Financial Tips for Young Adults

Starting down the road to independence can feel intimidating, especially when it comes to money. Be smart from the start with these financial tips.
young black man wearing a flannel and studying or working at a desk with a notebook and a cup of coffee.
Source: Pexels

Whether you’re a college student, newly minted graduate, or relatively fresh addition to the work world, finances are likely top of mind. If money management feels overwhelming, know you’re not alone: The Investopedia Financial Literacy Study found only 46% of Generation Z (ages 18 to 25) is confident about their financial understanding.

Luckily, many great resources—many a simple web search away—exist to help you feel financially on track. Learn how you can lay the groundwork now for a more secure and sustainable financial life.

Start with the Basics.

To build financial confidence, pick up the lingo. Boosting your financial literacy will not only strengthen decisions you make down the line, but help you resist bad money moves now.

The Financial Literacy Study indicates that Gen Z leans on technology to deepen their knowledge of all things money. Mix financial tips into your feeds by following One Big Happy Life, The Financial Diet, and Nate O’Brien on YouTube and @pariibafna, @pricelesstay, and @seth.godwin on TikTok. For a list of fundamentals, check out “The Ultimate Guide to Financial Literacy” by Investopedia.

And when you’re comfortable with the basics, start thinking about the long-term impact of your dollars. Read about socially responsible investing online via Athens Impact and Hansen's Advisory Services, Inc.

Racial justice through finance is a burgeoning topic with lots of resources from Adasina Social Capital. Green America's Guide to Socially Responsible Investing and Better Banking has articles for people from beginners to advanced on banking and investing topics.

Pick a Bank That Supports Your Values.

Steer clear of corporate mega-banks. Instead, seek out a nonprofit credit union or community investing bank, where you may find lower fees and more personalized customer service. According to NerdWallet, credit unions often boast better savings rates. They may also offer special account perks for students, like no minimum balance and no maintenance or overdraft fees.

Ditching mega-banks can also steer your money toward green solutions and communal good. While many conventional big banks propel environmental damage (for example, by supporting fossil-fuel expansion), credit unions and community investing banks pursue local impact by expanding economic opportunity.

Don’t Miss Out on Financial Aid.

Financial aid is awarded to more than 83% of first-year undergraduates enrolling for the first time, the Education Data Initiative reports. So, your chances are good! Complete the Free Application for Federal Student Aid (FAFSA) by the annual deadline to be considered for loans, which require repayment; grants, which don’t; and work-study eligibility. Apply for external scholarships and report previously satisfied course credit to save even more dough.

In Get a Financial Life: Personal Finance in Your Twenties and Thirties, author Beth Kobliner urges readers to “pay off…high-rate loans” with available savings before heavy accrual kicks in. Meet with your financial-aid provider to pick the appropriate payment plan for you.

Budget, Budget, Budget!

Keeping track of your assets and setting spending limits can feel daunting. “I try to budget, but it's hard to remember what my budgets are if I'm not constantly looking at them,” says Michelle Ott, a 24-year-old graduate student. The good news? There’s an app for that! Mint, Goodbudget, and similar software analyze money flow and visualize your budget (so you don’t have to).

A useful framework to follow is the 50-30-20 rule. To the best of your ability, commit about half of your post-tax earnings to “needs,” 30% (or less) to “wants,” and 20% to savings. Still, given sky-high rent and grocery costs, this method may feel more ideal than attainable for many. To set more young Americans up for financial success, systemic change is necessary.

For the most accurate read on your spending habits, CNBC finance correspondent Sharon Epperson suggests ditching money-transfer applications like PayPal and Venmo for a few months. Without blind spots on your transaction history, you can better determine how much you’re sinking into what.

Be a Smart Spender.

Honor the value of your dollars—and the planet—by saying no to waste. Did you know Americans collectively dispose of hundreds of thousands of dollars in food each year, per a Pennsylvania State University study?

Researchers found that a typical household’s food-waste rate hovers around 30%. Purchase only what you need and keep stock of perishables. Resist impulse buys that could also end up trashed later.

As for “must haves,” shop secondhand and look for student groups that help connect people with necessities. Drive down your community’s net waste and find reduced prices along the way. And don't forget to flash your student ID to claim student discounts.

Optimize your Credit.

According to the Financial Industry Regulatory Authority’s National Financial Capability Study, the majority of Americans don’t weigh options when obtaining a credit card. This is problematic, as selecting the right card takes effort.

Request bank recommendations, ask if student cards are available, and review everything from interest rates to spending thresholds on each.

Once you receive your card, sidestep interest by spending within your means and paying back what you owe monthly. You'll want to maintain a healthy credit score, too. To elevate your score, meet bill due dates (Kobliner endorses autopay) and—as Epperson recommends—cap spending at 10% of your credit limit, if you can.

Prepare for Emergencies.

Securing health insurance, Kobliner writes, “should be…your number one financial priority.” If a medical emergency hits, it could spare your savings.

To take financial security a step further, establish an emergency savings fund. Investopedia proposes stashing roughly “three to six months’ worth of expenses,” and Kobliner advocates for automatic savings plans.

Putting Your Financial Knowledge to Work.

Managing money effectively requires planning with intention, engaging institutions you trust, and asking questions as they arise. But while financial practices like budgeting and saving are critical, it's not realistic to expect to out-strategize a system built to benefit people with preexisting wealth.

From Green American Magazine Issue