text: In 2024, 35 U.S. states required a personal finance course and 28 required an economics course for high school graduation, up from 23 and 25, respectively, in 2022. While these numbers represent progress, there are still knowledge gaps for young adults to learn how to manage money, apply for credit, and stay out of debt.
  - Taking the time to learn a few basic financial rules can help you build a healthy financial future.
  - Start an emergency fund and pay yourself every month.
  - Saving for retirement is an integral part of any financial plan, and your nest egg can grow with the power of compound interest.
  1. Pay With Cash, Not Credit
  Exercise patience and self-control with your finances. If you wait and save money for what you need, you will pay with cash or a debit card to deduct money directly from your checking account and avoid using a credit card.
  A credit card is a loan that accumulates interest unless you can afford to pay off the balance in full every month. Credit cards can help you build a good credit score, but you should use them for emergencies only.
  2. Educate Yourself
  Take charge of your financial future and read a few basic books on personal finance. Once armed with knowledge, don’t let anyone take you off track, whether a significant other who encourages you to waste money or friends who plan expensive trips and events you can't afford. Research professionals like financial planners, mortgage lenders, or accountants before utilizing their services.
  3. Learn to Budget
  Once you’ve read a few personal finance books, you will understand two rules. Never let your expenses exceed your income, and watch where your money goes. The best way to follow these rules is by budgeting and creating a personal spending plan to track the money coming in and going out.
  Tracking expenses, like your expensive morning coffee, can provide a valuable wake-up call. Small changes in your everyday expenses are under your control and can impact your financial situation. Keeping monthly expenses, like rent, as low as possible can save you money over time and put you in a position to invest in your own home sooner rather than later.
  4. Start an Emergency Fund
  A mantra in personal finance is “pay yourself first,” which means saving money for emergencies and your future. This simple practice can keep you out of trouble financially and help you sleep better at night. Even those on the tightest budget should put some money into an emergency fund every month.
  Once you get into the habit of saving money, you will stop treating savings as optional and start treating it as a required monthly expense. Many accounts offer the power of compound interest, such as a high-yield savings account, a short-term certificate of deposit (CD), or a money market account.
  5. Save for Retirement Now
  No matter how young you are, plan for your retirement now. With the power of compound interest, when you start saving in your 20s, you will earn interest not only on the principal you deposit but also on the interest you earn over time, and you will have what you need to retire someday.
  Company-sponsored retirement plans are a great choice. Not only do you get to put in pretax dollars, but many companies will also match part of your contribution, which is free money. Contribution limits tend to be higher for 401(k)s than for individual retirement accounts (IRAs), but both are one step closer to financial health.
  Power of Compound Interest
  If you invest $200 a month, averaging a positive return of 9% annually over 40 years, you will save $856,214 for retirement.
  6. Monitor Your Taxes
  When a company offers you a starting salary, calculate whether that salary after taxes meets your financial needs and savings goals. Many online calculators help you see your after-tax salary, such as PaycheckCity.com, and chart your gross pay (total earnings) and net pay (earnings after taxes and other deductions, or take-home pay). In 2024, an annual salary of $43,000 in New York netted $34,549 after federal and state taxes; about $2,879 per month.
  In the U.S., low-income earners are taxed at a lower rate than higher-income earners—the higher your salary, the higher the tax rate. A salary increase from $43,000 to $49,000 a year looks like an extra $6,000 per year or $500 per month, but the tax rate will be higher, so it will only give you $4,469, or $372 per month.
  7. Guard Your Health
  If you’re uninsured, don’t wait to apply for health insurance. If employed, your employer may offer health insurance, including high-deductible health plans that save on premiums and qualify you for a Health Savings Account (HSA). If you’re under the age of 26, you may be able to stay on your parent’s health insurance, an option that has been allowed since the 2010 passage of the Affordable Care Act (ACA).
  If you need to buy insurance, investigate the federal and state plans offered by the Health Insurance Marketplace of the ACA. Look at quotes from different insurance providers to find the lowest rates. Research all your options to see if you qualify for a subsidy based on your income.
  8. Protect Your Wealth
  If you rent, get renter's insurance to protect the contents of your home from loss due to burglary or fire. Read the policy carefully to see what’s covered and what isn’t. Disability insurance protects your ability to earn an income by providing you with a steady income if you are unable to work for an extended period due to illness or injury.
  If you want help managing your money, find a fee-only financial planner to provide unbiased advice. Unlike a commission-based financial advisor, who earns money when you sign up with the investments their company markets, a fee-only planner can provide advice that's in your best interest.
  How Do I Choose a Financial Advisor?
  An excellent choice for a young adult is a fee-only financial planner. Unlike a commission-based advisor, who earns a commission if they sign you up with their company's investment plans, a fee-only planner has no personal incentive beyond your best interest, so they have no reason not to give you unbiased advice.
  Why Is Compound Interest So Powerful?
  Compound interest is one of the most powerful forces in finance because it grows your money exponentially, which means it can supercharge your savings over time. You earn interest on your principal and on the interest you earn.
  Why Did My Paycheck Shrink After My Raise?
  The higher your salary, the higher your tax rate. If you just got a raise or took a new job at a higher salary, the change in the marginal tax rate on the additional income will affect your paycheck. For example, if a salary increase of $6,000 per year bumps you up into a higher tax bracket, the percentage of your income that goes to taxes bumps up as well—which will make your paycheck smaller than expected.
  The Bottom Line
  You don’t need an MBA in finance or specialized training to become an expert at managing your finances. By following these eight tips, you will be on the path to financial security.