Feeling out of control in your financial life? You’re not alone. However, you can start taking back control and planning the financial life you deserve with these simple tips and tricks.
Track your costs
You should be aware of how much money you are spending and where it is going. Too many people make the mistake of not knowing how much money they spend each month on dining out or even how much of their pay they dedicate to necessities like rent and food.
Before you can get serious about your financial plan, you must first understand your expenses. It might be your student loan, medical debt, or even advisor transition services if you’ve recently started investing. Whatever your expenses are, be sure to carefully write them out, so you always know how much you’re spending.
Start saving—the earlier the better
You’ve undoubtedly heard this before, and you may not have taken it seriously—but you should.
The earlier you begin saving, the greater the advantage of your savings practices.
Here are a few examples of how saving early may assist you in your financial life:
Generate better habits:
- By beginning to save early, you will grow more comfortable with maintaining a habit of saving on a regular basis—a routine that you will be able to maintain for the rest of your life.
Boost your net worth:
- As you become older, having a significant net worth becomes increasingly crucial. You’ll be pleased to have extra money, whether it’s for a down payment on a house, a new baby, or retirement.
Prepare for retirement:
- Did you know that millions of American seniors do not have enough money to leave their employment when they are ready? The earlier you begin, the easier it will be to guarantee that you have enough.
Build your budget
There’s no time like the present to start building out a budget. Many people think budgeting is a good idea, but don’t actually commit. If you want to take control of your finances, you need to put in the work that it takes to establish a consistent and reliable budget.
Examine your average spending over the last few months. Has it been effective for you? Have you been able to save as much money each month as you’d like to? If not, or if you aren’t saving as much as you would want, it’s time to get serious about creating a budget.
Consider the standard 50/30/20 budget if you’re unsure where to begin. This is how it works:
- Set aside 50% of your money for necessities. Rent, food, utilities, and medical expenses are examples of such expenses.
- Another 30% of your money can be spent on wants, such as going to the movies, going out with friends, or buying clothing just for pleasure.
- Put the remaining 20% toward savings or debt repayment.
It’s simple and easy to commit to and is a great place for beginners to dip their toes.
Make a 5-year plan
How do you see the next five years panning out? You don’t have to have the details set in stone, but it’s smart to have a broad idea. Creating a financial plan is crucial no matter what stage of life you’re in. Your plan can be as simple as naming your goals or more complicated, detailing how much money each will cost and how you’ll earn the money you need to achieve it.
Financial plans are the foundation of every major financial decision, whether you’re planning your post-college spending budget or getting ready to have your first child. Having a plan to help you along the way is critical to success. You’ll be well on your way to creating a solid strategy with these four pointers.