A Simple Strategy To Getting Your Finances In Order
One of my main focuses coming out of college was how to pay off my student loans as fast as possible. However, with no job, no financial literacy, and no real guidance, I had a lot to figure out. This is my no-nonsense, straightforward guide to managing my finances.
Below are six things I wish I had known sooner that I believe would be useful to you as you navigate your finances. Disclaimer: I am not a finance professional; these are tools and strategies that have worked for me. I've learned the information shared in this post through my own research and working with my financial advisor.
Pay off your credit card debt as soon as possible, as they often have the highest interest rates. In comparison to my student loans, which had a 4% interest rate, my credit card debt was the thing I chose to tackle first as it affected my credit score the most, my ability to move into places, and much more. Keep your credit card debt as low as possible and pay more than the minimum each month.
Open a high-yield savings account. High-yield savings accounts are better than traditional savings accounts because they reward you with a higher interest rate, allowing your money to grow even faster as it sits in your account. High-yield savings accounts are good accounts to use for emergencies, planning vacations, downpayment on a house, etc. These accounts are good because you can allocate a certain amount of money into these different buckets based on your goals. I currently have my account with Ally and can’t speak to all other HYSA.
Learn how to invest through YouTube, books, and financial advisors. If you’re running low on money, starting even with just $5 each week is better than not starting at all. Time is on your side; work with it. Consider investing in your company’s 401 (k) and see if they match. Invest in the stock market and get life insurance if you don’t have it already. All of these are more focused on long-term investing.
Stop spending money on things you don’t actually need. It’s easier said than done, but you don’t need a new car or phone every year, new shoes, or new clothes for every vacation. If you really want to buy something, consider the cost per use. In short, you divide the amount the item costs by the number of times you plan on using it, whether it be clothes, an expensive jacket or shoes, a table, or anything in between. This allows you to see how much you’re paying and if it’s worth it.
Invest in your personal development. The greatest investment you can make is in yourself. Learning, upskilling, reading books, watching TED Talks and Mindvalley talks, and listening to podcasts are all great ways to invest in yourself. When you level up, your money will grow with you, too.
Create multiple streams of income for yourself. One stream of income is too close to none. If you have secured a job, try doing something you love on the side. Given the current economy, it’s important to always have a backup source of income.
My hope with this blog post is that you learned something new and are able to take control of your finances. May this be the beginning of your journey to financial freedom.
