Last Updated: February 1, 2024

You’re young, so what? Time is money. And, while cliché, there’s truth to those three words.

If you’re a young adult, you might be asking yourself, “Why should this concern me?” Your point is valid: Most schools do not provide financial literacy education. In fact, many young adults lack a basic understanding of finance in its broadest sense. In 2023, only 23 states required students to take class in personal finance according to the Council for Economic Education. But it’s time to change that mentality. At Liberty Group, we will guide you as you invest in your financial well-being while you’re young, so you don’t have to worry later in life. Here are our beginner’s tips for you and your financial success!

#1: Learn Financial Self-Control

The sooner you learn the fine art of delaying gratification, the easier it will be to keep your personal finances in order. Immediate gratification refers to buying items when you want them without regard to if you can afford them—perhaps you even purchase items using your credit cards because you don’t have sufficient funds to cover the cost in your bank account. The rush you may feel when you swipe that card and walk out with whatever you wanted can make delaying gratification incredibly difficult; it can even be addictive. Delaying gratification—while hard—can reap tremendous returns and an even greater sense of accomplishment when you achieve certain long-term goals (like saving to buy a house or paying off your student loans). While credit cards have some benefits, it’s more financially sound to buy when you can—not when you want. Due to this, it’s best to stick with a debit card when first starting out on your financial journey.

#2: Take Control of Your Financial Future

If you don’t learn to manage your finances, your finances manage you. You may even become susceptible to financial mismanagement. Finding a financial advisor you trust comes with time and understanding, so before you hand off your hard-earned cash to a stranger, pick up a book (or two) on personal finance. Improving your financial literacy not only makes you feel confident in your capabilities in managing your money, but can also help you make educated decisions when choosing who will hold the key to your financial kingdom!

#3: Know Where Your Money Goes

One word: budgeting. Do you know where your money goes? Do you have a monthly and/or annual budget? Do you have a savings plan? How much is spent on needs vs. wants? Do you spend more than you earn? Spending more than you earn is a dangerous, slippery slope. It also prevents you from building a rainy-day fund for those inevitable unexpected expenses. Living off of credit cards greatly amplifies the actual cost of what you’re purchasing, as you’re also paying interest on those purchases. Also, over time, seemingly small purchases add up. For instance, if you buy two $5 coffees per day, you’re spending $300 a month on coffee. Instead, invest in a coffee machine and buy a month’s supply of coffee for $40. It’ll last longer, save you money, and taste better! Boom. Budgeting 101. Understanding how money works will make your money work for you.

#4: Start an Emergency Fund

Pay yourself first. No matter what you owe or how much you make, it’s smart to set aside some monthly amount in case of emergencies. It might not seem like a big deal now, but down the line, that small monthly payment to yourself could help fund your retirement, vacation, or even the down payment on your first house—or a medical emergency or other unpredictable events.

#5: Start Saving for Retirement Now

Even if you can only put $1 or $5 a month into a retirement account or contribute a small portion to your employer-sponsored retirement plan (if offered), taking the first step to start saving is often the hardest part. Your parents might have told you (perhaps, over and over again) that you’ll hardly notice the money coming out of your paycheck—but it’s true! Don’t just trust them or us; try it out for yourself. You’ll quickly adjust to having a few fewer dollars on your paycheck each month. When you start saving early, compound interest will also become your best friend. Put $100 aside into a retirement account each month beginning at age 25; that $100 is making 7% return each year. By the time you retire, 40 years down the line, those monthly payments of $100 is worth $267,083. If you chose to wait until your mid-50s, and invest $1,000 a month with the same return, you’d have $174,466 in your account. Pick your fighter—and just imagine how that number will continue to grow as you naturally begin to increase your savings contributions as your career progresses and you age.

#6: Get a Grip on Taxes

Even before starting your first job, know how income tax functions. You need to make sure that, after taxation, you can meet your financial obligations with your remaining salary. There’s no need to panic because thanks to technology, income tax calculators exist all over the internet. Still, familiarizing yourself with the income tax process prevents you from being blindsided when you get your paycheck and when tax time comes. This knowledge also helps you know what to expect during salary negotiations. Also, though it sounds daunting, take the time to learn to do your taxes. Yes, it’s a pain and a dreaded day for some, but you build your financial acumen by more deeply understanding your finances. Nowadays, there is software to guide you and file online. Hey, you may even learn some tax reduction strategies as you continue to do your taxes over the years.

#7: Protect Your Wealth

To keep it short and simple: Do your research. Make sure you understand all your financial options in any scenario and reach a conclusion only after you feel confident that you’re not losing your hard-earned dough. Financial concepts are complex and can seem intimidating, but knowledge is power. Educate yourself so that down the line you don’t have to worry and can retire in peace. It goes without saying, but we recommend enlisting the help of a financial professional, accountant, and/or attorney as you progress in your life and your wealth builds. A fiduciary is legally obligated to act in your best interest—not in the interest of commissions and unnecessary financial products—and can offer invaluable resources, guidance, and peace of mind so that you can live the retirement of your dreams.

Every strategy is dependent on a variety of different factors, so make sure you read the fine print.

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Standard Disclosure

This blog expresses the author’s views as of the date indicated, are subject to change without notice, and may not be updated.  The information contained within is believed to be from reliable sources.  However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors.  This blog aims to expose you to ideas and financial vehicles that may help you work towards your financial goals. No promises or guarantees are made that you will accomplish such goals. Past performance is no guarantee of future results, and any expected returns or hypothetical projections may not reflect actual future performance or outcomes. All investments involve risk and may lose money. Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must evaluate and investigate any investments considered or any investment strategies or recommendations described herein (including the risks and merits thereof), seek professional advice for their particular circumstances, and inform themselves about the tax or other consequences of any investments or services considered.  Investment advisory services are offered through Liberty Wealth Management, LLC (“LWM”), DBA Liberty Group, an SEC-registered investment adviser.  For additional information on LWM or its investment professionals, please visit www.adviserinfo.sec.gov  or contact us directly at 411 30^th Street, 2^nd Floor, Oakland, CA  94609, T: 510-658-1880, F: 510-658-1886,  www.libertygroupllc.com. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training.