Financial To-Do-List When Turning 18

Sep 3, 2021 05:55 PM ET
Financial To-Do-List When Turning 18

Turning 18 is a significant step in one’s life. Amidst the excitement of adult life, you will have to start taking care of your finances. But don’t worry, we have you covered. Here is the financial to-do list to complete when you turn 18. 

With personal finance, it is imperative to start as early as possible. It is a long journey. The earlier you start, the more time you will have to get it right, and probably the earlier you will finish. 

The first financial steps when starting adulthood can seem daunting. In fact, many tend to make the mistake of not worrying at all about their finances at 18, which often costs them later. You do not want to be that person. 

Below is a list of 7 things you should do right when you turn 18.

1. Understanding finance

To begin, you need to understand the concept of finance. Start by learning about the world of finance, including its terminologies and, more importantly, all the financial tools that are available to you. Being financially literate will protect you from scams and allow you to see opportunities to invest.

Financial books written by proven, successful investors can be a good resource to start with. These will not only help you understand the world of finance but can also start envisioning your strategies and approaches to investments and savings. 

Furthermore, there are a variety of types of investments, savings options, and deals available online—Tinker with different possibilities to deduce the best way to save and spend your money. 

2. Create a bank account

Having a bank account is an important step to taking charge of your own finances. Every expense and income will be recorded electronically, which allows you to monitor your income/expense ratio and spending habits. 

This tool enables you to create a savings account and start contributing to an emergency fund. An emergency fund is a sum of money that will be set aside in case you incur some costs related to unforeseen adverse events. 

It is incredibly useful, as we observed with the pandemic. A young person is likely to change jobs often. Having an emergency fund will alleviate the financial pressure during periods of unemployment. 

You can also link your checking account to paying your bills. By doing this, you avoid any bills or debts that could contribute to having bad credits - which can be detrimental to your chances of taking out loans in the future. 

When opening a bank account, pay special attention to bank fees. Avoid these as much as you can. You will lose a lot of money if you let these fees accumulate. Ideally, choose the option with no fees, but if this is not available, go for the bank and package with the lowest fees possible. 

3. Use a credit card

A credit card is superior to using cash. Firstly, it is a safer option. If you ever lose it, you can freeze the card to protect your money. Losing cash guarantees that you will not get it back. It is also easier to track expenses. 

Another perk of a credit card is the deals it offers. Many stores offer discounts when paid with a credit card issued by an affiliated bank. Some banks also offer cashback on different stores and products. Do your research and choose the bank that has the best deal for your spending habits. 

A catch with credit cards is the need to maintain good credit scores. The secret to doing this is to control your spending and pay your debts on time. 

4. Establish good spending habits

A good system is built upon sturdy foundations. Bad spending habits can undo even a thorough understanding of finance and a well-organized financial plan. 

Start off by understanding your current spending habits. Categorize your spendings based on ‘needs’ and ‘wants.’ Try to reduce spending on the ‘wants’ category as much as possible. 

At a young age, this is the perfect time to save and accumulate wealth. Set the right goals to put aside an appropriate amount of money each month. In order to do this, make sure your expenses do not exceed your living means. Remember to be consistent, and it will just be a matter of time until you achieve financial freedom. 

5. Earn money

Once the groundwork has been laid out, you need to start earning money. Find something within yourself that you believe will provide value for your employers. Then, look for any type of job that fits your skillset. 

With the internet, the possibilities are endless. You can create, build or craft a product and sell them online. You can code a program that helps a company become efficient. 

Along with the income you earn from your work, you will also gather invaluable skills that will be important for you down the line. Working from an early age teaches a person to value work ethic and understand the value of money. This will help make step 4 easier. Once you understand the struggles to make money, you will treasure it more. 

Furthermore, you will interact with more people - from whom you can learn a lot. 

6. Invest 

It might be funny but think about retirement. As stated before, the earlier you start this journey, the earlier you could finish. 

Open a Roth IRA, which is a retirement plan that will allow you to withdraw money tax-free. Contribute a sizable amount regularly to this fund, and with the magic of compound interest, you will have more than you will need by the time you retire. 

Also, look at other investment options. Diversify your portfolio to reduce risks and have more streams of income. It is vital to make your money work for you. 

7. Learn about taxes

Two things are certain in life:  death and taxes. Taxes will be a very important component of your financial life. 

There are two reasons why an understanding of taxes is critical. 

  1. It has dire consequences.

Tax fraudulent or incorrect handling of taxes is an offense that can be punishable with jail time. Understand how to deal with taxes and protect yourself as well as alleviate all the hassle. 

  1. You will have to pay a lot of taxes.

Throughout your lifetime, you will have to pay a lot in taxes. Finding the best way to minimize the amount of tax you pay legally will save you a lot of money. 


When you turn 18, it’s time to take responsibility for your finances. You will need to learn the key finance terminology, use financial services, and be aware of your spending habits. To secure your financial future, choose your career thoughtfully, make your money work for you by investing, and treat paying taxes seriously to avoid trouble.



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