Smart Spending Decisions for Young Adults

Getting started in life and making the right decisions to help you grow and secure a comfortable future involves direction and guidance. To help provide some insight into smart spending decisions that will pay off in the future and protect your interests, here are some great investments to make in and for yourself.

Invest in Your Education

Going to college is a multi-year commitment that costs thousands of dollars, but there is substantial proof that a college degree can have a significant and positive impact on your financial future and career path. According to Bureau of Labor Statistics, people with a bachelor’s degree earn an average of $1,137 per week, compared to those with only a high school diploma who earn an average of $678 per week.


While going to a traditional four-year college is a great way to invest in yourself, it is not the only choice. There are many different career fields and education paths that lead to them. Trade schools and certification and training programs for careers in everything from computers and healthcare to real estate and mechanics exist, and offer a chance to make a good living. The key is to find a field that interests you and invest in the education and training to set you on your way toward that career.


Establish an Emergency Fund

Contributing a portion of your paycheck to establish an emergency fund should be a top priority. To pay for unexpected home or car repairs and medical expenses or to serve as a cushion in the event of a job loss, most advisors recommend saving six months’ worth of expenses in a savings account you can access easily if needed. Having an emergency fund keeps from building unnecessary debt by charging those surprise expenses on high-interest credit cards. It also provides a cushion of relief to fall back on in times of financial need or hardship.


Save for Retirement

It is never too soon to save for retirement. If your work offers a 401k or similar retirement program, definitely take part in it. Many offer an employer match where they will match up to a fixed percentage of whatever you invest. This is a chance to get free money. Even if there isn’t a match program, the money you invest is pre-tax meaning that part of your paycheck that goes toward your 401k is not taxed. An Individual Retirement Account (IRA) is another option to look at for saving for your future. Talking with a financial advisor to help set up a path to retirement is also a good way to invest in your future for some financial direction.


Buy a Home

One of the biggest financial decisions a person can make is buying a home. It offers a sense of pride and security, and instead of paying someone else rent to use their home, you are paying yourself to live where you are. Each time you make a mortgage payment you are building up equity in your home. Eventually that equity growth will lead to a paid off home with no need for house payments again, leaving you with a big asset in your portfolio.


Getting started out on the right foot by investing in yourself is key to building security and planning for your future. By choosing to make smart financial decisions that will pay you back later on and protect you from the unforeseen, you are paving the way to financial success.