Five Things You Should do For Financial Self-Care
Getting your financial footing can be a challenge for all of us, especially young people! I think most young people believe that there’s still time to save… until time runs out! It’s never too early to start financial planning. Financial planning involves understanding your finances, creating a budget, improving your financial literacy and understanding investments. Set yourself up for success at whatever age! Here’s what you need to do.
Tip One: Get Financially Literate
Financial literacy means understanding how to make wise decisions with your money. In other words, once you understand the basics of financial literacy it provides a solid foundation for your financial habits and goals.
For example, if you want to get out of debt, it’s essential to understand the best way to do so. Specifically, you would need a working knowledge of interest rates, budgeting and how to compare the growth of your debts versus your investments. That way, you will know how much your debt costs per month, how much extra money you have to tackle your debt with and whether diverting money from your investment contributions is worth it.
Tip Two: Minimize Debt
On that note, managing your debt is vital to your finances. For instance, store accounts and credit cards can spiral out of control, putting you further behind your financial goals. Instead of letting interest payments eat up more cash, it’s best to create a debt repayment plan.
Remember, debt is the inverse of an investment. An investment grows based on a rate of return, and debt grows because of interest. Therefore, it’s key to get your debt under control before you start investing significant amounts of money.
Tip Three: Start Saving and Investing
You might wonder what the point of rushing to save money is; after all, you’ve got thirty or forty or ten years until retirement. However, that’s exactly why it’s best to start contributing to an investment account now: you’ll compound your returns over several decades and grow your savings exponentially.
Tip Four: Learn to Budget
A budget is one of the most helpful tools to strengthen your finances. Although the word can seem scary, knowing where your money goes throughout the month is one of the most empowering facets of financial literacy. For example, reviewing your expenses can reveal an unused streaming subscription, weekly restaurant trips and an old gym membership.
Dozens of budgeting apps and tools make this financial habit easier than ever. You can start with your mobile banking app, which likely offers a free budgeting tool. However, you can also branch out to online budget calculators.
Tip Five: Keep Track of Your Spending Habits
A budget gives you a foundation for tracking your spending. In addition, a habit of spending less than you make will help unusually high spending become apparent. So, it’s best to give your finances a quick review every two or three months. Specifically, you can review your bank and credit card statements to see if you can reduce any expenditures in the future.
The Bottom Line
Creating a financial plan requires effort, but it’s well worth it. Your financial habits will drive your lifestyle now and during retirement, so it’s best to get your finances under control. A healthy budget. Financial wellness can seem like juggling – after all, you need to prioritize a budget, retirement plan, debt management, insurance and more. Start slowly, understand your spending habits, check your budget, and get yourself on the road to financial success.
For more help planning your finances, no matter your age, consider working with a financial advisor.