Did you know that 76% Millennials lack financial literacy? People today have all the means to gain financial literacy (online, from a money coach, or from a financial adviser) but very few tend to do so. So, in order not to be consumed by that trillion dollars avalanche of the USA consumers’ debt, you should learn about managing finances early on.
Below find 5 clear tips on personal finance.
You might think that you can save on the bills this month, but if missing the bills grows into tendency, the debt will grow as well. Kelly F. Crane, the president and chief investment officer at Napa Valley Wealth Management, states that some people either spend irresponsibly, and end up with debt, or simply forget to pay the bills due to the busy schedule. Either way, it’s crucial to stay on top of bills.
Instead of impulse purchases you can put this money into the “bills fund” and set up mobile notifications for the time when the bills are due. By the way, 53% of Americans pay bills via their mobile devices these days (Statista.com data)
In addition to having more purchasing power, people with good credit rating also have more chances of actually building wealth. Initially loans play the key role in the formation of your credit score. If you have bad discipline with repaying debt, you worsen your credit score and all the financial prospects go downhill from this point. If you have a good credit score you can hope for bigger loans and better loan terms from lenders.
However, you can upgrade your credit score by applying for a loan. Bad credit borrowers do have to pay bigger interest rates, but they can also better their credit by repaying the loan timely. Fit My Money actually has good financial advice for borrowers with bad credit. Note that you can check your credit score online for free.
Once you learn about the ups and downs of your credit score, it’s crucial to know how to repay the debt. In addition to monthly bills from credit card expenditures, average Americans often have the student loan, mortgage, car insurance and life insurance due payments monthly. Student loan debt alone hit a record $1.6 trillion in 2020. This means that learning to repay the debt is a significant skill. First of all, all financial experts say that you should list your debt and monthly interest rate to see the whole pictures, and then work out ways to repay the debt.
Financial experts only differ on the ways you must repay the debt. Some say you should first focus on the debt body then the interest rate, the others say that you should first pay off the interest rate and then gradually repay the whole debt.
Marcus Garrett, Paychecks & Balances podcast author, for instance, developed a system of repaying debt. It’s based on the abbreviation DEBT.
According to the Finance Wolves statistics 33% of adults have $0 saved for retirement. You may feel like you have all the time in the world, but retirement is approaching faster than you think. And you need to play the time card to your advance. Start saving for retirement early for more interest to grow on your deposit.
Celeste Hernandez Revelli, the director of financial planning at eMoney Advisor, says that you should at least take advantage of the 401(k) match of your company and contribute the least enough in order to claim the full match. In the long term, you should hit that 15% of the savings that you should put into your your retirement plan yourself.
Note that the biggest percent (28%) of your retirement plan goes from your 401(k) and start working on it now.
The saying alone seems controversial, because you can’t know where the emergency will come from and how much it will cost. However, the smart way is to put off a little money now and then for emergencies. There are two methods to be ready for emergencies:
Despite emergencies’ unexpected nature you can expect the sum of money to have in the fund. In the perfect case scenario you should have from three to six month of monthly expenses in it. No matter how much time it will take to get to that figure, the effort will be worth it. The best way to start an emergency fund is to open a high-interest savings account and put away as much as you can afford.
By the way the interest rate on personal savings has grown to over 13% in March 2020. so, investing in an emergency fund is even more beneficial today. Insurance may take a huge part of the monthly expenses, but you should never save on it. The least that you should have is the three types of insurance
Finally, you should never do it alone. You may not be able to afford to pay for a financial advisor but many of them are offering their advice for free these days. Dave Ramsey alone helps over 13 million people get out of debt on a daily basis. And his radio-program is completely free. Chris Hogan gives great advice on retirement planning.
Grant Cardone believes in the positive side of the debt. He suggests using the potential of your credit card but not overspend. And instead of worrying about debt down payments, you should focus on finding bigger income possibilities. And Peter Schiff gives out tips on understanding current economy and investment options.
Absorb all of the knowledge you can and create your own way of budgeting. Remember that it’s never too early to learn financial literacy.