Everyone wants to be financially successful. From the factory worker in Atlanta to the banker in The Big Apple, there’s no better feeling than knowing that you have made smart financing decisions that have measurable impacts. But financial success doesn’t happen overnight.
The key to building financial success is to set short and long-term goals, and to know which steps to take to meet those goals. Being successful financially also means being disciplined and avoiding common money traps like impulse buying or racking up debt.
Keep reading to learn everything you’ll ever need to know about managing your personal finances so that you too can experience financial greatness, from one of our Money Expert.
Create a Budget
That’s right, the dreaded B-word: budget. One of the first things you’ll want to do in order to pave your path to financial success is to create a budget. This means writing out all of your income and expenses, and then figuring out where any leftover dollars go. With a budget you can then create financial goals that make the most sense for you.
Having a budget also makes it easier to figure out which goals are worth tackling first. For example, if you have a goal of becoming debt free but also want to invest, you may have to trade-off investing temporarily, so that you can put as much money towards debt as possible.
Open the Right Accounts
Having a checking account is a must in today’s world, but how well is your checking account working for you? Ideally you want to choose an account that offers a decent interest rate, while also offering minimal fees. But in order to be financially sound, you’ll want to have much more than a checking account.
Opening a savings account is also a must. It’s much easier to put money away and not spend it when it’s not sitting in your checking account. Open a savings account at a different bank and then set up automatic transfers so that you can effortlessly save money.
Another account that you’ll want to have is a credit card with a rewards program. Ideally get a credit card that offers cash back on all expenses. Many credit cards offer 2% to 6% cash back on dining, groceries, gas, travel, and much more. The key with credit cards is to use them responsibly and strategically.
Don’t fall into the trap of charging your credit card with amounts that you can’t afford to immediately pay off!
Invest Your Money
Investing is scary, especially if you don’t know much about the stock market or the fundamentals of the process. The good news is that investing isn’t as difficult as it seems, and you don’t have to be an expert to reap the benefits of investing.
Investing is a critical part of financial success. It not only ensures you have financial stability now, but it also paves a path for success in the future. Even if you don’t have much money to invest, putting away as much as you can afford is better than nothing at all.
By taking the time to invest early on, in the future when it’s time to retire you can receive monthly or annual distributions to ensure your financial health.
To maximize your earnings, consider working with a financial advisor, especially if you’re new to investing. You can find the best financial advisors on Carefulcents.com.
Don’t Forget to Pay Yourself
Paying bills is important, but paying yourself is equally critical. Not only do you want to put money into your savings account on a routine basis, but you’ll also want to fund other accounts; including retirement savings and your emergency fund.
Even if retirement is decades away, it’s never too early to start saving. In fact, the sooner you start, the more compound interest you will earn.
Aside from retirement, you also want to build an emergency fund. This is money separate from your savings account and should have no less than three months’ worth of expenses. An emergency fund serves as a monetary back fall in the event that you lose your job or face a high unexpected expense.
Automation is the way of the world today. Automation has touched almost every part of everyday life. We’re in the age of self-driving cars and artificial intelligence! When you put your finances on autopilot, there’s a lot less for you to worry about. Using automation you can:
- Pay bills
- Transfer money
- Set spending thresholds
- Keep track of your credit score
- Receive alerts
While automation makes managing your finances a lot less hands-on, you don’t want to set up automatic processes and then forget about them. As you pay off debt, change your automatic transfer to put those funds into a savings account. This way your money is working for you just as hard as you work for it.
The benefits of using automation to manage your finances are truly endless. With automation, you’ll never have to worry about making a payment late or going over your budget.
Personal finance is an important part of life. Having a solid financial standing will serve you well now and years into the future. Keep these tips and tricks in mind to improve your financial health.