What are the 10 best financial tips for young adults?

Summary

• Money management can be challenging when you’re still discovering who you are and what you want to do with your life.

• Saving and becoming financially educated are two of the most important things a young adult can do.

• Knowing how to save money as a young adult is the key to achieving your personal and professional goals.

• Unbiased can connect you with a financial adviser offering expert guidance on your future goals. 

How to save money as a young adult

Financial responsibility can be a daunting prospect for young adults, especially if you’re entering the job market. 

However, there are ways to demystify finances and achieve your financial goals, no matter how big they are.

Below are 10 of the best financial tips for young adults seeking practical guidance. 

1) Start saving, even if it’s small

One of the best ways to develop financial discipline is to consistently put away a small amount of money over time. 

If you open a savings account with a top interest rate and deposit the same amount each month, you’ll build up a healthy pot over time. If you have a sum you don’t need immediate access to, you can invest it in a high-interest savings account.

Also, if you leave your savings untouched, your balance can benefit from compound interest over a long period of time. 

2) Get educated on your finances

Financial education is the key to unlocking better money habits and bringing your goals to life. You don’t need a degree in finance to be good with money (although it does help), and there are plenty of online resources to take advantage of. 

Unbiased offers hundreds of resources, such as articles and handy tools, to help you improve your understanding of how to save money as a young adult. 

3) Make a budget and stick to it

Know what your finances look like and create a budget to manage them. If this is difficult, use budgeting apps or read books about saving money to learn more about how to create a budget and stick to it for an extended period of time.  

4) Learn about investing

Investing is one of the best ways to get better returns on your money, but comes with risk. 

It is investing money into an asset, whether a company, fund, commodity or even an exchange-traded fund (ETF), with the expectation of earning a profit.

If done strategically, you can earn an income from investing or receive an annual profit from it. 

However, there are risks to investing that must be understood before trying it for yourself. A lot of research is needed to make smart investment decisions.

Getting financial advice can help ensure you have a diversified portfolio and reduce investment risk. 

5) Look at your retirement options

As a young adult, retirement might not be your top priority — but one day it will be, and laying down a foundation for it now can have a huge payoff in the future. 

The longer you contribute to a pension, whether a personal or workplace pension, the bigger the payout is likely to be once you retire. 

UK employers offer auto-enrolment and contributions if you’re eligible, which may bolster contributions, plus you get tax relief.

6) Keep on top of your taxes

A list of the best financial tips for young adults would not be complete without mentioning taxes.

Taxes might be frustrating, but avoiding them will make things much harder for you.

Don’t avoid managing your taxes. You should find out what you owe, pay your taxes on time, and stay on top of any tax news that may affect you and your income. 

A qualified financial adviser or accountant can help you manage your taxes, particularly if you’re self-employed. 

7) Avoid debt where possible

Most people have debt of some kind, but it’s how you pay it back that matters.

Use debit cards wherever possible, and resist taking out loans or getting a credit card unless necessary. 

However, responsibly using credit could boost your credit score and build a credit history if you don't have one — but you should always pay off your outstanding balance in full every month.

8) Keep costs under control

Another good financial tip for young adults is to find ways to reduce your monthly spending habits.

If you look at your costs closely enough, you’re bound to find some excess somewhere, whether it’s subscriptions you no longer use or shopping online regularly. 

Of course, restricting costs won’t make you an overnight millionaire, but it is a healthy financial habit to adopt if you want to be financially secure. 

9) Set financial goals

What are your personal financial goals? Where do you see yourself in five, 10 or 20  years? Understanding the nature and level of financial freedom you want is the first step to creating a plan for achieving it. 

10) Consider getting professional financial advice

Making the effort to secure your financial affairs and become savvy with your money can make a huge difference, but not as much as help from an expert. 

Consider approaching a financial adviser who can offer vital advice on how to reach your future financial goals.

What is worth mentioning when getting professional financial advice?

If you’re seeking professional financial advice, you should draw up a list of questions, ideas, and topics to help you get the most out of your free initial session. 

Consider your personal financial goals and ask what you need help with, whether it’s pensions, mortgages, retirement, or investments.

Talk about your history with spending and income and what you’d like to change going forward.

It’s a good idea to get guidance to ensure you know exactly how to manage your money and understand what you need to do and what actions you need to take. 

Get expert financial advice

Learning how to save money and adopting healthy financial practices is essential for anyone, regardless of age.

However, as a young adult, you benefit from the luxury of time, so your savings may benefit more from compound interest than older generations.

By saving, avoiding debt, paying taxes, and educating yourself on investments, you can unlock better financial habits. 

To further deepen your understanding of money management, get matched with an expert financial adviser through Unbiased.