Financial Moves When You Start Adulting
04/18/2025
Starting your adult life with smart financial decisions is the best way to increase your chances of achieving your life goals. It may not seem like your first three or four years in adulthood matter and yet losing those years to poor money choices might make a major difference in your financial outlook. Just a few smart decisions is all it takes to ensure you have a great start into adulting.
What are the first financial decisions that are critical?
One of the biggest is deciding which job to take because it drives two other decisions: housing and transportation choices. These two expenses require a significant amount of a person’s net paycheck. Based on location and ability to work remotely, these expenses can vary. Making the wrong decision with these two major expenses can lead to a lack of funds for other important needs such as savings. This can then create a compounding effect which is difficult to overcome.
Are there financial moves that are helpful long term?
Developing a realistic budget is important. Even if you don’t track your expenses monthly, having an idea of what you can afford is critical. This will also allow you to make smaller spending decisions on items such as streaming services, internet/wifi, and even mobile phone plans. The next important move is to build an emergency fund for unexpected expenses. If you can start small and add any money windfalls to this fund, you will be better prepared when life happens.
How can young adults maximize work benefits?
Start by utilizing a 401k and make a contribution even if it’s not at a level to get the entire company match. You should also look for wellness benefits that can save you money, improve your health, and/or reimburse your expenses. Your company might also offer other benefits like discounts or savings programs. If you are still on your parents’ insurance plan, be sure to contribute to a health savings account so you can start building a medical savings fund. This is a great tool to save in a tax friendly manner and be covered for a major medical expenditure.
Are there any other changes that might have to happen?
Most people will have to change their lifestyle especially if they have been living at home when they first entered the full-time workforce. This likely means eating more at home, packing lunch more often, finding a hobby to fill free time so you don’t spend money, and learning how to save on everyday purchases with discounts and comparison shopping. This also means finding entertainment times that are more cost friendly; the matinee rates for movies and twilight rates for golf are two examples. You might also want to consider looking for free concerts and events if you want to stay busier and spend less.