1. Spend less than you earn. It sounds so simple, but many people do not do this. If you find you are accruing credit card debt, that means you are living beyond your means, and you need to cut back on your expenses. A little bit goes a long way; any amount you can save each month will quickly add up.
2. Make yourself a budget. Don’t be afraid of the “B” word. Understanding and knowing where your money is going is extremely important. Be disciplined around cash flow.
Every money should be assigned a job and tracked as to where it is going. Once you keep track of your money for three months, you will be amazed to see where your money goes.
3. Learn about compounding interest. Compounding interest is your best friend. You get interest on the interest received from previous years, which is perfect for young people who are investing for the long haul.
Start investing now. That way, should you decide you want a second act in life pursuing some new passion or business idea, you will have a nest egg to fall back and won’t be afraid to take that leap.
4. Always invest in a retirement account. You may have competing goals right now, like paying off student loan debt, saving for the purchase for a home, or getting married. But saving money should be a priority.
Find it within your budget to take advantage of what your company offers in terms of a retirement account. We all should be investing to the maximum of the matching funds provided by our employers.
5. Consider yourself the CEO of your life, and your household as a business. The beginning of the year is a perfect time to take stock of where you are, including what investments and liabilities you have. What you want to see is your net worth increasing over time.
If you receive a raise or bonus, do not change your current lifestyle, but rather save the majority of it. That money can be put toward long-term goals such as buying a car or having children.
Finally, “Be kind to yourself and be patient when it comes to personal finances. Over time, savings will happen if you put your mind to it.”