People who effectively manage their money are happier, have better marriages, and even sleep better, studies show.
For young people with starting salaries, first apartments, and lots of hopes and dreams, here are some simple rules for the kind of life that lets you sleep at night:
* Pay your bills exactly on time. Not only do you save late fees and charges, but you begin to create a trustworthy reputation. When you pay your rent exactly on time every single month, you have a good reference for your next apartment. When you pay your bills exactly on time, more people are willing to trust you with credit.
* Create a budget. Know what you owe. Know what you need to save. Know how much you can spend on other things.
* Have a savings cushion. If you had to move today, would you have enough money to put down on a new apartment? If you had to fix your car, would you have enough money?
* Forget credit cards. Some financial advisors such as Dave Ramsey say there is never a need for a credit card. Some advisors think cards are valuable to establish credit. But all financial advisors think that paying credit card interest is foolish — especially when rates top 18 percent. If you use a card, pay it off every single month.
* Never take a payday loan. There is no better way to trap yourself in a cycle of debt than with a payday loan. According to Pew Research, "the repayment periods are too short, the required payments are too large, and the annual percentage rates are 10 times higher than traditional interest rate limits set by the state."
* Control your impulses. That means saying no to your desire for things big and small. This is easier when you know what you can spend for the month.
In short, establish financial stability by making a budget that includes regular automated savings — even a little adds up. Do not buy anything on a credit card that you can't pay off in full. Keep a cushion of savings for emergencies. If you follow those rules, you may never need a payday loan.