Paid Partnership: Respect My Region partnered with Freedom Debt Relief on this financial future feature. This article is intended for informational and editorial purposes only and should not be considered financial, legal, or credit advice. Financial situations vary by individual.
More and more young adults are becoming savvy about their financial future. Many young adults have come of age during periods of economic uncertainty, and this has made them realize that they are placing greater focus on budgeting, debt management, and long-term financial planning.
While major debt is often associated with older adults who have had time to get multiple loans and credit cards, there are also many young people, even as young as 18, who have a lot of debt.
By Paying Off Debts Sooner
While avoiding going into debt altogether isn’t easy, as loans are often required for paying for college, cars, and homes, young people are understanding that it’s best to pay off debts as soon as possible. As such, they are prioritizing this.
For young adults who have gotten themselves into a significant amount of debt while young, they are turning towards debt repayment plans to help stabilize their future. Debt consolidation from Freedom Debt Relief is one option some consumers explore when looking to simplify multiple debt payments into a single monthly payment structure.”
Some consumers use debt management or consolidation strategies as part of broader efforts to organize repayment plans and reduce financial stress.”
Boosting their Credit Scores
Many young adults recognize that credit history can influence future borrowing opportunities and lending terms. For example, when trying to find a mortgage. There are a few ways they are going about doing this:
- Student credit cards: Many students enrolled in colleges opt for student credit cards, as they require no credit history to get one. They then make regular payments to boost their rating over time.
- A credit builder loan: For young adults without a credit history yet, there are credit builder loans. It acts as forced savings, giving you the money back once the loan is fully paid off.
- Being added as an authorized user: Young adults will often ask their parents or guardians to add them as an authorized user to their credit report, which in turn boosts their own score. Some consumers use this strategy to begin establishing credit history earlier.
By Getting on the Property Ladder
While there is a lot of conversation about young adults not being able to afford homes, that doesn’t mean it isn’t happening altogether. In fact, many financially savvy young adults are purchasing lower-cost properties to get on the property ladder (and have somewhere to call their own).
There are a few ways they are managing this:
- Choosing a low-down-payment mortgage: This is one strategy some first-time buyers use when entering the housing market. Instead of having to have 20% of the cost, young people are turning towards mortgages that require a much lower down payment.
- FHA loans: Federal Housing Administration loans are popular with young people, as they tend to be first-time buyers. Eligibility for FHA loans depends on factors including credit history, lender requirements, and financial qualifications.
- Co-Buying: Young adults are now partnering up with someone they trust to buy a property together. Co-buying arrangements may increase purchasing flexibility for some buyers.
- Accepting a smaller place or less desirable area: Young adults know they likely cannot afford a huge house in their dream location (yet). So, they’re choosing smaller places in less desirable areas, so they are able to begin building homeownership experience earlier.
By Doing a Side Hustle
Young people have been brought up in a world where many people no longer have that traditional 9 am until 5 pm job with no other income. With the rise of financial advice on social media in particular, many young adults are exploring additional income streams alongside traditional employment.
As such, they take on side hustles. That might involve freelancing on the side, creating niche content for social media, or setting up an online store.
By Investing Early
Some people mistakenly assume they need at least a thousand dollars to start investing. Many young people are realizing this isn’t the case at all, and, as such, are starting to micro-invest.
This might involve using automated savings for buying fractional shares of stocks. While it might not build a lot of money quickly, starting young and investing more and more over time means long-term investing strategies may help some individuals gradually build savings over time.
By Getting Financially Educated
Finally, young adults are taking control of their finances by prioritizing education. They might not be able to save a bunch of money or buy a house yet, but they can learn.
The reason this has become more common is that there are tons of educational resources available, especially online. They might turn to:
- Social media financial influencers
- Financial online communities
- Finance podcasts
In this way, they gain exposure to different perspectives around budgeting, investing, debt management, and personal finance.
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Additional Disclosure:
Debt relief, debt consolidation, and financial products may not be appropriate for every consumer. Readers should carefully review terms, risks, fees, and eligibility requirements before making financial decisions.
