Finance for young people after 18 years

In Latin American countries, it is a constant that many of the children leave school to go to another country, particularly in the case of Venezuela, with which many “babies, who are not so much anymore” overnight they have to manage their personal finance alone.
For which they are not prepared and even less so now that they will no longer be under the continuous tutelage of their parents, experiencing their first financial blows.
Various studies show us that the majority of children turn to their parents for financial advice.
But not all parents with the best of intentions are prepared to offer financial advice to their children.

Much more so when it comes to an economy in another country that you may not be aware of, such as the United States, where in seconds you can run out of money.

The worst thing is that many young people would like to have a better education in finance.
A study conducted by Charles Schwab indicates that for every 3 young people, 2 consider that it is essential to be financially fit.

But when asked if they are, more than 82% say their finances are not good, and of those who have credit cards, two-thirds say they have trouble keeping them up to date.

So let’s share 7 finance tips used by the children of millionaires in the USA

1.- Live your finance as far as the blanket reaches you

It seems the easiest, but it is the most complex, most young people do not have a budget and do not even know how much they spend.

So if you don’t know how much you spend there is no way to know how far the blanket covers you.

Fortunately, everything has changed and there are apps as simple as “Mint” that allow them to synchronize their bank account and see how they are using their money.

2.- Do you already have an account in your name?

It is essential that one of the first steps your child takes in relation to your finance is to open a bank account in their name.

For which the “Bank Of America” student account could be a good option that does not charge a maintenance fee as long as you are under 24 years old and you are studying.

If you are not looking for a good Online bank that does not charge monthly fees and thus do not spend your money on “Commissions”.

3.- You need savings for emergencies

The main cause for financial crises in young people is that they do not have savings saved specifically for emergencies.

Therefore we suggest that you open a bank account apart from the one you use every day where you have a fund saved that covers at least 3 months of the equivalent of your monthly expense.

That money is what you will use for any unforeseen event you have and then of course you must replace it.

4.- There are good and bad debts

If your plan is to stay in the United States, you have to learn what the Credit Score is and how it is calculated, to see it very easily, it is like the grade you would have if someone was evaluating you to give you a loan and you are going to need it if you go to buy a home with a loan in the USA. Then you’re going to have to learn how to use credit cards. The rule is very easy, use them as if it were a debit card, that is, do not buy anything with money that you do not have, if you have the money, buy it with the card and before leaving the store pay the card. All this improves your Credit Score and for this we can suggest the Secure Card called “Discover It”, which is specially made to build your credit history and to use it you will have to leave a guarantee amount that can be $200 or $300.
Remember bad debt everything that is not to buy a house, because even the car debt is bad!

5.- Work?

Without neglecting your studies as much as you can, it is good that you begin to have experience in what it means to earn your own money and discover what everyone fears: taxes and their effect. Most millionaires send their children to work for others before running their own businesses just to learn the value of work.

6.- There is time for mistakes, dare

It is clear that it is easier to make a financial mistake at 18 than at 50 or 60, the implications when you are young are very small and rather in many cases they will serve as the best post-graduate degree you can afford. Being a good time for entrepreneurship and understanding how your small business is managed: income, expenses and what is left or profit.

7.- Take care of your finance save for your retirement

Every young person wants to have a wonderful financial future, and they really have the most powerful formula that can be had and it is called “Time”, that is why even if it sounds crazy to you or rather your parents have to force you, please start save for your retirement, even a little, the effect over time is extraordinary.

So what should you do:
a) Open a retirement investment account called ROTH IRA (your money will grow without paying taxes)
b) Do not invent in believing that you are going to hit the winning action go to a Robo-Advisor and open a diversified investment portfolio, you can start from $1, you can even program to save the change or change of each purchase you make in stores.
c) Then when the account grows over time, finances become more complicated and that is where you hire a financial advisor to help you achieve greater financial well-being.

I wish many of us had had the opportunity to take advantage of these tips when we were young, but you already have the recipe, it only remains for you and your parents to implement it. We wish you the greatest success!

Alonso Rodriguez Segarra CFP®
CEO & Founder Advise Financial
Specialized in the Financial Well-being of the Latino family.

Note: The mentions of service providers are merely referential, being able to change their conditions at any time, in no way Advise Financial or its collaborators receive any compensation from them. Always consult your financial advisor.