Growing up is hard. The quest to find a job while feeling financially stable and well-positioned in the world is a journey most people are familiar with. 

According to Keenan Harris, former Risk Management Coordinator at United Capital, adults make a lot of mistakes, most of which center around a lack of budgeting, obtaining housing (be it an apartment, condo or house) that is far beyond what is necessary, not utilizing discounts and misunderstanding credit cards and their terms. Some of these miscalculations, while seemingly innocent, are sure to rock the boat – and the bank. This leaves you wondering, “where the funds?” 

October is National Financial Planning Month, so here is some insight from Harris on what you need to know on heavy topics such as first-time renting, holiday spending and credit card commitment. Your unavoidable financial curiosity is soon to be met with answers that will make growing up a little less stressful. So brew a fresh pot of coffee and save the Starbucks® latte for a treat-yourself day because you’ve got some planning to do. 

The First-Time Renter 

New apartment renters sitting on floor with boxes next to them

First-time renters should keep this in mind: Know your limit. As much as you would love an apartment with a built-in wine shelf, your bank account will appreciate you being mindful of what you can manage with your current income. In fact, 25% to 30% of your income is the ideal dollar amount you want to carve out for your rent. This will leave you with extra money for fun things, while still erring on the side of caution. You want to leave 50% of your income to fixed expenses such as rent and other bills, 30% to variable expenses and the final 20% should go into savings. If numbers aren’t your thing, downloading budgeting apps such as Mint® and Wally can help sort out what you don’t want to. Mint® is an all-in-one resource for tracking your spending and getting smart about your money, while Wally allows you to snap photos of your receipts, so you can easily sort out all of your daily expenses. 

Now that you’ve managed to find comfort in your new apartment, maintain a conscious effort to make good financial decisions. According to Harris, “the most important thing you can do as a first-time renter is pay rent every month on time. This will build your credit to buy a home, purchase a car or finance for any other significant life event.” 

As inclined as you feel to spend that extra 80 cents for guacamole at a local restaurant, saving your money is an important practice as a first-time renter. You’ve got a new place, so cook at home more or invite friends over to save a few extra dollars. While you might suffer from the fear of missing out on a Friday night, you’ll be elated when your savings account continues to grow, leaving you plenty of room for emergencies, rainy days and the dreaded holiday shopping. 

The Holiday Shopper 

Three women holding Christmas gifts at mall

Harris notes that “the most important thing that you can do in your 20s is to develop good saving habits. You can rest easy knowing you’re doing the right thing.” 

With the holidays creeping around the corner, you might be panicking about how you’re going to afford to get Dad that golf set he’s been hinting at all year. Because of this, there is no greater time than now to essentially invest in yourself. There’s no need to break up with your Netflix account, but do you really need five other streaming services?

When it comes to planning out your budget for the holidays, it’s important to keep these few things in mind. You want to start by reviewing your expenses over the last few months. Pay close attention to how many times you’ve eaten out and how often you’ve placed money in savings. Keep an eye on auto payments. You may also want to make sure you’re making small budgetary changes to your everyday life. Opt in for a cheaper version of something - if it’s worth it. Say no to that cardigan that is sure to be out of season in just a few months. 

Harris said it might be the right time to look into getting a credit card. If used correctly, these lifesavers can offer rewards that can be a nice aid when shopping for your loved ones or repaying the debt from this holiday season. 

The Credit Card User 

Woman checking out with credit card at clothing store

Swiping that piece of plastic that holds what feels like unlimited funds is quite empowering. However, when signing up for your first credit card, you want to make sure you’re on board with all of its policies. According to Bankrate.com, you want to seek a card with the lowest interest rate possible. If you’re someone who loves to travel, you might even dig deeper for a deal that offers reward points for travel and leisure. 

What you don’t want to do is find yourself with a card that offers a limited balance with rewards you can’t benefit from. If you don’t travel, the travel card probably isn’t the best idea. Harris suggests that you “look at the total offer and know if you’re getting miles, cash back, the available amount on the card and possible restrictions.” With so many different cards out there, it’s important that you reach out to your bank and see what options best work for your spending habits. 

Some things to keep in mind once you’re approved for a credit card include: 

  • Make your credit card payments on time.
  • Paying the minimum amount due can sometimes hurt your credit score.
  • Ask for more money. Most people don’t know that this is an option.
  • Always pay the balance off as soon as you can.
  • Double-check those rewards and cash back offers.
  • Know what the interest rate is.

Once you’ve secured your credit card, use it wisely. Using your credit card to pay your rent or utility bills is not ideal, but it could come in handy when the holidays feel like they’re creeping up and you need to get a small last-minute gift. Remember that credit cards are just a way of spending money you haven’t earned yet. 

Set goals for yourself. Make mindful decisions when it comes to dividing up your income for things such as rent, savings and everyday spending. Ask all the right questions before committing yourself to a credit card, and practice good spending habits not just in October and around the holiday but every day of the year. If being financially more secure is already on your list of New Year’s resolutions, it’s time to get started. 

Set up your emergency fund and savings and continue to invest in yourself. “Have a long-term strategy for what you want to do with your finances,” Harris says. Think about what you want your next five, 10 and 20 years to look like.”

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