It’s very uncommon for someone to not make a misstep every now and then when it comes to their finances. A lot of this has to do with splurging on things you don’t really need, or by not being educated enough in finances.
However, there are a few steps you can take no matter your age that will help you live your best financial life.
Simply put, living above your means is going to eventually catch up to you. You need to aim to earn more than you spend each month so that you can put money aside in savings. A good rule of thumb is to try saving one-third of every pay raise you get. Choose to pay down debts instead of spending it on items you won’t blink an eye at in a few months.
This is a basic rule, but you might be surprised at how many miss this crucial step. In fact, more than half of Americans have less than $1,000 in savings. One way to make this process easier is to automate your savings and have a certain amount automatically transferred from your checking account to your savings account each month.
Many people fall prey to the urge to buy things simply to impress others. They waste money on things they don’t need, such as expensive clothing, cars, or gadgets. A better option is to spend money on things that can keep generating money over time or by saving money for the long-term.
Don’t be afraid of playing the stock market. Even starting on a small scale can help further your financial life. The sooner you start, the better, as this will provide more time for your money to grow over time. One of the number one regrets that people have who have invested in the stock market is that they wish they’d started sooner.
If you haven’t started to invest in your retirement just yet, you should do so immediately. The sooner you start saving, the sooner you can take advantage of compound interest. If you have children, encourage them to start with something as simple as a Roth IRA while in college.
This step can help them become financially secure as they get older and can help instill good financial habits.