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Fintech tips for young adults

How many people have you met in their 30s or 40s who are still digging themselves out from poor financial choices during their 20s?

Your late teens and early 20s are an age where you feel wedged between childhood and adulthood. You’re financially independent for the first time, but you don’t have the experience to fully appreciate how financial mistakes made when you’re 21 can follow you for years — or even decades.

Everyone’s 20s are a gift, but they’re also the most financially vulnerable years of your life. You haven’t made much money yet, you don’t have much of a credit history, and you haven’t yet had the time or freedom to build good financial habits. But you can change all that by taking advantage of some of the financial products available to your generation that even those in their late 20s right now didn’t have. Let’s explore some of the tools that can help you extend the freedom of your young adult years into full-on adulthood later.

Use Budgeting Apps to Set Good Habits Now

The average 20-to-24-year-old makes around $30k a year when working full-time. It feels like a lot more than your summer job in high school, but it is by no means a lot of money, particularly when you have bills to pay. And if you can learn to budget on roughly $2,000 a month, then you’ll do much better when you’re further along in your career.

Today’s budgeting apps are a far cry from your parent’s attempts to balance their chequebooks. Personal finance apps like You Need a Budget (YNAB) and Mint sync with your bank account to offer real-time updates, so you don’t need to wonder where all your money went at the end of the month. The budgeting tools available allow you to customize them to your needs both now and as they change later.

These apps can help you better understand the primary concepts of money (i.e., how much things cost versus what you have) to help you avoid high-interest revolving debt and set up an emergency fund.

Start Thinking About Financial Planning Now

You just started working, so why worry about retirement? The first reason is that when you’re young, you have time on your side. Even if you are still 20 years away from peak earnings, every dollar you put away now benefits from compounded interest.

Get the job started with basic estate planning. You may not have much in terms of assets now, but even setting up documents like a Durable Power of Attorney and an Advanced Care Directive are smart things to do once you turn 18 and your parents can no longer make decisions on your behalf.

The best part is that beyond basic estate planning documents, the world of financial planning is much more accessible for you than it ever was for your parents. The world of fintech has not only opened up opportunities for virtual currency, but it also offers opportunities like robo-trading, which allows you to grow your wealth with tools like Roth IRAs or money market accounts automatically each week without hiring a financial advisor. For example, Acorns will make regular withdrawals from your checking account and invest them in the stock market according to your preferences. You can even use the roundups feature to ‘round-up’ each purchase to the next dollar and invest your spare change — or bury acorns for the future if you will.

All of these tools make saving painless, even when you’re not proactively saving for retirement yet.

Use Grants and Tax Credits to Fund Your Purchases

Your parents got an education, their first house, and their first kid on their starter salary. You won’t. It’s not fair, but you can still some of those things if you get creative.

Investing in green legacy purchases, like electric cars or renewable energy projects for a home, allows you to enjoy some great tax credits and grants to help pay off some of those purchases. For example, did you know that if you buy a hybrid or electric vehicle, then you can apply for the Alternative Motor Vehicle Credit or the Qualified Plug-in Electric Drive Motor Vehicle Tax credit? These credits mean that you can invest in a vehicle that’s good for the future of the planet and get a generous tax credit to help you pay for the car.

As the government puts greater emphasis on renewable energy and the reduction of carbon footprints through national policies, you can expect these tax credits to grow and make your purchase even more affordable.

You Have Help to Make Smart Financial Decisions

Unlike previous generations, today’s 21-year-old can’t buy a house, car, and college education on a middle-class salary. These harsh realities mean that you need to be smarter with your money than your parents were. Fortunately, you have help.

The world of fintech is making it easier for people of all ages, educational backgrounds, and incomes to access the tools they need to make informed decisions about their finances. From budgeting apps to robo investors to grants available for those willing to ‘go green,’ there are options out there to make your financial life simpler in at least one way.

You can’t do much about the price of living or the cost of education, but you can have more information than before to make the best decisions possible. And that’s more valuable than you think.

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