Today, younger adults face a variety of challenges in their pursuit of financial independence. Some of these challenges are similar to those faced by previous generations, while others are unique to the times. Here are five financial tips to help you manage your personal finances and prepare for your future:

1) Invest in your future. Rapidly changing technology used in various fields may require continuing education. You may wish to make ongoing education a priority to enhance your skills and increase your professional potential. The more varied and flexible your skills, the more you will have to offer to prospective employers.

2) Open an emergency savings account. The uncertainty of the workplace may mean that your professional life will be interrupted by career changes. If you need to return to school to change career paths, you may experience periods of time without steady income. Creating an emergency fund to cover at least six months’ worth of living expenses can help you manage work-related transitions. This savings fund may also be used for other endeavors, such as starting your own business.

3) Save early and continuously for retirement. Saving for retirement is your responsibility. The more disciplined and diligent you are, the better off you may be. Social Security provides only a base level of income, and many employers no longer offer traditional pension plans. With employer-sponsored 401(k) plans,the responsibility of saving rests on your shoulders. Although you may be years away from retirement, the key is to make time and compound interest your allies.

4) Let retirement funds accumulate. If you change jobs early or often, while you may be permitted to leave your account with your former employer, you may also consider rolling over your employer-sponsored retirement plan funds into an Individual Retirement Account (IRA) or new company retirement plan. It may be tempting to cash in the account, especially if you have accumulated only a small amount, but doing so would make it immediately taxable, and you may also incur an early withdrawal tax penalty. Perhaps a greater concern, however, is that you may be unable to make up for time already spent to accrue these savings.

5) Use credit wisely. Credit card companies frequently target young adults with the lure of “easy money.” While credit cards offer convenience (it is virtually impossible to conduct some transactions, such as reserving airline tickets, without one), they also have the potential to create debt problems. Because payments can be extended far into the future, overspending on credit can create an illusion of wealth. Paying off the full balance each month is the best way to manage your use of credit.

Plan Now for the Future

Remember, the funds you accumulate during your working years may be your primary source of retirement income. Although inflation can erode your savings over time, a little discipline and common sense may help you better manage your current and future personal finances.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

This article was prepared by Liberty Publishing, Inc.

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