are also embracing the “freelance economy,” it’s also important that they learn money management skills early on.
So here are a few basic tips to adopt now so you end up more financially secure later on:
Start saving ASAP.
As a kid, I spent everything I ever earned or was gifted. Just because I had a savings account didn’t mean money ended up there. My income was as disposable as it gets. As soon as it was in my hand, it was thrown away on an overpriced Starbucks drink or a shirt I didn’t need. Now, I’m much more conscious with my funds, but I wish someone had taught me earlier about the importance of saving when you’re young. Sure, I didn’t “need” to save for anything back then, but I would have a lot more money now if I had.
If you have excess funds that won’t go straight to rent or other mandatory expenses, I suggest sticking them in a long-term, high-interest savings account. Typically you can’t touch this money for a few years at least, but your savings account will be much larger because of it.
Let your money work for you.
You’ve probably heard this one before. And like me, you’ve probably ignored it. Aside from sticking your money in the bank to earn very minimal interest (unless you opt for the previously mentioned long-term account), how do you make it work for you?
It all seemed too hard at first. Investing in stocks is overwhelming and risky, and I had no real knowledge of my other options. Only now am I starting to explore this avenue, still with limited understanding of what I can do. I dipped my toe in the water with the assistance of an app called Spaceship. I’m able to deposit sums of my choosing into a diversified portfolio and monitor my investment by the day. I can also look at the status of each individual company within the portfolio to determine which might be worthwhile to buy shares in myself.
In America, there is Raiz, a diversified portfolio that pulls investments from your spare change, and Robinhood, a program that helps you build your own portfolio. If you’re lucky enough to be friends with (or have the funds to hire) a stockbroker who can provide you personalised advice, that’s obviously the superior option. But if, like me, you’re wary and naive and seeking some initial assistance, apps are a good starting spot.
Don’t be embarrassed to seek out deals.
When I was younger, the thought of shopping at thrift stores or discount shops was shameful. Now, I’m all about a bargain; I’m not afraid to use coupons or vouchers; I won’t shy away from asking for doggy bags at any restaurant. You may think you look like a cheapskate, but some of the wealthiest people are actually the most frugal.
The main way I save, aside from limiting my overall expenditure and comparing prices or purchasing goods secondhand, is by hunting down deals and freebies. Apps are my savior in this domain. I mostly use them when going out to eat, as this is something I enjoy doing more frequently than I can afford to; so my apps help cut costs while maintaining my guilty pleasure. I have an app that alerts me to restaurants offering discounts during downtimes, another that provides credit back on each cafe or restaurant purchase, another that always provides freebies and discounts for takeaway coffees ordered in advance. I also check local forums for news of giveaways or special offers near me.
The only thing to watch out for is the trap of purchasing something you don’t need just because it’s cheap. If it’s a treat that makes you happy, I say go for it. But if it’s something you’re getting for the sake of it, it would be cheaper to just not get it at all.
Don’t be afraid of credit.
As soon as I turned 18, I got a credit card. I knew the importance of establishing good credit and wanted to start early. Meanwhile, I have friends who still don’t have one because they’ve been talked out of it by parents or older friends who have experienced the scary side of credit. Yes, accruing credit without paying it back is detrimental. But there’s a simple way to solve that – Don’t spend what you don’t have. If you spend within your means and pay back your bills straight away, credit is a great thing. Essentially, you should be using your credit card like a debit card to get the most out of it with little risk. And trust me, it’s very worth it. My good credit history has helped me get approved for property rentals and specialty bank accounts, increase my credit limit when needed and keep my interest rate low.
The older you get, the more often your credit history will be checked and referenced. If you ever plan to buy a car, home or other large purchase, establishing good credit now is a must.
I’m no financial expert by any means, so please seek a qualified professional if you’re really looking to strategize your savings and please do some independent research before adopting any of my tips. By the way, if you have any to add to the list, I’d love to hear them! Feel free to let me know below.
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Photo: Tamara Bellis on Unsplash
