“Did you just cash your paycheck money? Before you spend any of it, start with the end in mind. Think of a goal such as buying a house, a car, or paying off student loans. Know what that end is, then figure out what you need to save. Once you find that goal, work backward from there. The exact percentage you save from every paycheck doesn’t have to be a days-long calculation, but it should be thoughtful. If you’re working toward one of those heftier goals, It’s safe to say you should be saving double-digit percentages to get where you need to go,” said Adam Yofan of Buckingham Strategic Wealth, Downtown.
There is one classic tool known as 50/30/20 rule, in case, of doubt or absence of any particular goal in mind. While planning out your finances, dedicate half of your after-tax income to needs: food, rent, insurance, utilities, all that. The next 30% can go to discretionary spending, stuff like movie nights with your friends, subscription services, and other luxuries things that make life fun.
Perceive Money as a Tool, Not a Result
Investing apps have made the stock market an appealing destination for young adults to understand more about money.
Learning about investing is, well, a great investment. Early research can help you understand what you’re getting into once you enter a Roth IRA or 401(k) plan at your first job.
“We fear things in proportion to our ignorance of them,”Mr. Kaszak said
If you get the chance to buy some stocks and bonds, just know the difference between investing and speculating. Investing is all about diversifying your portfolio, using mutual funds, and varied stocks to minimize your risk while seeing good growth.
Focus Money for Prosperity and not Debt
Most people get stuck in the loop of focusing on paying off their bills and debt. In regards to money accumulation, their lives and attention is centered around paying bills and reducing their debt.
This is a major reason why, many financial advisers tell people to set up an automatic debit payment plan and to just start focusing on savings, prosperity, and growth.
Don’t keep piling cash into your savings
Letting your savings balance get too high by hoarding your cash can actually cause you to lose out on money.
The rule is to have three to six months of living expenses that include rent, utilities, food, car payments, etc saved up for emergencies. These could be anything such as unexpected medical bills or immediate home or car repairs. Once a person has enough saved up for an emergency fund, they can shift your focus and put extra cash in other places. This could be planned as per the needs and individuals’ preferences such as working toward hitting a short-term goal or investing your extra cash in the stock market.
Once the person has the safety net of their savings in place, one should take the time to really think about your bigger goals and how they can use the money to achieve them.