Money is a big part of life, which means that a lot of responsibility comes with it. For any young adult, understanding financial planning is vastly essential. As you’ll discover, there’s more to money than just earning it. There’s investing, saving, and protecting. Let’s break down the basics so you can feel more confident handling your money.

Here is a beginner’s guide to what young adults need to know about financial planning and comes from a busy Philadelphia bankruptcy attorney’s office.

Credit & Debit

For any financial beginner, understanding credit and debit is essential. They are very different and need to be treated as such. Debit cards provide access to money you already have in your bank account. If there’s no money in your bank account, you don’t have anything to spend on your debit card.

In comparison, credit cards give you access to money you don’t have. You can view it as borrowing. Your credit card company gives you a credit limit that determines how much money they are willing to lend you. Over time, you will pay the company back for the money you spent plus the interest fee for borrowing money.

While debit cards may feel like the safer choice, credit cards still play an important role in helping you build credit, which is essential for other purchases. By establishing your credit and using a credit card, you will build a history of your activity to show that you have an excellent track record in money management. You can get what’s called “bad credit” if you fail to pay your bills on time or miss paying them at all. You’ll want good credit to help make it easier to get loans, start your business, or get insurance discounts. 


When you start making money, it can feel like one of two things: what do I do with it, or how many ways can I spend it? You may feel tempted to spend your hard-earned money as soon as you have it in your hand, but that’s a good way to end up with nothing when you need it the most. Savings are essential to having stability in your finances.

The best way to save money isn’t by keeping it in a jar in your house or under a mattress. Opening a savings account means your money will truly be protected—from yourself and others. Once you open an account, you can start routing some of your money there. Don’t worry about trying to save a large amount of money all at once. Just a couple of dollars here and there can do more than you expect, adding up quickly.

Now, when you have an unexpected event or discover something you desperately want to buy, you will have the means to handle it. Without the savings account, you would be left out to dry and have to wait until you’ve saved the necessary money.


Having a savings account is something everyone should have. It helps protect the money so you can use it later, maybe when you need it more. However, not all of your money should be in savings. It’s doing nothing for you locked away. Get your money working for you by investing some of your income so you can acquire more money over time.

There are many types of investments to consider—investment funds, bank products, and the most common being stocks and bonds. Stocks are when you purchase a percentage of ownership of a company. As the company makes money, you will too. Bonds are when you give a loan to a company instead of getting ownership. This type of investment is a stable option to build money over time.

However, investments aren’t without their risks. If you invest in a business and they go bankrupt, you’ll lose whatever money you put in. Stock prices often fluctuate, which means you may not be making any money at all in some of your investments.


Taxes are fees imposed on individuals by the government. This money goes to fund public works or services, which in theory is great, but seeing money taken out of your paycheck can be a little disheartening. However, knowing about and understanding taxes will take some of the fear out of the fee.

There are two types of income that taxes will apply to: earned and unearned. Earned income includes salary, tips, commissions, and bonuses. Unearned income includes interest, rents, royalties, and profit from the sale of assets.

If you want to know the exact tax amount that will be deducted, you can create a tax plan. This process is done by finding your tax bracket, breaking everything down into tax deductions or tax credits, and keeping tax records. It can feel overwhelming, but a little research will help you better understand your tax deductions and plan for them.


It’s never too early to start financial planning. It can feel daunting starting out, but once you start learning, you’ll be more confident in spending, investing, and saving your money. Maintain a personal budget to know what to expect with your own personal finances. Use your budget plan to identify any extra funds you can free up to decrease debt and increase your savings and investments. Consult with a financial advisor for advice on your specific needs. In no time, you’ll be well on your way to a successful financial future.

About the AuthorVeronica Baxter, Legal Assistant and Blogger

Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area. She frequently works with David Offen Esq., a busy bankruptcy attorney, Philadelphia, PA.