Because Billshark wants to see young adults get started on the path to a solid financial future, we want to present these seven steps you can take to ensure your financial health.
1. Know where you’re going
If you don’t have financial goals, how will you know how to achieve them? Do you want children? How many? Do you want to own a home? Travel often? Retire early? Sit down and ask yourself where you want to be in five, ten, twenty, forty years. Take your time and don’t rush.
2. Budget, budget, budget
Once you know how you want your money to work for you, then is the time to create a plan for how to make that happen. Figure out your current living expenses against your financial goals, and notice gaps. Do you need a better job? A side gig? Can you find places to economize?
Then track every penny you spend, either in a notebook or using an online tool. If you do this faithfully, you’ll never have to ask that perennial question, “Where did all my money go?”
3. Create a safety net
We’ve said it before, but it’s crucial. You must have at least $1,000 in ready cash available for emergencies. Otherwise, you’ll go into debt to get your car repaired or your refrigerator replaced. Keep this money available in a highly liquid savings account or money market account and don’t use it for anything other than an emergency.
4. Save, save, save
Once you have an emergency fund set aside, you’ll need to savings for:
- a financial cushion in case you lose your job: This should be six months’ to a year’s worth of living expenses;
- a down payment on a house: To get the best interest rate, you’ll need a 20 percent down payment;
- medical emergencies: You’ll need enough to at least cover your annual deductible;
- retirement: It may be decades away, but it’ll be here before you know it. Planning for it now allows you to take advantage of the miracle of compound interest.
5. Learn how to invest
A sound investment plan allows you to let your money work for you. Read, study, take local or online courses to understand the fundamentals of investing.
6. Avoid debt like the plague
When you owe other people money, it’s a constant millstone around your neck. In addition, whatever interest you pay on debt—even so-called “good debt” like a student loan or mortgage—is money you could be using to pay yourself to help solidify your financial future.
If you must have debt, say in the form of a home or car loan, get the lowest interest rate you can, for the shortest period possible. And never go into debt for such luxuries as vacations or weddings.
7. Watch your credit rating
A good credit rating will help you obtain favorable terms on loans, and is often necessary for renting an apartment, keeping insurance rates low, and even landing a good job. Check it annually for free at annualcreditreport.com.
If you follow these seven steps, you’ll be light-years ahead of most Americans in making your financial dreams come true.
Billshark is famous for our unique ability to save people money. We been featured on NBC’s Today show and NBC Nightly News, CBS News, Fox 35, and in The Miami Herald, so you know we offer something no one else does: a real chance to save you hundreds or even thousands of dollars on your bills at no risk to you. So contact us today to see how much you can save.