Finance tips every 18 year old should know


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Do you ever wish you could go back in time and make different financial decisions? Some of the worst financial decisions are made when we are young and just starting to manage our own money and bills. At 18, you get that first taste of freedom, you can get your own credit card, open your own bank accounts without a parent, and even get a loan for a car on your own. But, making the wrong choices this early in the financial game, can set you back and affect your credit for years to come.

There are some great financial tips that every young adult should know to set themselves up for success in the future.

  • Plan for your retirement now. When you hear people say they wished they had started saving earlier or it’s never too early to start saving – it’s true. The earlier you start saving, the easier it is to reach your retirement goals. Starting an IRA now is just smart saving – whether you contribute a lot or a little, it’s a step in the right direction and a great tax benefit. If you are working and your job offers a 401K, especially with an employer match, take advantage of it. The 3% or 5% that you decide to contribute really won’t affect your paycheck that much and if your employer matches that amount, it’s a win-win for your future.
  • Avoid big unnecessary purchases or racking up debt. Just because you can afford something, doesn’t mean it’s a great idea. Purchasing a brand new car when you are a young adult may not be the best financial decision for you at the time. If you have a reliable car, stick with it for now. Also, avoid racking up unnecessary credit card debt. Pay off your balance each month – this allows you to gain good credit while avoiding paying any interest fees.
  • Be wary of multi-level marketing. We aren’t saying that all multi-level marketing initiatives are bad ideas, because they aren’t, and some people make a lot of money doing them. BUT, unless you have a large network of people who are interested in the products that you would sell and would be interested in purchasing them over time, it may not be the best investment of your money. Some companies require a hefty investment and the purchase of a large amount of inventory to even get started. The real money is made by getting other people to work under you and building your network. It might sound simple at first, but it could be more trouble in the long run.
  • Not spending money does not mean you are saving it. At the end of the money you have $150 extra in your checking account – skipping those coffees or meals out with friends paid off and you managed to save some money – awesome. But keeping that money in either cash or a checking account isn’t really saving it. It’s easily available to be spent the next month on a spur of the moment purchase. When trying to save money, put it in a dedicated savings account that you can’t easily access. Another great option is a CD – Certificate of Deposit – which pays a healthy interest rate if you don’t withdraw the funds early.

Whether you are off to college, working a full time job, or even taking a year off to figure things out, the tips above are great advice to make sure you start your financial freedom off on the right foot.

Stephen Yonych Jr.
Assistant Vice President, Watertown Manager
MLO# 701846

Author: Stephen Yonych

A recent addition to the Litchfield Bancorp Retail Banking Group in Watertown. Steve has spent the past 6 years in retail management & lending. Steve lives in Cheshire and has been actively involved with many community organizations including the Waterbury Chamber of Commerce, Leadership Greater Waterbury, the Lyons Club, the Crime Stoppers of Water-Oak and the Greater Waterbury Board of realtors.