Financial Responsibility Tips For The Young Adult
Be Smart About Your Money
Finally, you have a job, a nice apartment and the right car that fits within your budget. While it's great that you're on your own, you don't want to add extra pounds of debt.
Here are some ways you can be financially fit and save money:
- Develop a financial plan. Identify your long-term goals, establish a budget and save regularly.
- Save. You're a hard-working young adult, so don't forget to pay yourself first. Set up a savings plan with your bank or credit union. If you can get the savings to be deposited automatically into your bank or credit union account without having to do it yourself, it's easier to build your savings.
- Build an emergency safety net. Many financial advisors suggest saving up to six months of living expenses in case of an emergency. If you can't realistically save six months of living expenses, start with one month's expenses and try to increase it regularly.
- Got a raise? Increase your savings! If you get a raise at work, immediately increase the percentage of your salary that goes into savings. You won't miss the extra money and you'll be growing your nest egg.
- Build your credit and manage it. When you take out a car loan or use your credit card, you're establishing credit. The best way to build good credit is to pay your bills on time so you can prove you're responsible when it comes to managing your debt.
- Pay bills on time. You can avoid late fees and high interest payments, which can add up and make it harder to pay down the balance. Paying bills on time is noted by lending institutions.
- Read the fine print. Be sure to read and ask about interest rates and any additional fees when you apply for credit cards, loans or when you lease an apartment.
- Choose the right insurance plan. Whether it's for your car, apartment, health or life, make sure you have the right coverage that will protect you and your finances.
- Monitor your credit report. Credit scores are considered when you apply for a job, buy a car, rent an apartment, etc. That's why it's good to monitor your credit report for any discrepancies or identity theft.
- In many states, insurers generate a numerical ranking based in part on your credit history, known as the "insurance score." Studies have shown that how you manage your finances can help predict the number of insurance claims you might file. These scores help determine if you are a good risk to insure or not. So, a good credit-based insurance score could mean that you're more likely to pay lower premiums for your insurance. Learn more about credit-based insurance scores from III.org.
- Learn more about how GEICO uses this insurance score in determining policy premiums.
- By law, credit reporting agencies must provide you with a free copy of your credit report once a year. Please contact one of the three national reporting agencies, or all of them, for your copy:
Equifax: (877) 576-5734; www.equifax.com
Experian: (888) 397-3742; www.experian.com
TransUnion: (800) 680-7289; www.transunion.com
(Source: Vanguard and the Insurance Information Institute)
The above is meant as general information and as general policy descriptions to help you understand the different types of coverages. These descriptions do not refer to any specific contract of insurance and they do not modify any definitions expressly stated in any contracts of insurance. We encourage you to speak to your insurance representative and to read your policy contract to fully understand your coverages.