Nowadays, the reality of this world is that money has gotten harder to earn and easier to spend. With the lavish trends on technology and innovation, as well as the overall approach on human living, people are more likely to spend their earnings to appease their human needs and wants. Furthermore, the reality is that people purchase basic necessities in equal allocation with things that they want.
The perfect example is how most people are inclined to allot money for their weekly groceries the same way they set aside money to buy the newest iPhone.
People often disregard proper financial management in their lives, causing monetary disasters evident in the increasing cases of unpaid debt, growing interest on bank loans, and “normality” of filling bankruptcy. Any of these experiences can be quite excruciating, given the implications of such financial problems, not to mention the eventual economic instability and decline.
In times like these, financial advising and management can draw the fine line between an impending catastrophe and a smooth, worry-free life.
This is the reason why people should be taught the importance of managing money at a young age.
Teaching financial management to young individuals can help shorten their learning curve in properly handling their money, honing money-smart, reasonably thrifty and more responsible members of the society.
What better timing to teach the essence of financial management than at their best developmental stage, wherein they are generally more prone to making wrong judgments, more adaptive to critical changes, and more malleable in their ways.
Lesson #1 – No Money? Don’t Spend.
The simplest yet most profound lesson any professional financial advisor can give is that an individual should not spend money he or she doesn’t have. This is a lesson that people of all ages should follow but can be most applicable to those in their teenage years. Why?
For a young adult living in the trend-dependent, hip lifestyle of this generation, it is inevitable to be caught in waves of societal mainstream. This can ultimately have them running off swiping their (or their parent’s) credit cards left and right whenever and wherever they like. There is nothing wrong about wanting and having the latest accessories, the luxury gadgets, and the expensive clothing from time to time. However, what is critical is how a person has programmed his or her mind on spending, or how he or she evaluates the significance of every purchase as something that can be paid back later.
In a twisted way, the term shopaholic has become a socially-accepted “fact” nowadays. Still, something that has become a norm does not equate to socially (and financially) right. Spending credit money is something that all young people should absolutely avoid. Though it may be true that the major implications of lavish spending will be felt in a later time, the psychological repercussions can still appear readily.
Studies have found that people who frequent buying stuff tend to justify their expenses as investments. Evidently, this is not always true. Furthermore, the more frequent these lavishly buying of these investments, the consumer can experience an inexplicable satisfaction with every purchase, leading to a form of addiction. It exhausts the person, and also exhausts their bank account.
In this light, as early as possible, young adults should have a firm grip on themselves, a strong sense of control, and an impeccable assessment of what needs to be bought versus what doesn’t.
Lesson #2 – Get Insured.
Having life insurance is one of the smartest investments to get into to ensure financial freedom. More so, it is smarter if a person be insured at an early age. We say, the younger the better.
Getting an insurance policy is imperative for a money-smart individual. This is because it protects him or her from the risks of financial losses, damages or liabilities for damage caused by a third party. Insurance companies can vary in wide arrays, but the most significant ones involve health and life protection.
Having health insurance can benefit a person in periods when professional medical care is necessary. In this time when professional healthcare can be very costly, it would be a gift to be able to save one’s self and his hard earned money.
Health and protection is actually encompassed within life insurance. It allows individuals to get what they deserve during the span of their lifetime. Leading life insurance like American General (AIG) and up and coming insurance companies which provide Term Insurance offer a variety of choices in their plans that can ensure support to those who want to set-up and be prepared for their future.
Getting started early is an effective start in every young adult who wants to be financially stable in the future.
In addition, life insurances offer various benefits for people seeking them. Not only does it inculcate the values of being thrifty, it has been proven to be a safe and profitable long-term investment which ensures returns in the long-run. Similarly enticing is the fact that insurance acts as risk covers — Which allows people to live comfortably amidst the uncertainties of life.
Growth through dividends is also a major hook for this type of investment. There are policies that offer an opportunity to take advantage of economic growth without too much investment risk. In totality, the collective income of the company and all shareholders is distributed among the policyholders through annual announcement of dividends and bonuses.
In the end, being insured can give young individuals the opportunity to truly prepare for the success of their future.
Lesson #3 – Save Save Save!
Simply put, the most common way to go about being financially free is by saving. There comes a time when financial problems in the family may arise or business may not be going too well. Little by little, preparing for a rainy day can save your wallet and lessen the stress of your mind.
Prepare yourself by saving an emergency fund. Any amount saved should be put preferably in an account where it could only be accessed in dire need. Excess allowances, earned money from part-time jobs, or any money that a young adult can get his hands on should be put in a separate account for emergencies only.
However, saving money does not only prompt opening a bank account. Saving coins in a traditional coin bank is not a bad idea. It is a good start since its accumulated value can still be of great significance, more so in times of need.
Even at a very young age, people should be taught the essence and value of saving. This can be taught to teens by letting them have their own savings account where they can learn the responsibility of growing and handling their money safely. Ultimately, when a situation comes when money is hard to find, there is always an option to tap their rainy day stash.
The 21st century has prompted people to become hasty spenders because of growing trends and the inevitable evolution of one’s financial mindset. It is imperative to train young adults as early as possible to set their minds on integrating a sense of living in the moment and enduring for the future.
Challenges will absolutely come, but in spite of all the financial hurdles an individual may run into, living life today and creating a life for tomorrow can still be achieved through good money management and proper financial advising.