“Adulting” isn’t a real word, but the concept of behaving like a responsible adult is certainly something people who are, well, adults must commit to, especially when it comes to money.
If you’re on social media, you may have noticed that adulting is often discussed as an optional choice. “I don’t feel like adulting today” isn’t uncommon. But the problem with this attitude is that many who are also millennials are financially illiterate.
If you don’t feel compelled by the idea of being a grown-up who is responsible financially — and otherwise, how could you handle your financial matters successfully. Your money is not going to manage itself, so if you don’t become responsible for it, you’re likely to end up in major trouble. Here are four signs that your financial adulting is lacking.
You don’t have a budget
You may say that something falls within your budget or isn’t in your budget, but you actually never built a budget. You use the word loosely to refer to what you think is affordable. That is not financial planning. Your perception of what is affordable is probably influenced by how much cash you have on hand today and your perception of a certain item’s importance and value.
Here is an example: you just paid off your credit cards and bills, and you have a good balance in your bank early in the month, you are more likely to splurge on a present for your friend’s birthday. When you have a budget, you know how much you can afford — with a top ceiling. The two situations are different.
You save to spend
Your savings are purposeless. There is no real line between what you save and what you spend. Your checking (payroll) account and your savings account are both at your fingertips and you’re spending casually from both.
To have a proper savings plan, you must have a goal for your savings and place them in the best investment vehicle — even if it is a savings account. You must not be accessing these savings casually for day-to-day needs. Plus, you should have clear channels for savings that go into an emergency fund versus those that go for your retirement, long-term investments and children’s education.
You are turned off by jargon
You don’t think you need to read before your sign, or know before you owe. When you take a new credit card, a loan or even open a bank account, you just accept the terms and conditions to get started. Does anyone actually read terms and conditions? The short answer is probably, “no.” But you must be aware of a few points, like penalties, interest rates, and fees.
This awareness won’t only help you avoid hefty costs, it also guides you to products that better fit your needs. Develop a higher tolerance of jargon and research your options before signing on the dotted line, especially when major costs are on the line.
You’ve no clue of your spending
How much do you pay for utilities? What is your average phone bill? What is the share of dining out in your expenditure? If you don’t know or can’t even estimate any of the spending categories, you’re just living day to day with little knowledge of where your money is going.
Could this be a problem if you’re not falling behind? Yes, because all of these items could change and your income could change as well. And when this happens, it could take you a lot of hard work to figure out why you’re struggling financially.
Keeping track of your spending also can help you spot better bargains. For example, if you know that a big — and growing — chunk of your spending is going on car repairs, you might be able to consider the savings that a newer car under warranty might provide.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Be an adult — financially
Learn how to set a budget — a real budget
Have goals for your savings and don’t dip into them
Learn basic financial terms and concepts
Monitor and track your spending
— R.O.
