Invest ASAP
Some people recommend you pay off your debt before getting involved with investing. However, you can’t get back time. And time is the greatest gift for investors because of the magical term: compound interest.
Don’t wait to invest. Invest now. Max out your Roth IRA, and if you find yourself earning too much to invest in a ROTH IRA, max out your employer 401k. If you don’t have an employer, get a brokerage account, and start investing in mutual funds.
Investing is too serious a business to not participate in. Get started ASAP. You don’t need to be an expert; you only need to start. If you don’t know what you are doing, get involved with robo-investing. Robo-investing will give you the benefits of investing without having to do any work.
Tip — Robo-investing is one of my favorite types of investing, and it’s easy! Here are some top Robo-investing apps:
1. Vanguard
2. Sofi
3. Robinhood
4. Betterment
5. Acorns
6. Wealthfront
Compound interest can work for you (investing) or against you (debt).
Emergency Fund
There are three ways never to be broke again:
1. Invest
2. Always have an emergency fund (save)
3. Spend less than you earn
Emergency funds are here to aid you in all types of situations and tribulations. Never go a day without an emergency fund again.
I recommend you have an emergency fund of at least 12 months of living expenses or a minimum of 3–6 months of living expenses. For most people, this will amount to thousands of dollars; if you don’t know how you will save this amount of money with your current income and expenses, I recommend building new and creative sources of income to help you establish your emergency fund.
Tip — Emergency funds can help you with the following scenarios:
1. Emergencies
2. Job Loss
3. Medical/Health Bills
4. Pandemics
5. Unexpected dog bills
6. Unexpected house repairs
7. Unexpected car expenses
8. Unexpected situations period
If you always save some money (and don’t overspend), you will never be broke.
Max Out Your D*mn 401k Match
I’m still baffled that people take the employer match so lightly. I mean….this is FREE F***ING money. If your employer offers a match, please participate. You’re only helping yourself.
Suppose you can’t afford to max out your 401k at the moment, at least max out the employer match. Usually, the employer match is anywhere from 3%-6%. Make sure you contribute enough to get the max employer contribution. They will explain how it works in their employee handbook.
Tip — Enroll in your employer’s 401k matching program as soon as it becomes available to you. Don’t wait. Even if you are broke, find a way to max out the employer match. You won’t regret it, and neither will your future self and future net worth.
If your employer has 401k matching, I hope you enrolled before you got to this point.
Budget
Suppose you are not keeping track of your every dollar. In that case, you probably aren’t maximizing your money, you’re probably over-spending, and you probably don’t have clarity when it comes to your finances.
Have a budget that you proactively monitor. Some people prefer apps, some people prefer spreadsheets, and some people prefer automated systems. Whatever works best for you, do it now.
Tip — Top 3 Things To Transform Your Finances:
1. Invest
2. Create an Emergency Fund (save)
3. Budget
Budgets magically benefit your financial position.
Overspending
Consumerism is what we love doing most. We love consuming. We consume every day. But for most people, all of the consumerism negatively affects their financial health.
It’s not hard to stop buying things we do not need. You only have to stop.
What helps decrease consumption is to think at least 48 hours before making a purchase — especially a large purchase. When you establish this habit, you will notice a positive trend in your budget. There won’t be too much month left over at the end of the month either.
What also helps our overspending habits is: saving for purchases in advance. It can suck at first and seem pointless to do, but when you have your goal amount of money saved up, you will feel a splash of endorphins. You might even reconsider the purchase and change your mind. :)
Sometimes, it helps not to browse shopping apps and go to stores if we don’t need anything.
I heard buying experiences create a more lasting and beneficial effect on your life than buying materialistic things.
Tip — Always think 48+ hours before making a large purchase. You might change your mind or forget you wanted to make a purchase in the first place.
Overspending is what gets most people into financial trouble.
Live The Fabulous Life When You Can AFFORD It
The new cars, the fabulous homes, the name-brand clothing and shoes, and everything else that comes with the advertised idea of a golden lifestyle….well, these things will always be readily available if you want to take this route of living.
Many people forget they can’t actually afford to live this way, though, which gets them into trouble. “Fabulous” means different things to everyone, but you most likely know what it means for you.
My advice to you: Live fabulous when you can afford it. Don’t be a fraud; live within your means.
Tip — Wanting to impress others, wanting to keep up, wanting to stay relevant, wanting to dress stylish, well, none of this stuff really matters at the end of the day. These are all examples of empty living.
Reminder: You don’t need a new car or a new phone every year.
Avoid Unnecessary Credit Card Debt
I’m lucky I didn’t open my first credit card until after I graduated college. Usually, people get them much earlier in life (or when they are not fiscally responsible yet), which can wreak havoc on your credit and financial health.
Credit cards are tools and tools alone. Some of the ways to utilize a credit card include:
1. To make a business investment
2. To serve as a temporary emergency fund
3. Earn rewards (e.g., sky miles)
4. Earn cashback on habitual purchases (e.g., bills and groceries)
But most people do not use credit cards for these reasons. Most people use credit cards to shop for superfluous items.
It’s easy to rack up credit card debt, which is why you should be careful about applying for credit you don’t need or aren’t ready to utilize responsibly.
Tip — Recommendations:
1. Have at least two credit cards to use.
2. Link all bills to your credit card instead of your debit card/bank account.
3. Make all necessary purchases with your credit card. Credit cards provide security since they are separate from your bank account.
Credit cards offer security (e.g., protection against fraud or secondary emergency fund) if you use them right. If you don’t use them right, they will put you in a less secure financial position.
Live Where It Makes Sense
A high-paying job is nice when your whole paycheck isn’t going to rent.
Does it make sense for your money and you to live somewhere the cost of living is unreasonably high? For some, it does; for most, it doesn’t.
Aim to pay no more than 25% of your take-home (net) income for your rent/mortgage. Keeping your living expenses on the lower end will help keep the rest of your finances on track and in good health.
Tip — If you get a job working for someone else, I always recommend working remotely, so you can live anywhere.
New York, D.C., and San Francisco all come with a cost. Make sure it’s worth your while.
Self-Educate
My parents had my siblings, and I read Robert T. Kiyosaki (author of “Rich Dad, Poor Dad”) at the dinner table when we were kids. I didn’t comprehend what Robert was discussing at the time, and I thought it was quite dull to read (Sorry, Robert. I did re-read your book a couple of times afterward, though!). But the habit of reading finance books never left me; I never stopped reading books and articles regarding personal finance.
Self-educate yourself on personal finance. You can take classes and go to seminars, but a solid podcast or book will give you the same thing for free or a couple of bucks.
Financial education = Financial freedom
Tip — Financial Authors And Sites:
1. Dave Ramsey
2. Suze Orman
3. Robert T. Kiyosaki
4. David Bach
5. Warren Buffet
6. Nerd Wallet
7. Napoleon Hill
8. The Motley Fool
Consistently educate yourself financially, and your net worth will respond positively.
Keep An Eye On Your Credit
Financial fraud is real, alive, and well. Check your credit reports at least once a month.
You can check your credit reports for free. So there is no reason for you not to check. When you keep an eye on your credit, you can mitigate any fraud-type situation faster.
Also, it’s good to know where you stand credit-wise to help you set goals and understand your buying power.
Tip — There are many free sites to check your credit securely. Many banks now offer ways to check your credit inside their app. And remember, never give out your social security number when it doesn’t make sense or if you don’t need to.
Credit can empower you financially if you use it wisely.
Build Multiple Streams of Income
ALWAYS have more than one stream of income. Have 20 if you can. But two is always better than one in this case. You never want to depend on one source of income. That is like betting all of your life earnings on one very sick horse.
Get a part-time job, start your own business, invest, etc. Aim to find second gigs that are fun, easy, and don’t add much stress to your life.
Having multiple streams of income is a way to create financial freedom for your life. If you only have one income source right now, stop what you are doing and figure out how you can create a second income for yourself.
Tip — What are you good at? What are your hobbies? This is a great place to start when brainstorming second-income ideas.
Building multiple sources of consistent income is a sure way to create financial freedom IF you keep (save) more than you let go.
College
If you don’t need to go to college to accomplish your career goals, then don’t. Save yourself a trip, money, sanity, and time.
I know too many successful people who did not go to college, make great money, and often have or make more money than your typical college graduates.
College doesn’t guarantee sh*t. I went to college, and if I could do it again, I would, but it wasn’t necessary.
If you decide to subject yourself to 4+ more years of school, try to avoid student loans. There are too many scholarships, programs, and employers out there who will happily help you go to school. Save your money, and save your net worth by going to school for free.
Tip — Ways to go to school for free:
1. Military programs
2. Work while you go to school
3. Scholarships
4. Employer programs
5. Do your research
College does not guarantee you anything anymore, and why should it? Yes, the experiences are invaluable, but the piece of paper you bring home with you on graduation day is just that: a piece of paper.
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Destiny S. Harris is a writer, poet, entrepreneur, teacher, and techie who offers free books daily on amazon. Follow her on Instagram, Facebook, or @ destinyh.com
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.