There’s no denying that for many young adults, saving and investing can be a challenge. We all want to reach financial freedom, but the path to get there isn’t exactly easy. Luckily, there are some things you can do to get on the right track. Yes, it may be a lot of work, but the earlier you get organized, the quicker you can increase your accounts.
Below we are going to talk about ten tips that you can follow to grow your personal finances. Want to learn more? Then let’s get started!
Assess your income.
The first step in saving is to assess your income. You need to know how much you are earning so that you can develop a budget that works for you.
Most people tend to follow the 70/30 rule. This is where 70% of your monthly allowance is used for expenses, while the other 30% is divided between saving, donation, and investment.
However, what is best for you could be totally different. It depends on the amount that you make, alongside your regular living habits.
Track your spending habits.
Speaking of habits, in order to identify areas where you can reduce costs and save money, you have to begin by tracking your spending. This includes monitoring your accounts and sorting out where your money is being spent into categories.
Once you have a general idea, you can start looking at strategies to minimize these expenses. For example, if you notice you’re spending more on eating out, you may tone back and opt to cook from home.
Set achievable goals.
Everybody likes to envision where they will see themselves down the track. However, when setting yourself goals, you have to remember that they need to be achievable.
Anything that is too unrealistic can actually have an impact on your motivation and willingness to save. Take a look at these examples of financial goals to get started. They offer advice for both the short, mid and long term.
Keep hold of receipts.
Run your own business? Or know that you can claim deductions during tax time? Then, make sure that you get into the habit of holding on to your receipts.
Not only will you reduce your income tax, but it can also help you track your spending habits, as we talked about above. If you don’t want to keep the physical copies, many apps allow you to scan and store them digitally.
Are you still struggling during tax time? Then, check out some tax relief services so that the right professionals can help you negotiate with the IRS.
Choose where to invest.
A big part of growing your accounts is investing. This can seem rather daunting for some, but it’s the best way to secure your future and save for your retirement.
A few of the most popular investment types for beginners include:
- ETFs (Exchange-traded funds)
- Mutual funds
- High yield savings accounts
- Certificates of deposit
- Individual stocks
- House Hacking
Another choice that you may also wish to consider is investing in real estate. While it may require a higher upfront cost, becoming a landlord is a great way to earn an extra passive income.
Pay off your debt.
When it comes to increasing your personal finance, paying off your debt is extremely important. You aren’t able to move forward until you know that nothing is holding you back.
While eliminating your debt can be a long journey, it’s better to start early before it gets worse. Once it’s all gone, you can then begin saving without concerns about growing interest fees.
Avoid using cards.
If one of your primary worries is falling back into debt, one of the best tips to follow is to avoid using credit cards altogether. These can be tempting, and before you know it, you’ve built up quite a nasty bill.
Instead, try and live a cash-only lifestyle, or stick to using your debit card. It will be easier to stay on budget, and you’ll probably end up spending less because of it. Seeing your cash depleting each week may be the wake-up call you need to turn your life around.
Cancel unnecessary subscriptions.
Want to know another one of your most significant unnecessary expenses? Subscriptions. While we all love video and music streaming services, not many of us need five of them. Just one or two is more than enough entertainment for an entire family.
Don’t forget that books, magazines, newspapers, and even gym memberships all fall under this category. So reassess your options, and cut them down to the minimum. You’ll be amazed at how much you can save.
Save before significant expenses.
Do you need to repair your car? Buy a new fridge? Or maybe you have a medical expense coming up? Instead of waiting for it to drain your wallet, save in advance and set up an emergency fund.
Having the extra cash to spend on essential things means that your regular saving and investments won’t be disrupted. Most recommend keeping around three months’ worth of funds aside. It shouldn’t be touched unless absolutely necessary.
Work on building a second income.
Sometimes in order to truly reach financial freedom, we may need to figure out a way to make an additional income. This allows us to increase our savings more quickly and can keep those pesky bills at bay.
A few of the most popular side hassles that you may wish to consider include:
- Babysitting and pet sitting
- Buying and reselling
And that’s it! These were ten tips that you can follow to grow your personal finances. While it may seem like a strenuous journey, it is possible to achieve your goals.
You just need to stay strong, remain motivated, and find new ways to make the saving journey fun and exciting. Trust us when we say, all of your hard work will pay off.