Getting #inCHAARG of your Finances
Money is a challenging topic to discuss or take control of. Even if you grew up with an accountant as a father or aced your economics class in high school, life is unpredictable + can leave you [+ your bank account!] feeling less than stellar. The looming reality of school loans + major living expenses can be especially scary for graduating seniors or recent post-grad CHAARGies! Here are some tips to take control of your finances —
3 GOLDEN RULES
The three golden rules of personal finance to live by are:
1] Spend less than you earn — This is a given, but it’s easy to spiral out of control if you don’t manage your income + spending. Whether you live paycheck-to-paycheck or earn a salary, you should be able to accurately estimate how much money you’re earning on a monthly basis. That being said, make sure to spend less than your income because it will allow you the freedom to save, prepare for your future, + be equipped to handle any crazy curve-balls life throws your way.
2] Always plan for the future — It can be difficult to plan ahead six months, let alone for retirement! This rule refers to general saving + emergency funds — two things that should be separate. Whether you’re saving up for a new laptop, a car, or a mini vacation, it’s important + healthy to always have small, attainable goals for which you’re saving. Whatever your goal is, being proactive + putting away what little you can [even $5-10] each week will help you that much more in the long run.
3] Make your money make more money — Invest! Starting a business or investing in stocks may be far-fetched goals currently, but there are several ways you can *invest* your money smartly right now. The fact you’re going to college is your first real investment in your financial future! Most banks offer low-interest savings accounts, so this can be a good start in saving. Even better, you can open an investment account that can transform your spare change into a solid amount of money over time. Acorns is an app that smartly invests your round-up change from all your transactions. By investing your spare change, you hardly realize the money is missing when it’s being put into an investment savings account.
Budgeting can be an intimidating concept, but even having a barebones method in place can help you save money + relax about your finances. A good way to divide your income + spending is: about 60% should be reserved for your fixed costs [rent//utilities, groceries, other bills], about 20% should be put into savings or invested, ++ that leaves you with about 25% of your monthly income to spend guilt-free! Now when it comes to your spending, it is a responsible idea to keep a spending tracker, whether in an app or on pen + paper. You can divide your spending into categories [transport, food, shopping] to regulate what you’re spending your money on + exactly how much within your 25% spending budget.
In this day + age, it’s important to establish a good credit score + often difficult to gain trust in the eyes of loan-givers, car salesmen, + home-sellers without an established credit history. However, it can be easy to misuse credit cards + spiral into debt [eek!]. The best way to avoid this, while also building a credit score, is to use credit cards responsibly! Try sticking to only one credit card that offers a lot of rewards that are relevant to your needs//wants. Many student credit cards offer great rewards programs for buying groceries + gas, for example. You want to limit your use to these essentials + only put as much on the card as you know you can afford to pay off each month.
Looming student loan debt is incredibly intimidating for everyone. If it’s an option, you might want to consider consolidating your debt. It may be possible to combine all your debt [student loans, remaining car payments, credit card debt] to one account so you only have to worry about paying once for everything. The main reason for doing this is that it reduces your interest a lot — you might even be able to avoid higher interest rates + save thousands of dollars in the long run just by consolidating your debt.
Life is + always will be unpredictable. Of course, emergencies happen + rent might increase, but life’s unpredictability can also be a good thing! Either way, it’s always good to be prepared! You might find yourself in a new, higher paying job + all of a sudden have a bigger spending budget or now have a cushion to put more money into savings. Remember to stay flexible + reassess your budget//accounts every few months to make sure your financial plan is still best serving you + your needs.
Whatever life throws your way, use these tips to stay #inCHAARG of your finances — you got this!