7 Smart Money Moves When You Turn 18

Turning 18 is a big deal. It’s a time of transition, when newfound freedoms are accompanied by the gradual responsibilities of adulthood. Whether you’re finally legal or you’re the parent of a teenager, this blog contains some young adult finance tips that can help set an 18-year-old up for success.

You’ve anxiously awaited this day for years. Or, maybe you’re excited that it’s right around the corner. You’ve grown, you’ve learned, you’ve listened to your parents (occasionally). Now you’re 18 and it’s time to start the “adulting” you’ve heard so much about.

Yes, that potentially means you’ll need to think about things like student loans, rent, employment and auto insurance. But adulthood also brings more power and freedom. As a young adult, new choices will be open to you, and you want to make the right ones — especially when it comes to money.

To help you navigate your growing world, we’ve compiled seven smart money moves to make when you turn 18:

1. Find a Banking Partner

The credit union or local bank you choose is going to be with you for a while, so you want to make sure you choose a financial institution you trust. Look for a credit union that cares about your individual financial and life goals and can help you get there. Ideally, you want to feel like they have your best interests at heart. Also verify that they have the products and services you need, plus technology that can keep you connected to your money and your finances 24/7.

2. Open Your Starter Accounts

A good rule of thumb is to start your financial journey with basic savings and checking accounts. Avoid unnecessary expenses by opening a Free Checking account with no monthly maintenance fee and no minimum balance requirements. The money in your checking account should mainly be used to pay bills and make everyday purchases.

Your savings account, on the other hand, is for larger, long-term goals such as buying a car or owning a home. You’ll earn interest with a savings or money market account, which means any cash you leave in there will slowly grow over time. Once you have a little bit saved, you may want to open an additional account as an emergency fund for any unexpected expenses such as car repairs or textbook costs. A recent Federal Reserve study found that 4 in 10 adults couldn’t cover a $400 emergency.1 With a little effort, you should be able to join the 6 in 10 that doesn’t sweat the small stuff!

3. Consider a Credit Card

The upside of getting a credit card now is that you’ll be able to start building your credit early, which can help you get a loan, a more favorable interest rate or additional credit down the road. Credit cards also allow you to make important purchases, such as school textbooks, which you might not be able to afford right now.

Provided you use them responsibly and pay off balances relatively quickly, credit cards are a great way to start boosting your credit score — a three-digit number that lenders use to help determine whether to loan you money and at what interest rate. However, you also don’t want to land yourself in excessive debt that you’ll have difficulty repaying. If you do apply for a credit card, be sure to make on time payments and stay within your spending limits.

4. Craft Your Budget

The first major step toward adulting like a pro is setting your budget. About 80% of adults have a budget in place, according to Debt.com’s 2020 Budgeting Survey.2 A basic budget is a spreadsheet or app that tracks how much money you have coming in (and when), and what you’re going to do with it. Typically, a budget has three main “buckets”:

  1. Saving
  2. Bills/Expenses
  3. Spending

While there are lots of budget guidelines out there, one of the most widely followed is the 50/30/20 Rule, which says that 50% of your earnings should be put toward needs such as rent and groceries, 30% allotted for wants like entertainment and clothing purchases, and 20% put away in savings. If you have minimal living expenses and don’t need 50%, experts encourage putting the extra money away into a savings or retirement fund (yes, that’s decades away, but you could potentially sock away hundreds of thousands extra just by starting now).

5. Get Financially Lit

Being financially literate simply means that you know the basics of how money works and what to do (and NOT do) with it. In a recent study from the FINRA Investor Education Foundation, only 17% of participants ages 18-34 were able to answer basic finance questions.3 Ouch! Clearly there’s a lot to learn when it comes to managing your money, even if your family thoroughly prepped you for going out on your own.

Luckily, there’s no shortage of resources to help you learn what you need to know. Boost your money-smarts with blogs, podcasts, books and free classes tailored to your current knowledge level. These finance gurus to follow are a good start. Borrowing money, using credit wisely, avoiding fraud schemes and investing are just a few of the topics to put on your must-read list.

6. Register to Vote

While it’s not a money move in the typical sense, voting does relate to your finances. How? Legislation at the local, county, state or federal level can affect things like tax rates and minimum wage, which in turn could potentially impact you on a financial level. The votes you cast for either a representative or a piece of legislation help to ensure that your voice is heard on these issues. Visit the official State of Arizona website for local voter registration information.

7. Put Planning Docs in Place

Making a will is the last thing on a young adult’s mind, but even at this early stage of adulthood, it’s important to at least think the what-ifs through. Creating a Power of Attorney is an important first step when you turn 18, says Matt Osborn, Wills & Trusts Supervisor at Desert Financial Credit Union.

“Appointing someone to assist you with your financial affairs and medical decisions is a must once you become an adult,” Osborn explains. Should you become incapacitated … having these documents in place will help your family make important decisions for you.” A Medical Power of Attorney allows you to designate someone to make health decisions for you if you become incapacitated, while a Financial Power of Attorney designates someone to manage your finances if you are unable to do so.

Adulting isn’t always easy, no matter how old you are. When you turn 18, you’re likely to have a few stumbles on the path to becoming financially secure and stable. But that’s ok! By following our seven tips, you can start learning to manage your finances and stay ahead of the curve. Being an adult may seem like a lot of work, but remember it comes with some serious perks, too – like being able to rent a trendy apartment with your roomie or pay for a weekend getaway.

Want to bank with a credit union that has your back?


Wills & Trusts:
Document preparation services are offered through Desert Financial Credit Union; an Arizona Supreme Court Certified Legal Document Preparation Business Entity (CLDP #81024). Legal document preparation services are not insured by the NCUA and have no credit union guarantee.


The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.