Personal finance is actually quite simple. If you can follow a few basic money rules at a young age you’ll be able to build wealth and enjoy your money.
Of course, just because personal finance is simple doesn’t mean it’s always easy. If you’re willing to commit to a plan and put in some hard work you’ll be able to afford the life you dream of.
You can start by mastering these five money moves.
1. Making Your Savings Plan Automatic
When you automate your savings plan you don’t have to worry about forgetting to transfer the money. And, best of all, when you automate your savings you are paying yourself first.
To get started you should pick an amount of money that you can get by without and set it up to be taken out of your paycheck as soon as it hits the bank. When the money is out of sight it will be out of mind and you’ll be on the road to a large savings amount.
Even if you only have a small amount of cash to part with you should go ahead and set up the withdrawals. You can always increase the amount in the future.
2. Saving for Retirement
If your employer offers a 401(k) with a match it’d be a mistake not to take it. It’s best to start investing for retirement when you’re young. The earlier you start saving the less money you’ll have to part with each paycheck. And like we mentioned last week, you should even be investing when you have debt.
You should invest up to the employer match but most financial experts recommend that you invest 10 to 15 percent of your income for retirement. If this seems too large of an amount, start small and work your way up. Investing something, even small amounts, is better than investing nothing.
What if your employer doesn’t offer a 401(k)? Don’t worry. You can open up an IRA relatively easily. There are many websites that allow you to set up an IRA with a few clicks of a button.
3. Paying Down Debt
If you have a ton of consumer debt you need to make a plan to free yourself from it. In order to do this you’ll have to free up extra money to put on the principal payments. You can also work a side job or work overtime to earn extra money to apply toward your debts.
There are several methods you can use to pay off debt. You should research your options and pick the one the best suits you. You can start by reading a few personal finance books and blogs on debt.
You also need to set up a budget now. A budget will help you keep your spending on track and hold you more accountable.
After you pay off all your debt you’ll have more money to save, invest, and spend on fun things.
4. Making Goals
If you don’t tell your money where to go it will tell itself. That’s why you need to make goals for your money.
By making goals for your money you’ll be better organized and more in control. If you are thinking of buying a home, car, or other large purchase in the future you should decide how much money you’ll need and map out a plan to get there. You can also use goals to save for fun stuff like vacations or home renovations.
Working toward a goal will help you gain momentum. It’ll also help keep you more aware of your purchases and accountable of where your money is going.
5. Making Smart Purchases
There’s a difference between making cheap purchases and making frugal purchases. I used to be one to always go for the cheaper price, but when you make purchases off of price only you sometimes get less-than-quality products.
When you are making purchases for items that will be used for months or years you need to look for quality and price. This is especially true for vehicles. Luckily, the internet makes price comparison and product reviews easy to find. Take advantage of your resources to research and find the best bang for your buck.
Making frugal purchases now will help you save a lot of money in the long run.
These five money moves will help you build a solid financial foundation. By implementing these money moves into your routine you’ll be on your way to a bright financial future.
What other money moves do you think you should be making right now?