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Yahoo Finance Plus 12 Crucial Money Tips for Every Phase of Your Financial Life
Everyone makes money missteps at some point in their lives, whether it’s splurging on unnecessary items or neglecting to contribute to retirement funds as soon as possible. Even financial pros are not immune to making mistakes.
To help you avoid unnecessary pitfalls, check out these tips and tricks that can help you live your best money life — no matter your age.
Last updated: Oct. 8, 2020
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Start With Saving
More than half of Americans have less than $1,000 in savings, a 2019 GOBankingRates survey found. Although it’s tempting to spend rather than save when you get a paycheck, it’s important to prioritize putting money away into your checking or savings account. On top of that, you should also use the right checking or savings accounts to grow your money.
A checking account like PenFed’s Access America Checking1 can do more for your money because, with a monthly direct deposit of $500 or more, you can earn an annual percentage yield of 0.20% or 0.40%2 depending on the daily balance. That means your money will be growing while it sits there until you need it. Since that’s basically free money, it’s something to consider taking advantage of.
1Federally insured by NCUA. To receive any advertised product, you must become a member of PenFed Credit Union.
2APY (annual percentage yield) is accurate as of Sept. 22, 2020, and is subject to change at any time.
Avoid Lifestyle Inflation
It’s important to increase your savings rate whenever you start earning more in order to keep growing your net worth.
“Save one-third of every pay raise you get so you don’t succumb to lifestyle inflation,” said Ted Jenkin, a certified financial planner. By starting this practice early in your career, you’ll develop good habits like saving, investing and paying down debts instead of spending it on more stuff you won’t care about in a few years’ time.
Don't Waste Your Money on Things You Don't Need
Whether you’ve just received your first paycheck or your first raise, it can be tempting to spend your money on things you want rather than on things you need — but this can be a huge mistake.
“Don’t spend so much money on clothing,” said Michelle Schroeder-Gardner, founder of the personal finance blog “Making Sense of Cents.” “I’ve worked full-time since I was around the age of 14, yet I didn’t really start saving money until nearly a decade later.”
Don't Buy Things To Impress Other People
Spending on immediate wants can hurt your future needs, said John Rampton, founder and CEO of Calendar.
“Don’t waste your time on expensive cars or gadgets,” he said. “It’s better to save money for the long-term and for things that can keep generating money, rather than taking (your) money.”
Be Aware: 40 Money Habits That Can Leave You Broke
Start Investing In Your Retirement ASAP
A GOBankingRates’ retirement savings survey found that 64% of Americans have less than $10,000 saved for retirement. It’s easy to put off saving for retirement when you’re in your 20s, but that’s the best time to start. The sooner you save, the sooner you can take advantage of compound interest. No matter your age, it’s important to prioritize investing in your retirement accounts.
Don't Fear the Stock Market
Doing something that scares you can be a good thing for your finances. Novice investors are often scared of the stock market, but just by getting started, even on a small scale, you’re furthering your financial life. Learn some of the safer ways to invest for the long term if you’re worried about making mistakes. And the sooner you get started, the better off you’ll likely be.
Now, Invest Even More
“Invest in the market, and lock in gains by purchasing income,” said Tom Hegna, financial author, speaker and economist. “Once you have your basic expenses covered with income, buy more.”
By making wise investments now, you can create income for yourself in retirement to supplement Social Security, allowing you to live a more comfortable life in retirement.
Invest In Yourself
In addition to making financial investments, it’s important to invest in yourself by learning everything you can about personal finance so you can create a financial plan that works for you.
It’s easy to write-off personal finance as confusing, but you’re only hurting yourself. The sooner you take the time to learn some money basics, the sooner you can use this knowledge to plan out short- and long-term goals.
Listen To Yourself and Take Action
Figure out your goals, including your financial goals. By doing so, you’ll know exactly what you need to do in order to achieve them. It will also motivate you to stick to your goals and work even harder.
One way you can help yourself to reach your goals sooner is by growing your money in your accounts. By going with a checking account like the one from PenFed1, you can grow the funds you need access to thanks to the account’s annual percentage rate. Considering its APY is up to 10 times2 more than that of the average checking account, putting your emergency money or savings for a special treat here is a smart money move. Let your money work for you while it sits.
1Federally insured by NCUA. To receive any advertised product, you must become a member of PenFed Credit Union.
2Sourced directly from: www.fdic.gov/regulations/resources/rates as of Sept. 23, 2020.
Don't Waste Time Worrying
And don’t let fear get in the way of going after what you want, said Jen Sincero, New York Times bestselling author and success coach.
“Worrying is praying for what you don’t want, so stop worrying about money and focus on what you do want,” she said.
Remember That Money Isn't Everything
Although you need money to cover expenses and other life necessities, it isn’t the be-all and end-all. However, that doesn’t mean you shouldn’t ask for what you deserve.
“Ask for more money and learn to negotiate as soon as possible,” said money expert Brittney Castro. “(But) don’t chase money, because it’s not the holy grail. Enjoy it. Make lots of it. But always remember it’s a resource, not an indication of who or what you are in the world.”
Don't Let Money Define You
Dominique Broadway, a millennial personal finance expert and founder of Finances Demystified, agreed that money doesn’t define you or your success.
“Do not link money with success,” she said. “Money can come and go. Focus on saving and growing your money, and don’t focus on ‘shiny things’ to keep up with other people.”
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This article originally appeared on GOBankingRates.com: 12 Crucial Money Tips for Every Phase of Your Financial Life
