Financial decisions stick with you for much longer than you might think. Individuals who have been in the workforce for many years have hopefully built up an emergency fund of sorts and have some financial plan in place to protect what money they earned. Some of these people have had financial ups and downs and are financially smarter because of it.
What about people in their 20s and early 30s? Many of these people are recent college graduates who must now face the “real world” for the first time. Mom and Dad are no longer footing the bills and are now spectators. The combination of student loans and a poor job market create a tough situation for many individuals in this age range; however it may not be the time to succumb to debt and declare bankruptcy. It is the time to learn the importance of being financially responsible so you do not make any mistakes that will hurt you going forward.
Bankruptcy might be a prudent option for some individuals, but you need to speak with an experienced bankruptcy attorney in order to fully understand what is involved and what are the ramifications of personal bankruptcy.
Let us say that you are a 25 year old college graduate who has a job, but it is not the career that you are looking for and is more of a temporary solution. Here are a couple of tips on how to financially survive until you make it over the hump.
Budget, Budget, Budget
Keep track of everything you spend in a week or month. Compare that to your income. If there is more outflow than inflow of cash, that is a problem. Go through item by item and see where you can cut back. Start with a weekly budget and let that grow into a monthly and then later a quarterly budget. Take small steps first as you learn to spend only the amounts in the budget and resist the urge to stray from it.
Avoid New Debt
Student loans debt is more than enough debt for you. Adding credit card debt will quickly cause the situation to spiral out of control. There is almost always some credit card company willing to sign you up. Resist the urge to take what appears to be “easy money”. If you budget correctly, you should be able to pay for everything without having to use a credit card.
Live Within Your Means
This may be the root of all financial problems. There is always someone with more money than you. Trying to keep up with that person will financially ruin you. You may be used to a certain lifestyle afforded you in high school and college while on your parents payroll, but those days may change for the time being. Chances are your parents were frugal at your age which is why they were able to provide you with a high quality of life. If you want to be able to provide for your kids, tighten the belt.