Where Am I Going? Financial Literacy Tips for Young Adults
Have you ever tried to use a GPS without entering an address? Try typing “I don’t know where I want to go” in the Google Maps search bar. You will most likely get results saying something like, “No results found on Google Maps.” Apparently, a GPS requires a destination before it will give you directions.
Many young adults today feel directionless. Children used to follow in the footsteps of their parents, often joining a family trade or business. Maybe it was not always what they wanted to do, but at least they had a road map to success. In today’s world, slogans like “you do you,” “be true to yourself,” and “live your best life” make up the air young people breathe. When they go to college, they are encouraged to forge their own paths. After switching majors and changing jobs multiple times, however, many are still left wondering what they truly want.
This lack of direction combined with a widespread deficiency in financial literacy can pose a threat to young people’s financial futures, and it’s only natural they should struggle. Without a basic understanding of how to build healthy financial habits, we can’t take steps to success. Without a compelling vision for why we want to build those habits, we simply won’t take steps to success.
The good news is that we don’t need our whole life mapped out to be successful¾we just need to spend some time working on our “how” and “why.”
Learning How to Manage Your Finances
If you are a student or early in your career, you can prepare to accomplish future goals by practicing great financial hygiene. Just like brushing your teeth helps prevent cavities, practicing financial hygiene helps you avoid unmanageable credit card debt and other situations that might derail you on your financial journey.
Start by getting educated. Learn how to manage debt, save, invest, compare options in employer benefit and retirement plans, and weigh tradeoffs in financial decisions. Then build self-awareness by keeping track of your spending and debt habits. Finally, make a spending plan that includes regular saving and giving. You can start small just to form the habit and increase dollar amounts as you earn more.
Watch out for get-rich-quick schemes that promise effort-free rewards and instead look for reliable resources. At JMA, we emphasize money principles in the Bible that have stood the test of time and culture. These principles involve your heart as well as your bank account, challenging you to cultivate habits of generosity, stewardship, and long-term thinking.
Understanding Your "Why"
We are not only creatures of habit but also creatures of purpose. Goals with a solid “why” behind them provide motivation and direction to a financial plan. Many young people, however, struggle with goal setting. They often base their goals on impulsive desires and comparison on social media, or else fail to make time for goal setting because the next thing in a busy schedule seems more important than some far-off goal like “retirement.”
The most satisfying goals take time and are rooted in values. Instead of offering short-term gain, values-based goals bring your behavior into alignment with the kind of person you want to be.
To understand what you value, try turning off your phone and writing down what you’d want people to say at your funeral. While that might sound morbid, it can help you figure out what is most important to you. Once you know what you value, work backward from that and set smaller goals that will help you become the kind of person you want to be.
As you go through this process, realize that it is okay to set goals, unset them, and reset them. When reflecting on his financial journey in a survey about the financial habits of young people, one twenty-something observed: “It was only when I realized that goals can and must be flexible, as we are not machines, that I began finding freedom and discipline.”
Sitting on your hands won’t get you anywhere, but rigidly pursuing a goal just because you set it five years ago may very well get you somewhere you no longer want to go.
Money 101: Financial Management Lessons with JMA
As you take ownership of your finances, never hesitate to reach out to a qualified professional. At JMA, we offer Money 101 sessions where our financial advisors partner with you in developing your own financial “how” and “why.”
These money classes are generally one-on-one but also work in a group setting. Sessions are personalized but follow a basic structure:
- We start by getting to know the young adult and their financial baseline so we can tailor the discussion to their needs.
- After introducing our biblically-based six keys to financial success, we cover the tradeoffs of allocating income to different uses.
- We provide practical principles for debt management, spending, saving, giving, and taxes.
- After a conversational goal-setting and investment discussion, we top the session off by providing practical next steps.
Early career is the golden opportunity to work on your financial literacy, but it’s never too late to get back to basics with building a healthy relationship with your goals and money. Wherever you are on your financial journey, we’re here to help guide you along the way. Reach out to us at (505) 881-5100 for more information.