Learning the ins and outs of money management and success can be difficult, especially when you most likely didn’t learn about it in a high school or college class.
As you graduate college and enter the real world, starting smart financial practices immediately can help you avoid many of the money issues that individuals in their 20’s encounter.
Below are ten tips to get you started on having a better understanding of your finances and things you should be doing to improve them.
1. Make a Budget – And Stick to It!
The first step in getting smart about your finances, is sitting down and taking the time to analyze your spending, expenses and monthly income.
Once you do this, you can map out a monthly budget that will set you up for long-term success.
2. Get Your Spending Under Control
This one comes easier to some than it does to other.
It’s hard to resist the instant gratification that comes with buying something you want, whether it be a new big TV, that handbag you have been eyeing, or even just yet another dinner out.
The sooner you can learn to limit your impulse spending and delay the instant gratification that comes with it, the better off you’ll be in the long run.
Impulse and over-spending can lead to pesky problems like credit card debt, or not being able to pay all your monthly expenses.
If there is something you really want, a good idea is to make it a reward for meeting a financial “goal” and only buy it once you meet your goal.
For instance, you must put $3,000 into your savings account or emergency fund until you can buy those new expensive shoes you’ve been eyeing.
Taking the time to really work for it may just make you realize you don’t even really need the item; if you do still want it, you’ve worked on saving money in the meantime.
3. Start an Emergency Fund
An emergency fund is a stash of money you keep set aside for when a sudden and unexpected event pops up.
This could be as simple as your car breaking down and needing a minor $100 repair, or as serious as losing your job.
To make difficult times such as these less stressful, it is essential to have a healthy emergency fund set up to cover your expenses.
4. Start Saving for Retirement
We know it seems crazy to start thinking about retirement when you maybe just graduated college, but it is so important to start early!
Because of the way compound interest works, the sooner you start saving, the less money you’ll have to invest to end up with the amount that you need to retire comfortably.
5. Limit Credit Card Spending
This one is essential to financial success.
It’s easy to “spend now, pay later” with a piece of plastic.
However, you have to use your credit card responsibly in order to avoid ending up in debt.
Make sure you’re only using your credit card to the extent that you can pay it off in full at the end of each month.
Otherwise, you’ll end up paying loads more over time due to the notoriously high interest rates on credit cards.
This can prevent you from building up your savings and making large milestone purchases (i.e., a house, new car, etc.) when the time comes.
6. Learn About Investing
Investing in your retirement account is great, but it’s also a good idea to learn about investing outside your retirement account as well.
Investing can be confusing and can go wrong easily, so it’s a good idea to hire help if you’re not knowledgeable about it already and not comfortable learning it on your own.
Make sure to research anyone you plan to hire and understand the fee structure of their services.
7. Get Insurance
Yes, it can be frustrating to pay money month after month for something you never use, such as car insurance or health insurance.
But, you never know what will happen; mayhem can strike at any given time.
As an adult, it is your responsibility to protect yourself and your things.
Insurance can save you thousands of dollars when disaster strikes, whether it’s a fire to your home or a sudden emergency room trip for a broken bone.
8. Pay Off Your Debt
Debt is often a reality for most young people.
Ignoring it, however, will only make it worse.
You will keep racking up interest, making it harder and harder to pay off in the long run.
It can also prevent you from making major life purchases such as a home or car.
Your first step is making a budget (see #1), and then allocating your leftover discretionary income to paying down your debt.
There are different tactics here, such as starting with the highest interest debt or the smallest debt; pick whatever works for you and get after it!
9. Clean Up Your Internet Presence
Okay, this one might not seem like “financial advice” at first glance.
But, think about a potential future employer searching through your Facebook.
Does the thought make you cringe?
If you answer is yes (no shame, we’ve all been there), take the time to sit down and delete those embarrassing memories from when Facebook first became a thing.
This goes for Instagram and Twitter, too.
In this day and age it’s easy to dig up old, perhaps damning, things from your Internet past.
So, get out in front of it and clean it up before anyone finds it!
10. Invest in Yourself
Again, this one doesn’t necessarily help you save or earn money, but it is important for your overall financial health.
Taking the time to further yourself in your career or even in your mental and emotional health can pay off big time long-term.
Take that extra class you’re interested in; sign up for the race you’ve been wanting to run forever; or spend a little extra time each day focusing solely on you.
Feeling refreshed and fulfilled will help you give your all to your career, which will only benefit you going forward.