7 Money Management Tips for Young Adults

Schools have yet to widely introduce personal finance to kids' curriculum, and many kids won't have the pleasure of growing up with financially astute parents. So when young adults move out for the first time, they are often ill prepared for their financial future.

Some things seem like common sense: not bouncing checks, getting bills paid on time, and planning spending based on how much a job waiting tables will net. However, most young adults know nothing about the importance of saving, 401(k)s, investing, or the dangers of credit card interest, etc. These are things learned throughout the years, often through mistakes. To forego the dreaded "if I had only known," try foregoing a weekend of partying and consider these tips.

1. Buy Used - As many things as you can. When it comes to cars, furniture and miscellaneous items, purchase less expensive used items. A car's value plummets the second it's driven off the lot. Finding one that is a couple years old will save big bucks. Also, for fashion enthusiasts, designer clothing can be found in consignment shops if you're willing to put in the time to find it.

2. Credit Cards - Watch your interest rate. Pay on time to keep your rate down and the credit bureaus happy. Make sure bills are paid off every month so that money isn't wasted paying interest. When a payment is late, try asking the card company to remove the late fee. If your card history is otherwise spotless, they'll usually remove the charge.

3. Early Investing - Did Aunt Edna throw some graduation money your way? Try throwing at least half of it into IRAs, mutual funds or bonds. Carla Fried of Money Magazine advises investing in "firms with increasing dividends" for 2012. Two of her main picks include MONEY 70 member SPDR S&P Dividend ETF (SDY) and Vanguard Dividend Growth (VDIGX). Have a look at these or check out the latest issue of the magazine for more investing tips made easy.

4. 401(k) - Should you manage to score a job early on that provides this benefit, take advantage of it. The money is taken out pre-tax and often your employer will match a percentage of what you're putting in. If you start now, you'll be amazed at how much you sock away in as little as 5 or 10 years. The numbers can be fun to follow.

5. Saving - No matter which bank you choose, start an interest bearing savings account. Don't let your money simply sit in your sock drawer or a checking account. You will spend it. Ask your employer about delegating a small amount of your paycheck to your savings account through direct deposit. This way, whatever amount you wish will automatically be saved without any effort from you.

6. Insurance - Car, Health & Renter's. You will most likely need all three, health first and foremost. Not having these could cost you more later in health expenses, accident repair, and to repurchase items that were stolen or destroyed. Check with different providers for the best rates and bundling options.

7. Earn Extra Cash - If all you've got is free time, find ways to make some cash on the side and sock it away towards a predetermined goal. Sharpening your writing skills can earn money for articles or stories in online magazines and news providers. Also try: tutoring, cleaning houses, mystery shopping, babysitting, shoveling snow, walking dogs, and selling your old or unused items on Craigslist and Ebay. Every little bit helps.

Sources:

Carla Fried, "The new way to reel in income," CNN Money http://money.cnn.com/2012/01/03/pf/investors_guide_2012_bond_funds.moneymag/index.htm?iid=H_PF_News