Methods Young Adults Can Use to Manage Personal Finances
In 2019, more than 20,000 foster children aged out of the foster care system. Aging out occurs when a child becomes too old to stay in the system and so they are left to navigate the real world on their own. In Texas, foster youth can elect to remain in foster care until 21. Even then, when they depart, they are faced with many of life's obstacles, which they may feel unprepared for. This can be a scary and challenging time as many of these children now have adult responsibilities on their shoulders with minimal real-world experience. Some major challenges include understanding personal finances and learning useful money skills that can benefit their everyday lives. Personal finances can be tricky to manage for those with a lack of education and mentorship. Many youths are left to fend for themselves and their finances. With mentorship and guidance, foster and other youth in need can feel confident in their money management abilities. Below are four areas that youths can focus on when managing their personal finances.
Education or Career
When leaving foster care, many are faced with an overwhelming sense of confusion. Numerous questions start to come into play. How can I earn an income? How can I afford to go to school? With so many uncertainties during these times, it’s important to know there are ways to succeed. If a foster youth has the goal of attending college, there are resources for them to make it easier to afford the cost. First, there’s a tuition and fee waiver, which makes college free for those youth who have aged from the foster care system in Texas, as well as other youth with foster care experience. Additionally, an abundance of aid and scholarships for foster youth available. These scholarships vary in requirements and award amounts so research is key to finding the best scholarship for each individual. Applying to a variety of scholarships will help increase the chances of winning one. These scholarships can be used to help fund the costs of education such as tuition, room and board, and class materials. Reading the specifics of the scholarship will ensure that the foster youth is applying to a scholarship fit for their educational needs.
Additionally, grants are available for foster youth to make it easier to afford college. Two grants that are a great option for foster kids are the Pell Grant and the Federal Supplemental Educational Opportunity Grant. These grants are a great option because they don’t need to be paid back. This can decrease stress and worry for foster youth looking to continue their education. If a foster child is looking to jump into the workforce, there are also resources available to help find a job best suited for them. The iFoster portal is filled with resources for areas such as employment, education, and health for foster kids. These health resources include free eye exams and glasses, mental health services, and peer support groups. For employment, this portal features job programs that place foster children into internship or job opportunities. This ensures that the foster youth can be financially independent. Whether a foster youth wants to continue their education or join the workforce, understanding what options are available can help them see more success in their future.
Learning how to save can be a difficult feat. It can be a challenge to alter spending habits in order to take more control of your personal finances. Luckily, there are a variety of savings methods to kick start a savings journey! One method to increase your savings is to save a certain percent of your income. This will vary from person to person depending on what their income is. Starting small is a great idea because foster children can always adjust as they move forward. Additionally, if a youth is just starting a savings journey, consider utilizing short term goals rather than long term goals. This will help keep the motivation high as well as ensure that there’s a higher chance of hitting the goals. Once the short term goals are accomplished and a sense of confidence is achieved, larger goals can slowly start to be created for savings.
Additionally, youth should start to put together an emergency fund. Life can be unpredictable and knowing that an emergency fund is present can help alleviate some stress down the road. There are tons of savings challenges that can help people stay on track and accomplish your financial goals. These challenges are a fun way to push yourself and your finances to the next level. They’re also a great way for a beginner to start saving if they’re intimidated by storing away a lot of money. Furthermore, money management mentorship programs can be a great resource for foster youth. Mentorship programs can provide foster youth with valuable knowledge and support. When a foster youth has helping hands and someone they can lean on, they’ll be able to gain more confidence for themselves and their finances. Money can be a tricky topic of discussion, and a mentoring program can take the stress off the young adult. Having a trustworthy adult to look up to when it comes to all things life and finance is a major component to success.
According to recent statistics, 20% of former foster youths will be homeless within the first four years of aging out. Being on your own in the real world is already a stressful experience and the possibility of being homeless in an instant can be terrifying. The number one thing that can prevent homelessness after aging out is a reliable support system. Having a group of people or a mentor to lean on can help a foster youth get through these challenging times. These support systems or mentors can offer a helping hand and advice on how to navigate the adult world.
Housing can be a challenge to for many youth, especially in Austin. Rental markets are sky-high, and many youth lack the necessary requirements to obtain an FHA loan which is a great option for the first time home buyer. Instead, young adults in Austin have access to supports through Foundation Communities, Lifeworks Austin, and ECHO assessments. It is almost guaranteed that your youth will face housing insecurity. YES Mentoring is here to help, and though it is not expected that mentors will have all of the solutions, hopefully some of these tips (+ the mentoring staff) can help. Finally, another option is a host home. Host homes can allow aged out foster youth a sense of safety and security while they try to adjust to their new realities. Every foster youth deserves to have a home surrounded by love and support, and these host homes can offer that. The more resources and assistance that can be provided to them the better. It’s important that aged out foster youth know that they have options when it comes to housing and that they are not alone. With the right resources and support systems, these young adults can be confident in their next steps and making sure that their future is bright.
An important aspect of staying on track with personal finances is knowing how to budget and do so successfully. Budgeting ensures that money is being spent wisely and that the foster youth is being responsible with their income. For many aged out foster youth, it can be difficult to budget because they’ve never had a steady income before. It can be tempting to start impulse buying with no plan in mind. When a budget is in place, young adults can stay in line and face less stress down the road.
Budgeting will look different for everyone so it’s important to create your budget in line with your spendings and income. Start by taking a look at your spending habits. When looking at the bigger picture foster youth can assess where they’re spending their money and where it may be possible to cut back. By analyzing where most of the money is going, a budgeting plan can be created to help make sure they're not overspending. Young adults can look into the 50-30-20 budget plan. This simple budget plan is ideal for young adults looking to begin the budgeting process. This plan is broken down into different types of spending and how to plan a budget around them. By starting with a simple budget plan, foster youth can get a better grasp on the concept of personal finances and money management. Overall, when a budgeting plan is in place, personal finances can feel more in control.
With so many foster youth aging out of the system, it’s important for them to feel a sense of belonging and security. With the help of support systems and mentors, these young adults can make the best possible decisions for their future. Personal finances can be stressful and confusing, but with the right resources these young adults can continue to learn and grow with their finances. It’s important to know that personal finances will not be solidified overnight. It will take time and trial and error to find out what works for them. With that being said, mistakes will happen on this journey and that is okay. The more experience and confidence with personal finances, the more likely foster youth will see success in their everyday lives.