A lot of young people live paycheck to paycheck. Inflation makes that hard to keep up with, and they’re always one health or financial emergency away from ruin. It doesn’t have to be that way, though; that doesn’t mean being rich. Young people can enjoy financial freedom in many ways without hitting the jackpot or raking in a 7-figure salary.
Let’s look at several of them.
Go Easy With the Furniture
This applies in different ways. First, you don’t have to have a full set of furniture in every room. Just get what you need. Treat it well so it lasts a long time. Avoid large, expensive items unless you’re going to be there a long time; they’re difficult and costly to move.
Buy Used Cars
The moment you drive a new car off the lot, it’s subject to massive depreciation. If you had to sell it the next week, you’d literally lose thousands of dollars. It’s better to buy late-model used cars in good condition.
Keep Student Loans Down
Student loan debt is a fact of life for most college graduates these days, and some are drowning in it. If loan debt is going to be a reality, choose a good school that costs a lot less than that dream school you also got into. In the long run, where you went to school really doesn’t matter for most people.
Cook Your Own Meals
Eating out is fun and convenient, but it’s also expensive. Cooking your own dinners will save a lot of money. Avoid falling into the habit of going out for lunch with colleagues every day.
Create an Emergency Fund
Major car repairs, medical emergencies, water heater failures, and the like can blow holes into a budget and send you into debt. With every paycheck, set some money aside to build an emergency fund that can lessen or cover the blow.
Pay Credit Cards in Full Every Month
This is one of the easiest ways to free up money that won’t be going to interest. It also helps you learn how to operate on a budget.
Increase Your Credit Score
A good credit score improves your chances of securing a loan and good interest rates on it. Paying off your credit cards is one way to boost your score, but here’s another: take out a personal loan you can easily repay over 6 months. You’ll really only be paying the interest, and the boost to your credit score will be worth it when it’s time for a major purchase.
Perform Basic Car Maintenance on Your Own
When your car breaks down, you obviously need a skilled mechanic to fix it. It doesn’t take a skilled mechanic to change the oil, replace wiper blades, check and refill fluids, etc.
Live in Any Home You Buy for at Least Three Years
If you’re not going to stay in place for at least three years, you’re better off renting. Otherwise, realtor fees, taxes, and closing costs will turn buying into a net loss.
Watch the Subscriptions
A subscription to a magazine here and a streaming service there doesn’t cost that much. But they add up. If you’re not getting your money’s worth from them, it’s time to cancel.
Use Coupons, Rebates, and Points
These things add up. A lot of people don’t want to bother, but if you do bother, you can save a lot of money. Sometimes, rebates will effectively pay you for buying something!
Avoid Addictive Substances
Cigarettes, vaping, and illegal drugs are money drains. So is alcohol. If you choose not to abstain from them, at least pursue moderation both for your finances and your well-being.
Cut Back on Unnecessary Luxuries
Starbucks or home-brewed coffee? The newest cell phone or your current version that gets the job done? A lot of things we do daily are things we can do without spending jacked-up rates on.
Treat Yourself Once in a While, Not All the Time
Living frugally is a great thing to do, but sometimes you have to indulge yourself, and that’s fine. Just make it a treat to look forward to, not one to expect.
Maintain Good Health
Health care is expensive, and a lot of people with high-deductible plans are feeling it. No one can prevent aging and catastrophes, but you can take care of yourself with exercise and a good diet so that you’ll be less vulnerable to illness and injury.
Put Off Having Kids Until You Can Afford Parenthood
Raising a child is expensive, as in averaging almost $250,000 to raise a child to the age of 18. If you’re not ready to take that on in addition to your other obligations, wait until you are ready.
Don’t Rush Into Marriage
Similarly, there’s no need to get married in haste. Take time to know you and your partner are truly compatible for the long haul. Divorces are usually messy and expensive.
Take the 401K and the Employer Match
If the place where you work offers a 401k, take it. It’s an easy way to passively build retirement savings. Direct at least 10% of your pretax income to it if you can. Always take advantage of whatever matching contribution your employer makes.
Stay With Your Parents Longer
Assuming you get along well with your parents, living in their home as long as you can can make good financial sense. Because it will be rent-free or with very low rent, you can save for a car, save for a down payment on a home, pay off student loans, etc.
Follow the 30% Rule
This is the rule that you shouldn’t spend more than 30% of your income on rent or mortgage. If you are, you’re likely living beyond your means, and you should downsize or simplify.
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