As young people leave their childhood homes for college, the workplace, and beyond, they are finding that some of the largest changes they must face center around financial management. For many, the decisions required for a fiscally responsible lifestyle can be a source of stress or even catastrophe if not handled appropriately. For those who are seeking help in managing the financial aspects of their adult lives, investment professional Chris Linkas has assistance to provide. Read on for a look at his advice for young people who are struggling with the fiscal burden of being independent.
Post-Collegiate Background
With an extensive foundation of experience in the credit industry as well as the field of investment, Chris Linkas is a great source of knowledge on finance in general. But one thing he has special insight on is the process of navigating financially difficult circumstances when entering adult life. This is due to the economic situations that abounded as he first made his way into the world after graduation.
After earning his degree from Bowdoin College in 1991, Chris found that he was graduating directly into a recession of large proportions. The economic downturn, fueled in part by the savings and loan crisis, posed a challenge to many college graduates at that time. Securing work could be difficult and many found it difficult to navigate the high levels of competition that abounded. But these extenuating economic circumstances helped to sharpen Linkas’ financial sensibilities and he was soon able to find work at a consulting firm. Later he was able to turn that start into a career in credit and real estate investing. It is precisely those experiences when starting out that have motivated him to share some of his fundamental learnings on financial management and how they apply to young people today.
Be Financially Literate
One of Chris’ biggest recommendations is the importance of getting a firm hold of your ability to understand financial information. The world is awash in financial products, from loans, to credit cards, to leases, and in order to navigate them while avoiding ruin, you must know how they work. Of course, no one learns this information overnight, and like most things in life, it’s best to start small and work your way up.
To this end, a good way to start in on improving your financial literacy is to get a firm grasp of the finances you already have. This means tracking the money coming into your bank account as well as the money that is leaving. It’s easy for a newly independent person to see the world of products available for purchase and let their spending run away from them. A key element to avoiding this is to keep purchases conservative at first, from apartments to food to entertainment, make sure whatever you’re spending is less than what you’re making. Related to this, approach credit cards with caution, as this type of spending can easily get out of hand and can be costly to repair.
Avoid Keeping Up With Peers
In line with the above advice, Linkas recommends trying to cultivate an attitude of satisfaction with the things that are within one’s means. He’s seen many people meet with financial hardship by trying to match their spending with those of their peers. This can be disastrous for many reasons, especially if your peers have a larger income than you or have money they receive from other sources besides employment alone.
While it is easy to see a friend with a flashy new car or dazzling new clothes and covet those luxuries for yourself, remember that these types of material possessions will not bring happiness, especially if they come with the stress of overspending. It’s also worth noting that just because you see a friend with an expensive possession, it doesn’t mean that they can afford it themselves. Those items may have been purchased on credit and they could be laying the groundwork for financial hardship in your friend’s future. To avoid such a fate, only spend money on things that make sense for your own financial situation, regardless of how your friends spend their own resources.
Read Up On Investing
According to Chris, setting money aside for investment is one of the smartest financial decisions a young person can make. Whether that money goes towards a retirement account such as an IRA or a 401k or goes to an appreciating asset such as a house, this type of financial planning is the mark of someone who is focused on their own future. Even a small amount of money set aside in the present can pay big dividends down the line by the annual compounding that is typical of many investment vehicles.
Of course, like other aspects of financial planning, it’s important to only invest capital you can afford to part with. It does you no good to take your rent money and put it into stocks as you’ll soon find yourself out on the street. Additionally, it’s important to properly research possible investments and seek qualified advice before putting money towards a specific endeavor. Many people confuse investing with speculation. Taking one’s hard earned money and putting it towards a volatile commodity can often be akin to gambling. Linkas recommends consulting a financial planner or someone else with a background in investing in order to help guide your decisions. For a longer-term approach, consider taking classes in the subject to gain the ability to make investment decisions on your own that will instill you with confidence.
While there are many financial concerns that can arise as young people take their first steps into the independence of adulthood, none of them are insurmountable. With a solid grasp of fundamentals such as budgeting, debt avoidance, and investing, anyone can put themselves in a financial situation that will make them feel at ease with how they spend their money. With the above advice from Chris Linkas available as a jumping off point, those looking to further improve their financial prowess will find their efforts rewarded many times over.
