Fiscally preparing for the future is the main way for young adults to manage their finances, according to financial planners.”College students have to have a plan in some capacity,” said Mark LaSpisa, certified financial planner for Vermillion Financial Advisors.
“Most money problems are a result of low self-esteem and we tend to use money to make us feel good by replacing something,” he said. “The higher the self-esteem a person has can highly reduce their chances of having money problems.” Cutting back on luxury spending, using a debit card to get cash instead of going to the ATM, and talking less on cellular phones were some of the tips given in “6 Surefire Ways to Stretch Your Paycheck,” a recent article in March 2005 edition of Essence magazine.
LaSpisa said young people get caught up on buying items or services they cannot afford. “College students make poor decisions and are overly confident on what things may seem to be. If it is too good to be true, then it generally is.”
Major credit card companies try to devour young adults in debt beginning at 18. Different advertisement techniques and free gifts often lure young adults to sign up for credit cards.”They [college students] think it’s free money,” LaSpisa said. “At some point and time, you have to pay them back.”
Often times, he said, the first credit card purchase is a car that they cannot afford. “Purchases like these start off as a bad decision that sometimes has a domino effect,” LaSpisa said.
According to LaSpisa, there are still people that have been out of college for at least 10 years and are still paying for their financial mistakes today.LaSpisa said a good consumer should do research before making a major purchase and feels college students and young adults should begin on the right path to preparing for the future.
“Expect the unexpected,” LaSpisa said. “There is going to be a major financial expenditure that you will not expect and that is why you need a buffer; when you set up a budget, you will always have money for the unexpected.”