5 Financial Tips For Every Young Professional Should Know

Personal finance has not yet become a required subject in college or universities; so many people might be fairly clueless about how to manage their money when out in the real world for the first time. If you think that understanding personal finance is way above your head, though, you’re wrong. All it takes to get started on the right path is the willingness to do a little reading – you don’t even need to be particularly good at math, neither do you need a career in finance.

Here are some important things to understand about money if you want to live a comfortable and prosperous life.

1. Learn Self Control - There are many small unnecessary expenses that we incur every day which at the end of the month make us get into debts and loans. But the sooner you learn the art of delaying gratification, the sooner you’ll find it easy to keep your finances in order. You better spend on what is necessary otherwise you will keep spilling your cash to non existing avenues. Also, if you can’t afford something, leave it to those who can, then go work and raise money to a level where you will easily buy your item without debt.

2. Take Control of Your Own Financial Future - If you don’t learn to manage your own money, other people will find ways to (mis)manage it for you. Some of these people are in business and want to make money out of you, especially if you do not understand the basic personal finance.  So, arm yourself with personal finance knowledge by reading books on personal finance so that you are not caught off guard. Understanding how money works is the first step toward making your money work for you.

3. Know Where Your Money Goes - Work on a very reasonable budget to ensure your expenses aren’t exceeding your income. Once you see how your morning java adds up over the course of a month, you’ll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time. If you don’t waste your money on a posh apartment now, you might be able to afford a house before you know it.

4. Start an Emergency Fund - One of personal finance’s habits that should be continually repeated is pay yourself first. No matter how much you earn or owe in loans or debts, it is wise to find some amount of money in your budget to be put aside every month. Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Save by investing in zero risk investment avenues.

5. Know the difference between your risk fund and risk free funds - The art of growing money requires taking some risks here and there. Risk fund is the amount of money that you send out there to do business ventures, ready to take some losses, which if you lost it; your living standards will not change. While risk free fund is money meant for you which may include: rent, school fees, daily expenses, health and emergency. This is the kind of money that you should protect with your heart and soul otherwise your living standards will keep going down. Keep both funds aside as the risk fund determines your future as the risk free takes care of now.