Unless you took a finance class, chances are you didn’t learn a lot about managing your money in high school or university. As such, you, like many other young adults, might find you’re having trouble managing your money. Here are 5 tips to help you gain control of your finances.
1.Learn self control
Now that you are responsible for your own finances it can be tempting to become a spendthrift. You can effortlessly purchase almost anything with a credit card, but it is better to wait and save up instead of purchasing things on credit. Unless you pay of your whole balance right away you will end up paying interest on all the items you have purchased and it can add up quickly.
2.Take charge of your finances
If you don’t manage your own money someone else will. Though you can always turn to your parents or a trusted financial planner for advice it is ultimately your decision how you spend your money. And though your friends may grumble if you can’t go out and party with them every weekend or you know just how much your significant other would love that expensive gift, you need to put your foot down and spend within your means.
3.Know where your money is going
The basic tenant of achieving financial security is to make sure more money is coming in than is going out. To figure out where your money is going track your spending and use this data to create a budget. Make small changes (like skipping that pricey latte every morning) to make your money last, and do your best to keep your recurring monthly expenses as low as possible. Choosing an affordable apartment over a fancy one will make it easier to afford a nice condo or house further down the road.
4.Start your emergency fund
No matter how big your debts are or how tight your budget is you should always set aside at least a little bit of money each month in an emergency fund. This emergency fund will keep you out of financial trouble if you encounter an unexpected expense like a pricy car repair or you get laid off. If you build this into your budget as a non-negotiable monthly “expense” then soon you’ll have more than just emergency money saved up. Extra savings can go towards a down payment on a home, your retirement fund and even a well earned vacation. Store this money in a high interest savings account so that you can also earn interest that will bolster your savings.
5.Start saving for retirement
By starting a retirement fund as soon as possible you can actually maximize the amount of money you will have to retire on because of compound interest. Since you earn interest not only on the money you put in but also the interest you have already accrued you will need to invest less principle in order to end up with the amount of money you will need to retire. A larger retirement fund also means you may end up in the position to retire early, or to make the most of your retirement by enriching it with travel.
For more financial planning advice book an appointment with Tim Lacroix by calling 403.648.1541 and visit timlacroix.com today.