Officially becoming an adult and turning 18 is both exhilarating and intense. You have the whole world at your fingertips and you’re filled with excitement. But, you’re kinda freaking out because you might feel underprepared.
Figuring out how to be an adult and handle your own finances might be on the “I have no idea what I’m doing” list. Not to fear, MoneyLion is here! Here are our top 9 steps to successfully start your financial journey.
1. Layout Priorities and Goals
First is first, needs and wants are very different. One is a necessity like food, shelter, transportation. The other is shopping for clothes, eating fast food, and buying PlayStations. In order to start making smart financial decisions, you need to understand that where you spend and invest your money is important.
Make a list of goals you’d like to hit, both short term and long term. Whether it’s paying off your car in 1 year or saving a certain amount of money by 30. Setting timelines gives you a blueprint and plan to work towards those goals every day.
2. Write Out Budget
Ah, the dreaded budget. In a perfect world, we’d all have unlimited spending with no consequences. Wrong! Even the richest and most wealthy people in the world have a budget– it’s just very, very large.
Sit down, gather 3 months of all bank statements including credit cards. Grab different color highlighters and go through every transaction while highlighting based on appropriate color (ie, yellow for gas, red for atm withdraws).
Use a budget sheet like this free one and calculate your totals for each category, filling in the blanks as you go. Comparing your income to variable and fixed expenses should give you a clear picture of your overall finances. Cut back or omit–and possibly put into savings. Try keeping this sheet posted somewhere you can see it every day, so you don’t forget your goals!
3. Open A New Bank Account
The first time you open your own bank account without a parent feels like a right of passage into adulthood. Finding the right bank to handle your finances is the difficult part. Modern banking becomes more advanced by the minute with so many different options, it’s hard to know where to begin?
Introducing RoarMoney from MoneyLion. The perfect modern banking solution for everyone. Our FDIC insured bank accounts give you all the security of traditional banking right from your phone–for only $1 a month!
4. Build Credit
You might be asking yourself, “How can I improve my credit when I don’t have any?”. A secure card is one option, but typically you’re required to put down a deposit equal to the limit of the card. Whereas a MoneyLion Credit Builder loan offers affordable, low APR loans to anyone with little to no credit history borrow and build credit without a credit check.
5. Live Below Your Means
Listen, housing is expensive. One of the luxuries of living with your parents is them paying the bills. Living on your own is awesome, but going from paying no rent to hundreds of dollars (maybe thousands) a month is quite the shock.
Stick around at your parent’s house for a few more years. We aren’t saying stay until your 45, but if you’re in college or just graduating high school, there’s no need to rush. Renting a room in a house or apartment is another cheaper option.
Here are 8 ways to eliminate costly expenses in your life:
- Eat Out Less
- Sell Stuff ( Facebook, offer up and eBay)
- Side hustle (uber eats, flipping items, dog sitting)
- Wear second-hand and thrifted clothes (totally in these days)
- Cancel Cable
- Cheap DIY gifts
- Safely Use Public Transportation
Trust us, giving up the good (PlayStation) for the great (paid off car) is merely a small trade-off short term for a better future. After a while, you’ll love seeing money in your account.
6. Shop Around For Insurance
If you’re young enough, stick on your parent’s plan and If your job offers you health insurance, consider yourself one of the lucky ones!
For everyone else, shop around or bundle insurances to lower your monthly bills and ask about discounts if you are a student. This applies to all types of insurances like health, auto, dental, vision and life. Don’t jump on the first option, take time to learn about insurance policies. There may be better and affordable options out there.
7. Start Your Emergency Fund
Having a rainy day emergency fund is one of the first things you should have in place. You never know when you’re going to get a flat tire or visit urgent care. This account is separate from your savings and is strictly used for emergencies only. And no– a craving for pizza isn’t an emergency.
8. Start An Investment Account
Investment isn’t only for the uber-rich and experienced. Start early with a MoneyLion investment account and set up your personalized fully managed portfolio. Customize based on your comfort and risk tolerance.
Earn side cash by shopping through our rewards program and add into your investment account with recurring auto-investing monthly. Find out more here!
9. Track Progress and Save Money
One of the most important factors in your financial journey is tracking your budget and progress. On your RoarMoney app, you can monitor your credit, track your spending, and use the Financial Heartbeat feature to help you reach your goals faster!
Enjoy the Journey to a Stress-Free Future!
Your financial journey is going to have a few bumps in the road and some learning curves. Like anything in life worth having, financial success might cost you a few necessary headaches. That’s why MoneyLion created an effortless way to bank and invest.
Let us handle the stress and you enjoy the rest!