5 Financial Tips for When You Turn 18

Financial Advice Student


3 min. read

By: FCU Team

Turning 18 is a huge milestone! There’s probably a lot on your mind right now: high school graduation, decisions about whether or not to go to college and becoming an adult in the eyes of society. You’re likely not thinking too much about money and financial independence. Everyone’s situations are different, but here are a few financial tips on things to start thinking about or habits to develop early.

Financial Habits to Develop Early

1. Building Your Credit Score

You may have heard your parents or friends talk about credit scores, but do you know what they are and what they mean? A credit score is a number, usually between 300 and 850, that determines your creditworthiness, or how trustworthy you look to lenders at financial institutions. Simply put, it tells lenders how likely you are to pay a loan. A credit score is made up of a variety of sources and will inform the kinds of loans you can get and the terms associated, like the length of the loan and the interest rate. The higher the score, the more beneficial the terms will be to you.

Knowing the impact a credit score can have for taking out loans as well as understanding other factors which positively and negatively affect your score will help ensure you’re making smart money choices early.

Florida Credit Union offers members with online banking free access to their FICO® credit score. A FCU member can view monthly updates to their score, as well as review two key score factors influencing the score they currently see. Taking steps to address these key score factors may lead to a higher score.

2. Creating Budgets and Building Savings

Budgets help make sure you’re spending as much or as little money as you determine to be appropriate based on a careful study of your needs. You’ll want to start by looking at your monthly income (the amount of money you have coming in) and your general expenses. The latter is more difficult to figure out, as you can have many expenses, like rent, food, gas, etc.

This initial analysis will reveal how much money you have leftover each month, if any! If you’re in the red each month, meaning you’re spending more than you’re making, you’ll definitely know you need to make a change in the way you’re handling money. You can do this by cutting out unneeded expenses, such as subscription services or gym memberships, or reducing the amount spent on certain categories like eating out. If you’re ending each month with some money left over, your budget can also include areas where this additional money could go, including a savings fund or other designated goal, such as paying for debts.

Even if you don’t have a large income or many expenses, starting small can be beneficial as the level of budget complexity may increase as you get older. You can read about four helpful budgeting methods here. Find the one you think would work best, and give it a try!

3. Retirement

While you may scoff at the prospect of retiring when you’ve barely entered adulthood, it’s still important to think about! Reflect on the lifestyle you have now and the lifestyle you’d like to have in 10-20 years. You have general expenses like food and a place to live. Beyond that, you may have a few loans in the future, like a mortgage. You’ll also have your leisure activities you may want to pursue, like travel and hobbies.

Many seniors who reach retirement age come to find that their social security is not enough to pay for basic expenses. How do you intend to pay for those expenses and continue to have the lifestyle you imagine for yourself if you don’t have enough money. This is why supplementing your social security with investments, retirement accounts and ample savings may save the future you from financial struggles. Never underestimate the impact of investing early!

4. Taxes

Everyone’s experiences with taxes may be very different when they turn 18. Some folks work from early in their lives and have experience with income taxes, while others will not have worked and exist solely as codependents on their parents’ taxes every year. Regardless of where you are on the spectrum, you should know about when taxes are due every year (April 15!), the general filing process and their importance. 

5. Establish Your Financial Goals Early

As with many skills in life, financial planning is something you’ll be better at the earlier you start. This is why you should set some financial goals early, as well as reasons to accomplish those goals. If you want to travel the world in the next few years, creating a budget and a savings fund dedicated to that goal is a great way to teach yourself discipline and money management. The same applies for other goals, like wanting to own a home. Budgeting, saving, maintaining a healthy credit score and educating yourself on mortgage loans is essential.

Whatever your goals, make sure you keep setting them, make financial plans to achieve them and work towards financial independence!