Mastering your money is a significant yet difficult feat, especially for a young person. Juggling student loan debt, finding a good job, saving for a future purchase, and investing for retirement seem like such insurmountable tasks.e. However, there are several small, impactful ways by which you can reach your financial goals. With these smart money habits, some thoughtful commitment, and a bit of discipline, you will gain financial freedom and begin to build wealth.
Smart money habits:
- Automate your payments. Never miss a billed payment again with automated settings. For your electric, water, and cable bills, you can simply assign your payments to be paid on or just before their due date. Not only will you avoid all late fees, but you’ll also be free of any concern for your bills. Why waste time worrying about being late or getting bombarded with an unanticipated fee? Automated payments are also an effective way to save and invest money. Adjust your savings accounts to set aside a bit of each paycheck automatically. Check out the app Albert for a great place to effortlessly begin a habit of saving.
- Invest. Rather than letting your money sit idly, investing makes your money work for you. And it is one of the best ways to build wealth. Though getting started may seem like an arduous pursuit- there is no need to fear, especially since you won’t need a lot of money to do it. Tools like the app Acorns are great ways to invest small sums. This particular app rounds up every purchase to the nearest dollar and invests those additional cents. Though this concerns just mere pennies, your earnings, with time, can build significantly! However you invest your money, be sure to begin earlier rather than later. This will allow you to take full advantage of your investments’ compounding interest.
- Avoid small, daily purchases. It may seem obvious that spending money on frivolous and unnecessary items is unproductive for your financial pursuits. However, have you considered exactly which items might fall into this superfluous category? Daily purchases like your $5 latte can add up and eliminating this expense could make a big difference for your savings account
- Create goals for, and in accordance with, your annual income and net worth. These should be specific to you, your habits, and financial needs. However, there are a few goals to keep in mind:
- Pay off debt. Prioritize your high-interest debt so to pay that off first. Typically, it is your credit card debt with the steepest interest rate, so make sure to tackle that as soon as you can.
- Contribute to your company’s 401k plan. Though you’re young, it is time to start thinking about your retirement fund. The money you put away now is more important than that which you will save even a year from now.
- Save for what’s to come. You’ll likely plan to buy a home or car one day. And you may not plan for a car accident or sudden health concern. But whatever comes your way, make sure you’re prepared with set-aside money.
- Don’t treat “extra” money like it’s extra. Whatever money you receive for your birthday or randomly find in your pocket should be considered savable. This isn’t a piece of advice you may have wanted to hear. But it’s important to realize that these gifts and surprise finds can do more for you in a savings account than spent on Chipotle.
- Track your spending. This seems simple enough. But this easy step will ensure that you do not exceed that which you make each month. Again, there are several apps to assist with this task, including the market leader, Intuit Mint. This service helps you stay on top of your finances with a perfect view of your spending.
The very subject of money can be stressful. But it doesn’t have to be. With smart spending, strategic investments, and thoughtful planning, you can be freed of your financial worries. And as a young person, these habits are best begun now! Call on us at Prospect Financial Solutions for expert advisement and compassionate guidance. We are here for all of your financial questions, big and small.
