As a young adult, it’s so helpful to get a good understanding of how to manage your finances. If you cultivate great habits in your twenties, you’ll experience a compounded effect of wealth, abundance and prosperity. Proper money management involves simple practices, but they can be difficult for many to execute. The key is discipline. Exercise discipline and use these tips to keep your finances in check.
It’s not about whether or not emergency situations will arise. It’s really a matter of when. If you want to destroy your finances quickly, avoid the concept of an emergency fund. If you want to protect your finances, work toward saving $1,000 first. Keep the money away in a safe account that you don’t access unless it’s an absolute emergency. Emergencies don’t include a flat tire. A flat tire should be covered in car expenses. You know your tires will get flat at some point. Plan for those expenses outside of the emergency account.
All work and no play will make you a dull person. If you’re constantly saving and don’t get to spend anything, it’s going to be very difficult to stay on course. Give yourself a weekly allowance of money that you can spend as you please. Even if it’s just $5 a day, it’ll get you in the habit of satiating the itch to spend and stay focused.
Take a look at your expenses and see what can be trimmed. Many people spend hundreds each month on expenses like cable and the gym that they never use. If you watch Hulu and Netflix more than anything else, turn the cable off. Consider sitting down with an insurance adjuster like East Coast Public Adjusters or someone similar to see how much more fat you can trim. If you can lower your monthly expenses, you’ll be able to have more expendable income that can go toward savings and investments.
One of the great ways to stay disciplined involves keeping separate accounts. Keep an account that covers the bills and runs on automation. Keep another account that covers regular expenses such as groceries, personal maintenance and entertainment. Only carry the debit card for the one that covers regular expenses. When you do this, you won’t run into problems with money overlapping or accidentally overdrawing in accounts that cover essential bills and savings.
These are the foundation tips to remember when you’re looking to keep your finances in check. Start by mastering these four and then build on it. Be intentional about getting rid of debt and building wealth.
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