Many young adults are facing rough financial seas, and working hard to overcome a down economy. College graduates may spend months searching for a job, while simultaneously trying to rent their first apartment, cover living expenses and chip away at credit card debt. Student loans may add to those obligations and create an overwhelming financial scenario for young adults just starting out.
Many young adults overburdened by their finances are unaware of the resources available to them. This can lead to stress, budgeting missteps and credit damage for those who are still learning how to manage their income. So it’s important that young adults know how to begin managing their obligations and when it’s time to seek financial assistance.
First, student loans should be a priority. Data from the Project on Student Loan Debt shows the average graduate owes $25,250 in college debt. Student loans recently surpassed credit card debt as the costliest balance most young adults carry. There are several programs that allow individuals to consolidate their loans and make their monthly payments more affordable.
Second, it’s also crucial to focus on chipping away at credit card debt. Credit card balances may cut into a young adult’s income and make it difficult to stick to a budget, maintain a solid credit history, or establish an adequate savings fund.
Individuals can juggle their financial obligations efficiently by first establishing a budget. A common mistake many adults make the first time they create a budget is failing to account for the little things. Gas, food and entertainment costs add up and may jeopardize their ability to stick to a disciplined spending plan. Budget calculators may paint young adults a more accurate picture of their finances.
Setting an initial budget, covering regular bills and paying off loans and credit card balances can be a sobering experience for young adults and recent graduates. It’s important to start off on the right foot by relying on all available resources, such as credit counseling services and financial professionals, to set a strict spending and repayment plan from the onset. The first years on their own are an important time for adults financially. Establishing strong credit, staying free of debt and building a healthy savings account can help them build a strong foundation and work toward financial independence.