If this is your first time here, Molly’s Money is a series I write on this blog that includes all things personal finance. Got a question about money that you want answered? Leave it in the comments below or email me!
It’s no secret that I’m really, crazy passionate about getting your personal finances in order. When your personal finances are out of whack, it really throws everything out of whack. You get stressed. You feel stressed. You get frustrated and angry. Some people even become depressed over their finances. I know… I’ve been there.
I’ve learned a lot over the last 10 years and there are things that I’ve learned along the way that I realize are key to becoming a financially responsible, grown adult. So, here’s a list of 20 things that I’ve learned and 20 ways to become a financially responsible, grown adult.
1. Live within your means. That means live on less than you make. That means not maxing out a credit card every month. That means having extra money at the end of every month… even if it’s $10. If you have $10 left over at the end of the month… you lived that month on less than you made.
2. Know how to budget. You should have a monthly budget (I realize I say this all the time… but I say it a lot because it’s important. Like, really important.) You should stick to your monthly budget. You should know how much is going out of your account each month and how much is coming in your account each month. Everything should be accounted for. And I do mean everything.
3. Save for emergencies. That means you have three to six months of expenses set aside in an emergency fund or account in case you lose your job, are unable to work, your heat pump goes out, your car needs repairing, you break a leg. Anything. Emergencies happen and you need to save for them.
4. Save for the future. That means learning about ways to invest your money… whether it’s contributing to a 401K, a traditional IRA, or a ROTH IRA… or maybe even a money market account.
5. Pay your bills on time. All of them. Utilities, rent, credit cards, medical bills, etc. They have a due date… and that due date needs to be adhered to. Strictly.
6. You should check your credit report. Yearly. You should be pulling your credit report every single year and making sure there’s nothing funky or wonky on it. You need to know exactly where your credit stands. You could have become a victim of identity theft and you’d have no idea unless you pull your credit report.
7. Learn how to shop for insurance. Health insurance and auto insurance aren’t the only insurances that you need. You need life insurance. If you’re an adult, you NEED life insurance. You need renters or homeowners insurance. Maybe even disability insurance… who knows? But you need to be shopping for those things and taking those things into account. Totally going to beef up my husband here… but he’s awesome and he sells life insurance. If you have questions about life insurance or anything like that, let him know! He’s pretty awesome and really smart, I’ll say.
8. Learn how to control your spending habits. Are you an impulse buyer? Do you get sucked into “sales” and “specials” and “limited edition” stuff? Control your spending habits. Know how to say NO to that thing that you just don’t need to be buying. Save up for the fun things… it’ll be that much more worth it in the end.
9. Get your debt under control. This one is pretty self-explanatory. If you’re in debt, now’s the time to get out of debt. If you’re out of debt and debt free, stay that way.
10. Start buying smart. Unless you’re Bill Gates or some other rich person and you have more money than you know what to do with, it’s time you start shopping around and knowing what you are paying for. Don’t buy a new car because it’s new… you might be able to get the same car, barely used for a much better price. Clip some coupons, check your grocery store’s weekly specials, keep an eye on promotions… you can find areas to save money easier than you might think.
11. Get a job. Any job. Out of work? Can’t find a job? Collecting unemployment? Don’t be a victim. Trust me, I’ve been there. I didn’t have a job during one of the worst years of the recession, and I was broke, and I was depressed, and it was awful. But instead of being a victim, I sucked it up. I had a college education and I felt like so many jobs were beneath me… but I did them anyway. I worked FOUR jobs at one point. FOUR. It was hard. I was tired. But I made it work. You CAN get a job… it might not be your dream job, but you can get a job. Work at McDonald’s. Work at Subway. Work at the mall. Babysit. Tutor. Get a job. You don’t have to stay there forever… any job can give you experience in SOMETHING.
12. Learn how to rock a job interview. Know what to wear, know how to answer tough questions, know how to shake someone’s hand, know how to ASK the right questions…
13. Know about your job’s benefits. What kind of pension or 401K plan does your job offer? Health insurance? Vacation? Sick days? Any kind of tuition assistance or student-loan forgiveness plan? A gym membership? Know all of your options and explore them thoroughly.
14. Learn to read the fine print. If you are signing your name on a dotted line… for ANYTHING, be dang sure you’ve read the fine print. If it’s a gym membership, know how long you’re locked in. If it’s a credit card, know EXACTLY what the fees and interest rates look like now and down the road. If it’s a contract with a realtor… know exactly what you’re getting and what they’re getting. Bottom line is… if you are ever, EVER signing a legal document, you BETTER know exactly what you are signing. Because guess what? If you find out down the road that there’s a stipulation or line in that contract that you don’t like and you’ve already signed it… too bad. You’re stuck. So, get the information now.
15. Learn about taxes. Know the difference between federal, state, and local taxes. Know how much is taken out of your paycheck for each. Know how much is being withheld. Know ahead of time if you’re going to need to set aside some income to pay your taxes later. Know about estimated taxes. Know about deductions. Know how to file your taxes.
16. Know what you need to do to buy a house. What are the steps that are involved in buying a house? What do you need to do to be qualified to buy a house? How much money should you have saved?
17. Know what’s needed to qualify for a mortgage. You should know exactly what kind of mortgage you are interested in applying for… how much you’d need to put down in order to avoid PMI, etc.
18. Know how to give. Generously. Giving is a huge part of being financially responsible. I am so passionate about giving financially and giving generously… it’s something that brings me so much joy. Know what organizations you’re giving to… research different organizations you might want to partner with financially… If you can’t afford to give financially yet (outside of tithing if you’re a Christian), then find ways to give of your time and talents.
19. Learn about those everyday financial services you don’t even think about. Look at your checking account, savings account, debit cards, etc. What fees are associated with each? Minimum balances? Interest rates? Charges or fees for using an ATM or other bank? Transferring money? Make sure you know the ins and outs of your accounts. All of your accounts.
20. Don’t borrow money from your family. It just gets awkward. Once you’re an adult… you should be paying for things yourself. If your parents or someone wants to gift you some money for something. Okay. That’s fine. But borrowing money from a family member or friend creates an unspoken awkward tension between the both of you until the money is paid back. And what if you can’t pay it back? Well, then that tension just increases and, in most cases, it doesn’t end well.
Well. There you have it. 20 ways to become a financially responsible adult. Now, I realize that this is not the be-all, end-all of lists. And I realize that each item can often have caveats and whatnot… but in general, if you get these 20 things under control and taken care of, well… then you are well on your way to becoming a financially responsible adult.
Anything you’d add to the list?