5 Financial Planning Tips for Young Entrepreneur

Classes called “Economics for Young Entrepreneur” are usually not part of the secondary curriculum. Because of this unfortunate disability, many young adults do not know how to manage their money, apply for credit, and how to get or keep debt. The state will remedy this weakness: by 2020. 21 high school students must have courses in personal finance and 25 vocational lessons.1

This should at least help the next generation. But for high school students, let’s take a look at the eight most important things you need to understand about money. These financial tips are designed to help you live the best financial life and benefit from it, the younger you are, the longer it will take to increase your savings and investments.

KEY TAKEAWAYS

  • Taking the time to learn a few critical financial rules can help you build a healthy financial future.
  • Learning to prepare your annual tax return yourself could save you money.
  • Start an emergency fund and pay into it every month, even if it is a small amount.
  • Saving for retirement is an integral part of any financial plan, and starting young gives you the most time to grow your nest egg.

Learn self-control

If you are lucky, your parents taught you this skill when you were little. If not, keep in mind that the more you learn the ability to defer satisfaction, the more you will be able to manage your own money. Although you can easily buy on credit whenever you want, it is best to wait until you get the money you need to buy. Do you really want to pay interest on a box of jeans or flakes? A credit card fits well and takes money out of your current account once, so there is no interest balance.

If you are used to transferring all your purchases to a credit card, even though you can not pay the full bill at the end of the month, you can still pay for these items after 10 years. A credit card is possible and by paying on time we can get a good seat. And some offer fine rewards. Except for rare emergencies, always pay all bills when you receive an invoice. Also, do not carry more cards than you can handle. This financial advice is very important to create a healthy financial history.

2. Manage your financial future

If you do not learn how to manage your money, others will find ways to manage it. Some of these people may have bad intentions, such as financial planners with fake commissions. Others may have good intentions but do not know what to do, like Grandma Betty, who really wants her own home, even though they can only pay off on a risky floating loan.

Do not rely on the advice of others, but take responsibility and read the basics of personal finance. Once you are informed, do not let anyone catch you unintentionally – neither someone who quietly blows up your bank account, nor a friend who wants you to go out every weekend and collect a lot of money with them. .

3. Know where your money is going

After reviewing various personal finance books, you will realize that it is important to ensure that your expenses do not exceed your income. The best way to do this is to establish a budget. When you see the price of morning coffee increasing in a month, you will realize that a small and controlled change in your daily expenses can have a big impact on your financial situation, such as earning a living.

Plus, you can save a lot of money over time by keeping your monthly expenses as low as possible. While you can now rent a fully equipped home, opting for something a little more casual could give you ownership or ownership more quickly than others.

Understanding how money works is the first step to making your money work for you.

4. Start an emergency fund

One of the most common mantras in personal finance is to “let yourself down first”. No matter how much you owe on student loans or credit card debt, and no matter how low your salary seems, it’s wise to put money — or money — in your budget. you can include them as a monthly emergency reserve.

Having money in emergency savings can protect you from financial hardship and help you sleep better at night. If you are also used to saving money and find it an unmanageable monthly expense, you will soon have more than just emergency money – you have a pension, vacation pay or housing benefit. a.

It’s easy to put your money in a regular savings account, but it pays almost no interest. Deposit money into a high-value brokerage account, short-term investment certificate (CD), or brokerage account. Otherwise, rising prices will hurt the value of your savings. Make sure that the rules of your savings account ensure that you get your money back quickly.

5. Start Saving for Retirement

Just as your parents probably put you in kindergarten, hoping to prepare you for success in a world that for centuries seemed exaggerated, retirement plans are drawn up in advance. Because of the complexity of how interest rates work, the sooner you start saving, the less capital you need to invest to get the amount for your retirement.

Why start building up a pension when you are in your twenties? Here’s an example from Investopedia: You start out investing in the market with $100/month and an average positive return of 1%/month or 12%/year, for a total of 40 years/month. Your peer of the same age starts investing after age 30 and invests $1,000 per month for 10 years, plus an average of 1% per month or 12% per year, compounded each month. After 10 years, your friend has collected about $230,000. Your retirement account will be just over $1.17 million.

Company-sponsored retirement plans are a good choice because you can invest pre-tax dollars, and companies often pay a portion of your contribution, which is akin to getting money for free. Contribution margins are typically 401(k) higher than individual retirement accounts (IRAs), but any employer-sponsored plan you happen to offer is one step closer to your financial position.

If you don’t have access to a business plan, don’t despair. Self-employed people have many options for planning their retirement. Others can open their own IRA, which allows them to withdraw a certain amount each month from their savings account and deposit it directly into the IRA. Even if it is only a very small amount, it will eventually yield something useful.