October 29th, 2020 | Updated on December 16th, 2020
At this point, millennials have officially entered adulthood — many have already begun their career, some have moved onto the next step in academia, and others are just trying to figure it all out.
Among these important life milestones, there are plenty of other aspects of “adulting” that are difficult to grasp and even harder to master, managing your own finances being a big one.
Depending on your upbringing and education, you may have a solid hold on financial management, no clue at all, or you might be somewhere in between.
While it would be helpful to have a headstart on these concepts, the reality is, most of us just have to figure it out as we go along.
Not to worry, though, in this post we’re clueing you into some important things to know about personal finance management, taxes, and investment. Read on to learn more.
1. Adjust Your Budget As Circumstances Change
Figuring out even the basics of budgeting can be incredibly hard to do. Learning to estimate your take-home income properly, anticipating monthly expenses, and determining how much you can spend, save, and invest are just a few of the things to figure out when you’re building a budget.
But on top of all of these important steps, there’s one thing to remember that you might not have realized: your budget isn’t set in stone, and it shouldn’t be!
Your budget should evolve as time goes by and life circumstances change. Now, that’s not to say you need to revise your budget each month, but it’s good to be aware of upcoming changes so that when you get a new job with better pay or get an increase notice on your rent, you can adjust your budget accordingly.
2. Establish An Emergency Fund Ahead Of Surprise Expenses
As you probably already know, life is full of surprises and some of them cost a pretty penny. Whether it’s an emergency car repair, visit to the doctor, or a couple of last-minute Christmas gifts that you didn’t budget for, there are plenty of things that can throw your finances out of whack with little to no warning at all. That’s where emergency funds come in.
An emergency fund is basically a savings that you reserve for emergency-only expenses like those mentioned above.
Financial experts recommend that individuals keep at least $1,000 in their emergency fund at all times, and more if they have financial dependents or other financial obligations to consider.
3. Keep Your Tax Records Handy
Taxes are another big part of adulting that few have the luxury of learning about before they’re faced with filing on their own.
Besides interpreting complicated tax code and understanding deductions and IRS instructions, there’s another key point that will make your life much easier as you continue to file your income taxes year after year: keep your records handy.
When you file your taxes, you’ll need to input information from the previous year’s return, which can be pretty difficult if you’ve misplaced your records. The good news is, there are a few ways to recover old records, such as your W2.
Here’s how to get old W2:
- Contact your employer to ask them to reissue your old W2
- Contact the IRS
A few other things to note here. If your employer issues paper W2’s, it may serve you to ask for a digital copy instead to make record-keeping more seamless.
On top of needing old information to file your current return, it’s important to remember that the IRS can request old records for up to six years after you filed.
4. Invest In Your Future Early On
You may or may not have heard this one over and over: set up a retirement plan early on! But the truth is, there’s no over-exaggerating the importance of establishing retirement savings ASAP.
Modern retirement can add up to millions of dollars if you want to retire comfortably, so it’s in your best interest to set up a 401k, IRA, or other type of retirement account while you still have a full career ahead of you.
Did any of these financial lessons or tips surprise you? Open up the conversation in the comment section below!