A class titled “Finance for Young Adults” usually isn’t part of a high school curriculum—an unfortunate oversight that leaves many young people clueless about how to manage their money, apply for credit, and stay out of debt. Although some progress has been made—23 U.S. states required a personal finance course and 25 required an economics course for high school graduation in 2022—there are still large knowledge gaps in this age group.

Basic economic and financial education in high schools should help at least a segment of the next generation, but young adults in the crucial post-high school years also need to master core lessons about money. Learn more about how to start managing your money from the very beginning of your financial life.

Essential Finance Tips for Young Adults

The sooner you start learning to manage your money, the better your chance of financial success will be throughout your life. If you are just starting out, there are several steps you can take now to protect your financial health, start saving, and build wealth throughout your life.

Pay with cash, not credit

One of the most important ways to exercise self-control with your finances is also very simple. If you wait until you’ve saved the money for whatever it is you need, then you can put all everyday purchases on a debit card instead of a credit card. A debit card deducts the money from your checking account immediately (with no additional fees), but a credit card—unless you can afford to pay off the balance in full every month—is actually a high-interest loan.

Learn to Budget

There are two rules that every personal finance advisor keeps repeating. Never let your expenses exceed your income, and always keep your eye on where your money goes. The best way to do this is by budgeting and creating a personal spending plan to track the money you have coming in and the money you have going out.

Start an emergency fund

One of the most-repeated mantras in personal finance is “pay yourself first,” which means saving money for emergencies and for your future. This simple practice not only keeps you out of trouble financially, but it can also help you sleep better at night. Even on the tightest budget—no matter how much you owe in student loans or credit card debt, no matter how low your salary is—there are ways to put at least some of your money into an emergency fund every month.

The Bottom Line

Remember, you don’t need an MBA in finance or even specialized training to become an expert at managing your finances. Following these basic rules can put you on the path to financial security, which is the foundation that will allow you to build the rest of your dreams.

Originally posted by Investopedia adapted by IAA Credit Union