I honestly don’t know why financial responsibility and wealth management are not discussed more openly at all ages. Actually, scratch that, I do know why. As Robert Kiyosaki (author of Rich Dad, Poor Dad) clearly covers  - education was never meant to generate financially independent adults, rather subservient laborers who get paid to stay broke.

Wealth ownership, through greed and flamboyance, became such a visual medium- having a big house, a fancy car, lots of jewelry and lavish parties. We all aspired without realizing how much money it could cost. More than that, badly made large investments can keep you in a cycle of debt your entire life. Whats worse, you could inherit generational debt that could deplete your future offsprings before they even get started.

I learnt fiscal responsibility way too late in life at the age of 27. Circumstances around me forced me to adapt and develop systems to keep track of my money, and the intentions I have with it.

why do I say 27 is too late?

When you’re talking about money, time is an important factor. Money compounds over time, which means the earlier you get in, the stronger your foundations last. This is why children and young adults who are educated early in the knowledge of money are able to sustain long term financial wealth. They understand the difference between assets and liabilities, and investments versus enjoyment.

Financial responsibility is not always about wealth accumulation though - its about building a relationship with your money. It’s about understanding where your money comes from, where it goes, what your priorities are in life, and then how to use your money to achieve them. It’s a never ending cycle that usually ends well, if done right.

Though if you haven’t reached this stage, there’s no need to fret. There’s a common adage when it comes to investing - the two best times to invest are two years ago, and today. Which means, you have missed out on opportunities in the past that could have been beneficial, but you can’t use that as an excuse. The best time to start is now, because there are always opportunities that require your attention, if you care to look.

But where do you start? Financial literacy can be very overwhelming, if you don't know where and how to access it. Lets cover five basic principles I wish I’d known when I started out. These are important factors to consider, regardless of your age or financial status.

1. Confront your finances and educate yourself

   
   Financial education must be a conscious decision.
   
   If you didn’t have an experienced family member fill you in, then you need to consciously and actively decide to learn about finance. Start telling yourself that whatever situation you’re in, you need to start thinking about how you spend money. Delaying in that education could cost you.
   Here’s an interesting factoid - If you simply keep your money as is, or in a savings account, it actually looses value over time, thanks to inflation. I learnt this in a very hard way, when I discovered that a large chunk of my retirement savings were just lying there, uninvested, losing money as the market grew. I’m not going to lie, that stung.
   But it was an important life lesson, which did cost me plenty to learn it. Understand your money, and confront your relationship with it. Education about finances can benefit you in ways you can’t even imagine.




2. Create a debt payoff plan

   
   There is nothing more dangerous than a person who does not know what they owe.
   
   If you’re an adult, there’s a 99% chance that you are in some form of debt. Most of adult life is debt. You make purchases over the month, and pay for them at the end of the month. Unless you purchase beyond your means, and then spend a couple of months to a few years to pay it back.
   
   Debt payoff is one of the best financial decisions I made. I sat to work on my student loans, and it took me a few weeks of brutal confronting and studying, to finally scope out a plan on how to repay the debt.
   And you know what, all said and done, it helped. I discovered that sticking to the plan, isn’t as hard as making the plan. Once I had reverse engineered how to pay off my debt, making do on those payments actually worked in my favor.




3. Build a budget

   
   Once you know how much you can spend, you know how much you can’t.
   
   One of the most important things that all young adults should understand is the value of a budget. A budget is more than just a thorough understanding of your money, its an actual step towards living within your means.
   
   When you’re calculating a budget, you need to know 4 things
   1. how much you earn
   2. how much you owe
   3. how much you save
   4. how much you spend
   
   
   A budget is a first step to financial discipline, which is why budgeting takes time. You’re not going to get your ideal budget in one sitting. You need to take the time to actually write it out, plan your expenses and maintain a standard to stick to. Budgets also can change constantly, based on your life circumstances, so as you build a system, make it scaleable. It should be easier to adapt based on change (like when you get a new job, get married )




4. Don’t place all your eggs in one basket

   
   Never keep all your money in one place, and never trust all your money with one person (including your partner).
   
   Another crucial element of finance management, and a good solid life principle as well - Diversify. Keeping all your money in say , a savings account, is quite a risk, because even if your bank is FIDC insured (which means its protected by the federal cash reserve in case the bank goes down), you have no idea what circumstances can come into play that may require access to money.
   
   Another factor to consider, is financial restrictions that are placed on your various accounts. For example, a savings account usually allows 6 free transfers, until they start charging a fee. If your money is in an IRA or 401K (retirement accounts), then you usually can’t access that money until you’re 60 (without heavy penalties). This is why you want to diversify and keep your money in multiple buckets. You also need to familizarixe yourself with the access to these buckets, because not all of them will function like a piggy bank at your disposal.
   
   Diversifying also allows you to take more financial risk, reap rewards across multiple options and have back up / safety funds in case of serious emergencies.




5. Discuss money management, especially within relationships

   
   The rich talk about their wealth, the poor keep it quiet about it. And that is a large factor in why the class system is hard to break.
   
   Finance and wealth management are only taboo for one reason - capitalism. The rich dont want to give away their methods, so they introduce get-rich-schemes to the poor and middle class to keep them trapped in a cycle. Money was not spoken about when I grew up. As a child and teenager, I loved this, because I didn’t have to worry about cash and budgeting and I could spend hours on social media fueling my ego. As an adult, this is one of those steps that I truly wish I could change. I wish I had the incentive to understand money earlier, and that I would have been in an environment that fostered that.
   
   What I’m trying to get across, is that financial literacy is crucially important. Even if you don't know what you’re about, talk about it so that you can hear more from others. Listen to everyone’s advice, but always do your own research. And especially now, when you’re parterning up, either in relationships or long term commitments or marriage, money has to be a top priority. Imagine falling in love, and marrying someone because they’re such a sweetheart, and then a week into the marriage, you learn that your spouse is in a three-hundred thousand debt, which is now also ‘your’ debt.
   
   You want to educate yourself on the financial habits of your parter, before a commitment. And it goes both ways, you should be able to share your financial status with your partner as well. Topics like this, should be kept in the open, so that the knowledge is shared. And thats a little preview on good financial management for young adults. If you’re less that 30 years old, then I strongly recommend checking these five points off your list. I cannot emphasize enough, the importance of starting early in your life.
   
   I hope this little nugget of information was helpful. It’s of course, just a quick intro, and you need a lot more depth. If you felt like this sparked your interest to know more, or if you already knew most of this, and wanted a more advanced version, check out my subsequent post - Advanced Financial Responsibility for the Financially Literate