When young adults become fully responsible for their personal finances for the first time, they’re often in for a rude awakening. Financial literacy is rarely taught in school, and if their families didn’t discuss credit scores, taxes and interest rates as they were growing up, these newly-minted members of the “real world” can easily get themselves into debt and other financial trouble.
Most millennials are now in their 20s and 30s — the time when many people make major financial decisions, like home ownership and long-term investment strategies. If you’re part of this generation and feel undereducated about your finances, follow this advice from members of Forbes Finance Council.
1. Take online courses.
Given millennials’ propensity for technology, I would suggest they take a few courses in basic economics, accounting and capital markets from the likes of Coursera, Udemy or similar providers. The courses are affordable, well delivered and even fun. In my opinion, they constitute the most efficient way to get updated on whatever topics you are interested in, including finance. – Gabriel Grego, Quintessential Capital
2. List out your expenses.
Millennials are quite bright; they simply don’t have the experience. Right away, I recommend they make a list of everything they spend money on each month. Enlist their parents in this endeavor if possible. After the amounts are added up, they should ask themselves this question: How do I pay for all of this? This is the first step to improving financial literacy. – Amir Eyal, Mylestone Plans LLC
3. Investigate passive income opportunities.
Unfortunately, there is no proper financial education in schools, colleges or universities. Many parents fail in this area, as well. Most people work for money all their lives, however, it is possible to learn how the money that you earn can work for you so you eventually can replace your “job” income with passive income from your investments. – Dmitriy Fomichenko, Sense Financial Services LLC
4. Understand the impact of your credit score.
Millennials looking to become entrepreneurs need to understand that their personal credit might be the defining factor in their ability to access working capital. Getting approved for funding is challenging when the borrower’s credit score is low. It is important that they learn how to read a credit report, remain aware of their credit score and understand the factors that affect it. – Ben Gold, QuickBridge Funding
5. Talk to a trusted mentor.
There is a plethora of information available on the internet to support a self-help approach. However, picking the brain of someone you know and trust is far superior. Their most relevant insights are often tailored to your specific needs. Find someone who you could consider a mentor, and bounce questions or thoughts off of them. – Ross Garcia, PREI Capital Group & Divorce Mortgage Advisors
6. Track everything to get your whole financial picture.
There are four basic things everyone should know about their finances: income, expenses, assets and liabilities. Companies manage their cash flow, and individuals should, too. There are tools that connect your bank, credit card and other accounts to help you make sense of your finances — many of them free of charge. Mint, Quicken, Personal Capital are just some of the more popular ones. – Atish Davda, EquityZen
7. Start saving.
If millennials get into the habit of saving money, they will look for means to either invest or spend savings on something they always wanted. With today’s availability of information, and millennials being so used to Googling, they will start learning about various financial products. Also, they should not be afraid of making mistakes and losing some savings, as that will enrich their experience. – Deepak Kedia, Motorola Solutions Inc