Young adults entering the world of employment are often unsure about how to handle their finances. Most prioritise self-fulfilling expenses like going on vacations, dining out, and spending a fortune on shopping sprees, pushing savings and investment for the later years. Learning how to manage your finances early can streamline your financial future. With the advance of time on your side, you can maximise your potential and ensure financial stability for future years. This guide outlines some of the best financial tips for young adults that can help you start your journey early and champion financial security for the future.

• Use your credit cards judiciously and track your sending to budget better and save more.
• Start an emergency fund and get insured to keep rainy days covered.
• Invest wisely to achieve your long-term goals.
• Get an early start at retirement planning to ensure your corpus grows under the power of compounding.

• Pay with cash, not credit

Avoid relying on your credit cards for payments and purchases. Overdue credit card payments are high-interest debts that can spiral out of control in the long run. Inculcate patience to save for whatever you need to purchase. Funding your purchases with cash or a debit card allows you to draw money from your savings account and avoid credit build-up.

• Try to save as much money as possible

One of the most crucial financial tips for a young adult remains understanding the value of saving. As a young adult, you should try to save as money as possible. From saving the money you receive as a birthday gift or to your weekly pocket money, try to store away a part of the funds for the future. Inculcating a disciplined saving approach early helps you remain vigilant throughout your career.

• Track where your money is going

The previous financial tip for young adults goes hand-in-hand with the act of budgeting. To avoid overspending, you will have to budget your expenses. This means listing down your income and costs to review where your money goes. Creating a personal spending plan will help you identify unnecessary expenses like frequent dine-outs and too many subscriptions. Making small changes in your everyday expenses can help you save more for the future.

• Start an emergency fund

When you start earning as a young adult, saving money for emergencies should be a priority goal in your financial plan. Emergencies like job loss or medical expenses can catch you off-guard. It can be particularly challenging to face these circumstances if you are financially ill-prepared to handle them. Therefore, you should make it a practice to put aside money into your emergency fund every month, even if you’re on a tight budget. Store your emergency funds in instruments like fixed deposit accounts and liquid funds to ensure easy accessibility and earn returns until you need them. If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

• Get insured

Experts suggest getting insured as early as possible. This is, in fact, one of the most valuable financial tips for young adults. Starting health and life insurance early ensures lower premiums, cutting down the cost of insurance significantly over the long run. Waiting until you’re 30 or older doesn’t just raise premiums but also leaves you uninsured for a long time. This means you have to pay for all medical expenses out of your pocket. To avoid this, get started early. Compare insurance plans, coverage, premiums, and rider options from different carriers to get the best insurance coverage.

• Invest early

Seize the early bird investment window to maximise your returns. This is one financial tip young adults are now quite familiar with. When you invest early, you give your funds enough time to grow and compound. In other words, you have better chances of wealth accumulation. Additionally, as young adults, you possibly have fewer financial commitments and, therefore, can afford to invest more and venture into riskier investments. With time on your side, you can capitalise on risky equity investments and have an ample recovery period to make up for any losses along the way. You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.60% p.a.

• Start saving for retirement

This financial tip for young adults may come as a surprise to many since we often tend to view retirement as a late-stage life goal. As a young adult, you should remember that it's never too early to start planning for your retirement. By investing in instruments that offer compound interest benefits, you will have interest on both your principal and returns. Over time, this will help you create a sizable retirement corpus. For instance, you can start investing in PPF and NPS when you start earning to devise a comprehensive retirement plan.

It is common for young adults to struggle with financial decision-making at first. When you start earning, it’s easy to lose focus on long-term goals and spend guilt-free. However, this can be harmful in the long run. The above-listed financial tips for young adults can help you manage your finances better. By building your savings account, tracking your expenses, creating an emergency fund, getting insured, avoiding credit overuse, and saving for retirement early, you can get a head start on achieving your long-term goals.