Necessary finance tips for young adults

1. Understand the basics

Financial services often seem really complicated, but it’s not hard for you to understand the basics for all financial services that you buy. Otherwise, you could get a nasty surprise if something goes wrong.

Before you sign on the dotted line, make sure you understand the basics of:

* What you have promised to do (eg make regular payments).
* What the company has promised to do (eg provide a loan, or cover a loss).
* Whether there are any exceptions or qualifications to these promises (eg an insurer may not have to pay your car insurance claim if you had been drinking when the accident occurred).
* What you should do if something goes wrong.

Don’t be afraid or embarrassed to ask questions. Sometimes it can be awkward, but a good salesperson should give you enough time and information so that you can understand the product. You can also ask to take the documents away, so that you have time to read them and get advice.

Don’t be pressured into signing something that you don’t understand. You could regret it later.

2. Hold onto your paperwork

Anything to do with money often involves lots of paperwork – account statements, contracts, policy documents, terms and conditions and more.

If you’re tempted to throw all this paperwork in the bin – stop! Even if you don’t read it all straight away, get into the habit of keeping the important paperwork in a special file that’s easily accessible. It will come in handy if you have a question or problem about your financial affairs.

You should also get into the habit of keeping notes from any important telephone calls you have with your finance institution. Again, they might help if you have a complaint.

Your notes don’t need to be fancy, but it’s important to record basic information such as the name of the person you spoke to, the date and time, and an outline of what was said. Keep this with all your other paperwork.

3. Reduce your costs

Some form of savings or transaction account is almost a necessity these days. But don’t be complacent about your account – there are ways that you can reduce the costs.

For example, if you are a student or a recent graduate, you may be able to get a fee-free account. Ask your institution if they have one.

But what if you are not eligible for a fee-free account? You can still reduce your costs by changing how you bank. For example, it’s often cheaper to use Internet banking than to visit a branch. But first, you’ll need to understand how and when fees are charged on your account. Ask your institution to tell you about the main fees and charges, and whether you are entitled to a certain number of free transactions. You can use this information to help you develop cheaper banking habits.

4. Minimise the risk of unauthorised transactions – keep your PIN secret

Many complaints about unauthorised transactions are made each year. The best way to protect yourself from someone accessing the money in your account is to keep your PIN and/or password secret! Don’t tell anyone your PIN or password – this includes your friends and family. Also, don’t keep a copy of your PIN or password near your card, or on your computer (unless it’s password protected).

Many institutions will let you choose your own PIN or password, and this can help you remember it. But, be careful with what you choose – don’t make it so easy to remember that it will also be easy for a thief to guess.

5. Be very careful with direct debits

Direct debits can be a great way of making sure that the necessities of life – like your bills and rent – are paid on time. But make sure you know how to cancel a direct debit if you need to. For example, if you change your phone company.

To cancel a direct debit, you should tell both your institution and the company making the direct debit (eg the phone or electricity company). Writing a short letter is often best. Keep a copy of the letter, and if problems arise, contact your institution straight away.

Also, make sure you have enough money in your account to cover a direct debit. If there is not enough, you might have to pay an expensive overdraw fee.

Personal finance tips

1. Pay yourself first. Whether it’s through your employer-sponsored 401(k), an individual retirement account, or passbook savings account, sock away at least 10 percent of your income for you. After all, you don’t work just to pay bills; it just feels that way a lot of the time.

2. Save three to six months of worth of income for emergencies. And don’t touch it unless it’s really an emergency. Saving for a vacation or new wardrobe do not constitute emergencies. You never know when you could lose your job, become disabled or sick, or have a major medical or family emergency.

3. Take advantage of your employer-sponsored 401(k) plan. Contribute at least as much as your employer will match, which is typically between 3 and 10 percent. Consult your the human resources department at your work for details on how that particular 401(k) plan works.

4. Pay off credit cards with the highest interest rate first. Obviously, there’s no sense in paying off a 12 percent card before a 15 percent card. Make minimum payments on the 12 percent card until the one with the 15 percent rate is paid off.

5. Come up with a budget and stick to it. You can use a computer program or just pen and paper. But do it. Figure out your income and expenses and what you have left over to spend as you wish.

6. If you have trouble determining where your money goes, particularly cash, then keep a spending journal. Document every expenditure for at least a two-week period. This will help you in coming up with a budget as well.

Create Your Own Business Cards in 15 Minutes

In Staples stores you can now design a business card and print out a supply in about a half hour. It’s called Business Cards in Minutes. I saw it in action when I was out in San Diego a few weeks back.

I was speaking at an HP marketing workshop held in a local Staples store there. Some of us arrived early and to kill time we wandered around the store. One of the people, Noelle, pointed out the terminal and said, “Need some business cards? You can get some before you leave today.” I thought she was kidding, but she sat right down at the terminal and started working on a business card.

Business Cards in Minutes consists of a special computer kiosk provided by Logoworks by HP, where you can design a business card on the spot. You can then get the cards printed right there at the print center inside the Staples store. Here is the photo we took of the kiosk while Noelle was in the midst of creating a business card: Read the rest of this entry »