Personal Finance Habits That Can Make You Rich
Personal finance has not yet become a required subject in high school or college, so you might be fairly clueless about how to manage your money when you’re out in the real world for the first time. First of all, don’t worry. You are not alone.
If you think that understanding personal finance is way above your head, you need to give yourself a little more credit!!! no pun intended 🙂
All it takes to get started on the right path is the willingness to educate yourself on best practices – you don’t even need to be good at math! To help you get started on a path of excellent personal finance, and to even start saving some money, try these 5 tips.
1. Spend Significantly Less than You Earn
The first habit is to spend less than you earn. And if you want to build wealth fast you need to spend significantly less than you earn. You would think that this would be a common sense rule but unfortunately it’s not. Most Americans spend a lot more than they earn which is why there’s so much consumer debt. If you can ingrain this one habit at a young age you’ll be on the track to financial freedom.
2. Invest Your Money at a Young Age
The earlier you start investing the more time your money has to grow. This is why investing at a young age is so crucial. Even if you only have an extra $20 per week to invest you should do it. Anything is better then nothing, and while $20 might not seem like much, imagine what just 1 year of savings would like like from putting away $20 a week! Those small amounts can turn into something huge in twenty to thirty years.
3. Avoid Debt
Debt should be your enemy. Those of you with mountains of student loans have probably already figured this out. If you have student debt, I recommend using Credible to see if you can lower the APR on your student loans by refinancing.
Debt will hold you back from so many financial opportunities. Make it your mission to avoid all forms of consumer debt. If you’re already in debt you need to first work on getting rid of it before you’ll be able to build wealth.
4. Save as Much Money as You Can
Saving for the sake of saving is pretty pointless. Instead you should create financial goals like saving for a house, car, or early retirement. Once you’ve come up with meaningful goals start stashing away as much money as you can. Save for your current goals and for your future.
5. Find a Career You Enjoy
Last but not least you need to find a career you enjoy. You’re not going to be able to realize your full earning capabilities unless you at least mildly enjoy what you’re doing. Plus, who wants to work their entire life doing something that they hate? It might take you awhile to find that perfect fit but you’ll know when you find it.
Don’t know what to put your passion into? Well, get a job and start a side hustle. Many millennials work a side gig starting in college and continue to grow it after graduation. This is especially a good way to try out some different options before committing yourself to a career you’re not sure about.
Practice Makes Perfect
If one of your goals this year is to build wealth then these five personal finance habits will get you there. At the end of the day the steps to take are very simple, it’s acting them out that will be a test of character. Good luck!