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Must-Have Financial Skills for Young Adults

June 12, 2024

Statistics show that young adults in the U.S. are sadly lacking in basic money skills. What happens when their turn comes to run things? It’s a sobering question. Evidently, parents and schools aren’t doing their job when it comes to raising kids with financial savvy.

Year after year, the annual survey taken for the T-I-A-A Institute Personal Finance Index shows low financial literacy for the 18-to-25 age group. A majority of these young adults consistently fail to demonstrate a working knowledge of financial concepts such as budgeting, saving, insurance, and investing.

That means tens of thousands of young adults are going off to college or joining the workforce today, without knowing how to manage their money, or how to avoid overspending, or even how to build a solid financial future for themselves.

In the past, learning to balance a checkbook and pay bills on time were part of financial training for kids and teenagers, but today, things look a lot different. Now we have online banking and instant digital transactions. It’s so easy to use credit and transfer money that many young people just live day to day without a plan— until they need a bailout from Mom or Dad!

The fact that young adults rarely handle cash also means they no longer have a physical connection to their money. When you don’t actually see and feel your money coming and going, you might not realize when it’s gone. This disconnect can lead to unintentional overspending and a lifetime of debt, not to mention a lack of motivation to save for the future.

So, if you’re a parent of teenagers, or a “Gen Z-er” just starting out, here are a few must-have financial skills and how to get them:

__The first “skill” is actually an** attitude. __ The Bible says God is the owner of everything, as in Psalm 24:1, “the earth is the Lord’s, and everything in it, the world, and all who live in it”. Understand that nothing really belongs to you, even yourself. You are a manager of God’s resources, which should change your perspective on money and material things.

__The number two financial skill you’ll need is planning. __“A dream without a plan is just a wish,” as they say. And wishes won’t buy you a house. The fundamental planning tool we recommend is a budget, otherwise known as a “spending plan”. A budget keeps track of your income, giving, and spending, and gives you a picture of your progress towards meeting your financial goals. Download the free FaithFi app to get one started.

__The next fundamental financial skill everyone needs is: work! __ Maybe your dad always told you that “Money Doesn’t Grow on trees!” Annoying as that was, it’s the truth. Employment is where your money comes from, not the oak tree in the yard. So, start at the bottom if you have to…work hard, and develop your resume! Earning can really build your financial confidence.

If you do have a job, make sure you keep it in perspective. Remember your identity comes from Jesus, not from what you do for a living.

In Colossians 3:23 and 24, we see the key to successful work: “Whatever you do, work at it with all your heart, as working for the Lord, not for men, since you know that you will receive an inheritance from the Lord as a reward. It is the Lord Christ you are serving.”

__The next skill is to open and manage a bank account. __Then, make sure you develop habits of giving and saving from every paycheck. Watching your balance increase will encourage you to stick to your plan. Keeping track of your bank balance will also help you understand your limits. You can’t spend what isn’t there.

The next skill will also help you understand your limits. Learn about credit. Don’t fall into the trap of believing that a credit card equals permission to spend all you want. Instead, keep track of your balances, pay them in full every month, and watch your credit score.

Another basic financial skill you’ll need is to understand investing…including types of investments, their risk, and potential return. Check out the great information at Sound Mind Investing.

__Finally, admit you don’t know it all…and learn where to go for solid financial advice. __As it says in Proverbs 15:22: Without counsel plans fail, but with many advisers they succeed. Visit faithfi.com and click on the “Community” tab to chat online about your money questions. Or, ask someone you trust, who knows about finances, to help you.

Now more than ever, young adults need financial skills to succeed in the “real world”. Our challenge to our bright and hopeful “Gen Z” generation is to pursue a firm faith and financial literacy.

As you aim to sharpen your financial skills, consider banking with a Biblically-aligned institution that shares your commitment to promoting the Gospel’s progress. Click below to become a member today!

Faith Fi is a biblically-based financial teaching and equipping organization that has served millions of faithful men and women through their website, mobile app, podcasts, and other resources. To learn more visit https://www.faithfi.com/

This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.

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