Managing finances can be tough, especially in your twenties. Let’s be honest here, not many people like to deal with their finances. I’m not afraid to admit that I love a good sale or traveling but I would like to think I’m pretty savvy when it comes to managing my finances.
I’m lucky to have two parents who both manage the finances and taught me early on the important of saving, investing, and balancing a budget. I also have an Associate’s Degree in Business Administration so I have learned how to put away for my future and to avoid all those risky manipulation out there. Just like any subject, there is also more to learn but here are some of my tips that I keep telling my friends to help get their finances in order.
You need a budget. My parents have always had a budget, so I think that is why I have. It doesn’t matter if you are making minimum wage or 100K a year, you need a budget. This will help you be aware of your all your financial spending, saving, and income. I have a excel spreadsheet that I have specifically devoted to tracking our monthly finances. If you are not sure about how much to save, aim for a certain percentage of each check!
Multiple bank accounts. When you have multiple bank accounts, you are able to stay organized on how much funds you have for certain things. For example, we have a vacation, household, general, and Christmas savings account at our bank. Each month when contribute a certain amount to each one. This helps us stay organized and stay on top of our budget. When Christmas comes around, we still meet our monthly budget goal because we already have funds set aside for the holiday.
Plan for your future. It is never too soon to start thinking about your future. The earlier you start the more money you will have down the road. 401k’s are great but even if your employer doesn’t offer one, IRA’s are just as good. If you manage your finances like you will be able to contribute to both. Make sure you research which retirement account is best for you—each one is different.
Talk to a financial advisor. Did you just roll your eyes at me? I know this tip seems daunting but it is such a great decision. It doesn’t matter if you are setting up a 401k or filing your taxes, it is always helpful to have someone who knows finances inside and out to bounce ideas from. If talking to a financial advisor seems uneasy, you can talk to a parent, family friend, etc. to help you create a plan with your finances. Some of the best advice I’ve gotten has come from my mom!
Avoid store credit cards. I know that it can be really attempting to save 20% off at your favorite store but these credit cards normally have crazy interest rates. They also impact your credit score and too many credit cards can be hard to keep up with… like my momma also said, “you can spend money you don’t have”. If you want the store credit card to your favorite store, fine. Just be smart and pay off your balance each month!
Pay off your debt. Now I can’t give personal advice here because I have never been in debt… but I hear so many friends saying they don’t plan on paying off their student debt anytime soon. I literally cringe. Debt is scary and anyone who has taken a business course knows the damage it does to your financial status and credit. However, I suggest to pay off whatever loan has the most interest first or to try and merge your debt with another bank at a lower locked in rate. Confusing right? Talk to a financial advisor!
Manage your credit card(s). Andrew and I each have a credit card that we use just like a debit card so we can rack in points! We are basically spending money and making money. However, each month we pay off those credit cards in full. We give ourselves a weekly budget to follow so we know that our monthly statement will be around a certain fixed number that follows our budget goals.
Just because I have a degree in business doesn’t mean that I’m financial advisor. However, I hope you find these tips helpful!
How do you keep your finances in order?