Your parents told you to do it, your teachers told you to do it, even your neighbour’s relative’s dog walker’s brother told you to do it… but have you done it?
Becoming a young professional has been hard enough and trying to be taken seriously has been the focus of your entire thought process but now that you are well on your way, you should probably start thinking about what you are currently doing with your finances and what you should be doing with them!
Start thinking about it now, and developing habits to ensure that money you have worked so hard to make goes as far as it possibly can.
Retirement. Yes, you are a “young” professional which means this is probably quite a while away but something you need to be thinking about now in order to reach the goal of retirement and be able to continue to reach goals IN your retirement. Because of the way compound interest works, the sooner you start saving, the less principal you’ll have to invest to end up with the amount you need to retire and the sooner you’ll be able to call working an “option” rather than a “necessity”. This means if you have not started a savings plan for your retirement yet stop reading this and go do it right now.
Self-Control. In order to save for retirement you need to have some sort of money to put in to make that compound interest work! This means in some cases you may need to learn to delay gratification to keep your finances in order. It is so easy to purchase an item on credit the minute you want it, but it is much smarter to wait until you have actually saved the money to purchase it. Is paying interest on a pair of shoes or a bag of Doritos really a good idea? If you have been making a habit of putting all your purchases on credit cards stop now because you may find yourself still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, that’s great, just make sure not to carry more cards than you can keep track off and to pay the balance in full at the end of every month. One simple rule… if you don’t have the money in your bank account to purchase it, just don’t. Credit is not free money.
Awareness. If you have any knowledge of personal finances you know it is important to make sure your expenses are not exceeding your income. Do you know where your money goes? It is important to look at your bank statement at the end of the month and make sure that a) you are not in the red & b) you are not wasting your money on unnecessary expenses. Once you have taken a look at where all that money is going it is easy to make manageable changes in your everyday routine that may have a big impact on your overall financial picture. In addition to everyday expense it is important to look at your recurring monthly expenses and see if there are changes that can be made there. Would foregoing the nice, posh apartment now mean being able to purchase a home in the near future?
You don’t need a fancy degree or diploma to be able to manage your finances. They are YOUR finances and YOU are the best one to take control of them. Start with these simple things and see what a difference they can make. Good luck on achieving your financial goals and check back for more tips soon!