6 Financial moves to make as you turn 18

Turning 18 is one of the significant achievements for youngsters. It grants them a sense of individuality, freedom and the calibre to make life-changing decisions. However, turning 18 is a transition from adolescence to adulthood. Only a few kids share financial literacy or know their finances well by 18.

Thus, making certain decisions may help you gain financial knowledge with time. It begins with understanding your goals, saving habits, passion and career. It paves the way for future wealth growth and accumulation.

If you are turning 18 soon or just turned one, this blog will be interesting to read. It discusses some important financial moves you should make as you hit 18.

What financial steps should you take as you hit 18?

The day you turn 18 is the day you think about your life goals with a different perspective. Your life goals involve saving, investing, earning, accumulating wealth and accomplishing a dream life. However, many individuals fail to manage finances even after 21.

Why? It is because they lack clarity. It is okay to share a little confusion regarding financial terms at 18. However, you should be active and vigilant enough to gain financial literacy while completing your graduation.   Here are some steps that you can take as an adult:

1) Before applying, learn how a credit card works

As one moves ahead of teenage years, one feels the responsibility. It involves seeking financial independence from guardians. Whatever your reason for being financially independent, it is a good one. On the other side, individuals gaining freedom for the first time, easily succumb to taking multiple credit cards. However, it impacts negatively and one quickly finds himself in debt. Why? It is because one lacks the knowledge and technique to use credit cards the right way.

Thus, before applying for credit cards, one must learn the functionality. Once you know the pros and cons of using credit cards, you use them responsibly. For example, students should avoid making costly purchases on credit cards. If you don’t pay, you risk losing your credit score.

2) Open a relevant bank account

Having your bank account is the primary step towards being financially independent. It allows you to manage and conduct transactions individually. What could be better than using your debit card for a transaction than that of your guardians?

Identify the bank account that’s right for you. There are usually two types of accounts: current and savings. The latter is ideal for students.

Most individual parents want children to have a joint account with them. It helps the children gain access to funds while parents can keep check on expenses. Decide whatever suits you the best.

3) Educate yourself on budgeting

Earning and accumulating wealth is not the end goal of financial management. Instead, budgeting makes an important part of the same. Unless you know- how to budget properly, you can never achieve your financial goals.

Thus, incorporate healthy budgeting habits into your lifestyle. Identify your total monthly spending and analyse expenses to reduce. For example- identify the unused subscriptions and ways to cut the utility bills. By switching to affordable subscriptions, you can save enough.

You can dedicate the money you save towards emergency funds, other higher life goals or building retirement savings.

4) Know how to deal with cash emergencies

What do you do when you need money urgently but cannot get it? Yes, panic like anything. It is the natural first reaction to any emergency. However, panic only makes one take wrong decisions. Instead, when you know the right path to take in such situations, you will never panic.

For example, if you need quick cash for medical, you will explore the fast finance facilities available. Options like no credit check loans from a direct lender may help you.

It is because these loans are specifically for persons lacking good credit scores and detailed credit history but need money quickly. One may get the cash with a quick screening that does not hamper the credit profile. When you know about such facilities, you will not wait for someone to help you out. Instead, meet your financial needs quickly.

5) Monitor your spending habits regularly

It is one of the most important financial lessons that every adult should learn.  It is because as you turn 18 and earn; you spend 4x of your income. You must be thinking it is not possible. Guess what? It is. For example, you purchase something that exceeds your monthly savings on a credit card. By the month’s end, you receive a credit card bill fairly more than your monthly savings.  

You can reduce and have a tab on expenses by understanding your expenditure curve. What triggers you to spend money on a particular thing?  Mostly a person spends it because of his instincts. Once you know the calibre to spend responsibly and priories savings, your financial status may improve. Moreover, it grants students/ young adults the opportunity to re-think about using the money sagaciously.

• Understand the tips to keep credit healthy

Credit score, credit report, debts, payment history, and credit history are some terms you must understand before beginning the financial journey. These terms decide the frequency and the chances of accomplishing your financial goals. For example, if you want to buy a car, you must have a high credit score with limited debts in your credit report.

Additionally, knowing financial terms puts you ahead of most individuals your age. It helps you make clear financial decisions independently. Here are some tips to keep your credit healthy:

• Reduce reliance on credit cards
• Limit using an overdraft facility. Instead, keep enough cash with you.
• Avoid engaging in joint accounts with pending debts or bankruptcy status
• Invest in a credit mix. For example- you must have credit card debt, short-term loans, car loans, etc., as a good mix on your credit card. However, do not apply for any loan if you do not need one.
• Ensure regular payment on your debt to avoid loan penalties

These are some important ways to keep credit healthy. The most important of them is reduced credit card usage. If you need money, you can instead check instant cash loans for your needs. These are affordable to credit cards and grant you more flexibility.

Bottom line

Turning 18 is a wholesome feeling. Individuals concerned about ensuring a healthy financial status with a good bank balance must understand finances well. This will help them make healthy financial decisions. No, it would not hurt their financial stability then. Instead, they will feel more confident in their skin and tackle money issues wisely.