I feel that I had a solid education growing up and into college. I probably could have paid more attention and applied myself a little better instead of having priorities elsewhere, but when it comes to personal finance I feel like it was not that I was ignoring these life lessons; it’s that I was not taught. This is not to blame my parents at all, I made my own spending and saving decisions, or lack thereof, but as I even studied business in college, I think there was a gap in what really should have been explained; how to set yourself up for financial success. Whether you are already into your career or just beginning, it is never too late for a little financial improvement.
Create a Budget
If you do not allocate where your income goes, you could be on a spending free for all each month, so not only creating, but maintaining a successful budget is improvement for a little financial structure in your life. While noting every dollar that is coming in, first take a look at what comes out first; your necessary monthly expenses such as rent/mortgage, utilities, car lease, and student loan payments. Next comes items that you will need to set aside enough money for, such as food, gas, and spending money. This is the tricky part, as you will need to figure out how much how much you should, and can, spend without being excessive.
Reduce Unnecessary Spending
This is where the excessive spending comes in, such as going out to bars and restaurants, shopping, and entertainment funds. If you take a look at your last credit card/bank statement, go over line by line for purchases that were not necessary monthly bills, and circle each, adding up the total spending. It will probably shock you, so the next step would be to see which items could have been avoided and work towards reducing unnecessary spending going forward.
Create an Emergency Account
While on a strict budget, any sort of unexpected expense can throw your successful planning out of whack, so you want to give yourself a little cushion. You never know when you might have an auto repair come up, an unexpected home repair needed, or even worse, an unfortunate job loss. For purchases, it would be nice to have the money readily available so that you do not have to put it on a credit card to try and figure out how to pay for it later. Experts say you try and have three to six months’ worth of expenses available, though some will say six months may be too much and could have been better spend investing.
Contribute to Retirement as Soon as Possible
Although it may be the furthest from your mind, start saving for retirement as early as possible; you will thank yourself later. Even if money is tight, if your employer offers a matching 401(k) program, at least put in the maximum company match, otherwise it could just be leaving free money on the table.