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The Financial Lessons All Working Adults Need to Know

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Congratulations! You've entered the world of work and you're ready to start seeking out your own sense of financial independence.

The only problem is, no-one ever taught you how difficult it really is to manage money. Despite all the lessons that we get at school about things like biology, math and English, there isn't a lot of education out there when it comes to maintaining and achieving financial stability.

The good news is that why entering the world of personal finance can be scary - there are things you can do to put yourself in a good position, so you're ready to take on the challenges that lie ahead of you. Here are a few lessons that you'll need to learn as you enter the working world.

  1. Goals are Crucial to Success

Keeping your eye on the prize almost always makes it easier to achieve your goals. When the going gets tough, a vision of what you want to achieve with your finances will push you to stay on track and stop you from veering off course. As soon as you start earning a regular income, ask yourself what you want to do with the money that you're not going to be spending on things like food and bills.

For most people, this will mean planning for retirement, saving up for a new home, or just looking for a way that they can invest their cash. Whatever you do, make sure that your targets are specific, memorable, achievable, realistic, and time-bound.

  1. The Faster You Start Saving, the Better

When it comes to savings, it's tempting to tell yourself that you're going to spend all the money you earn for the first year of your employment on stuff for you, then come back to your goals in the long term. However, the truth is that the quicker you can get started, the better off you'll be. First of all, you never know if you're going to end up losing your job for one reason or another.

Secondly, when you start saving early, you can place money into an account that allows you to build up compound interest. The more your money grows, the more it will start to deliver benefits. Time is crucial when it comes to developing a strong nest egg.

  1. Always Have a Budget

Budgeting isn't everyone's idea of fun, but it's one of the best things you can do for your financial future. When you have a budget, it pushes you to be more frugal and considerate when you start spending money. For instance, you'll realize that taking out a loan doesn't just mean accepting the first offer you get but looking for something that comes with a low-interest rate so you can afford your other necessary expenses each month. Take the time to look into all lenders and make sure you choose someone reputable. HappyPenguin.com is a good example.

To start developing your budget, all you need to do is figure out how much money you have coming in each month and how much you have going out. If you can keep the amount you spend below the amount you earn, and have something left over for savings, you're on the right track.

  1. Put Savings on Autopilot

When the going gets tough, it's easy to tell yourself that your savings can wait. After all, we often prefer to do things in the now, rather than waiting for the things we do to pay off in the future. However, your savings are crucial to your long-term financial freedom. With that in mind, set up an automated payment that comes out of your current account every month and goes into a separate savings account. Generally, it's best to save around 20% of your income after tax as a minimum.

You can always save extra money if you have it, or you can choose to spend that money on the items that you want, rather than just the things you need. It's totally up to you. If you get a raise, however, think about putting more cash towards your savings.

  1. Be Realistic with your First House

A lot of people get carried away with their financial goals when they first get a paying job. One of the main things you're likely to go "over the top" on, is buying a house that you simply can't afford. A huge mortgage payment can be dangerous to you and your savings. You'll need to think carefully about what you need out of a home, and what you can afford to put aside in mortgage payments and extra expenses.

If you do have extra money to splash on a house, think about making a bigger down payment if you can. The larger your down payment is, the less you'll need to finance overall.

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