#14: How to get your personal finances in order
Adulting duties fr
Was money a taboo topic in your family?
I recently had a conversation with a friend about how we didn’t even know how much our parents made until they had to fill out the FAFSA.
But not talking about money isn’t going to help us make more money.
If we want to be successful, managing our finances is a huge part of that.
As the saying goes, “what isn’t measured, isn’t managed.”
I might not be a financial expert but I’ve learned a few things along the way.
Here are a few tips about how I made sure I got on the right track financially:
1. Create an emergency fund
With the chance of a layoff looming over our heads at any given moment, emergency funds become extra vital. Create your emergency fund by calculating how much your living expenses are for 1 month, and then multiplying that by 3 to create a 3 month emergency fund. If you want to be extra safe, have a 6 month or 1 year emergency fund.
Then, save it in a high yield savings account to earn as much interest as possible (I like to use this one). Now you have cushion for when emergencies happen, like when your car decides to break down or you have to pay an unexpected visit to the hospital.
2. Build a good credit score
Having a good credit score is the key to being able to qualify for loans, like for a car or a house. Even if you just want to rent an apartment, they will likely check your credit score during the application process. I do believe that having a credit card to build a good credit score is a necessity in America today.
To build a good credit score, use your credit cards wisely and pay off the balances on time. A good credit score to aim for is above 700.
3. Budget and track your spending
Before you start budgeting, I would first recommend tracking your monthly expenses to see where you land - awareness is the first step. From there, you can create realistic goals with a budget. An Excel spreadsheet or a budgeting app like Mint are great options to keep track of your spending.
A good rule of thumb is the 50/30/20 rule: 50% of your income should go towards needs, 30% towards wants, and 20% towards savings/investments.
4. Start investing in retirement
The best time to set yourself up for retirement is now! You spend 40-ish years in your career, and you could spend 20-30 years or more in retirement.
The nice part about saving up for retirement is that you save on taxes when you invest into retirement accounts. Plus, the earlier you start saving, the more your money will grow in the account. Be sure to take advantage of your company’s 401k retirement plan!
This is Part 1 of a series on personal finance, so stay tuned to learn about the best credit cards and how to start investing!
Health & Wealth ☕️
Here are fun resources to help you launch your personal finance journey:
1. A book: “Rich Dad, Poor Dad”
I have to give a shoutout to the most popular finance book, “Rich Dad, Poor Dad”. It’s a great beginner book for anyone looking for an easy-to-digest storyline about the mindset of investing.
2. A show: “How to Get Rich” with Ramit Sethi on Netflix
We love entertaining and educational content wrapped into one 🙌 This Netflix show takes us through the financial lives of people from different walks of life, from an athlete to an influencer to married couples. Ramit Sethi, a finance expert, walks through each of their situations and guides them to becoming more financially well-off. I enjoyed his take on defining what “a rich life” means to you, and arranging your spending and lifestyle based on what matters most to you.
3. A YouTube channel: Graham Stephan
I’ve been watching Graham Stephan’s videos since probably high school. He’s one of the OG finance YouTubers - if you look at his playlists, you’ll literally see hundreds of videos he’s created on each topic. He covers a huge variety of subjects for beginners, from investing to real estate to credit cards.
4. A podcast: The Table by Anthony O’Neal
I’m also a big fan of Anthony O’Neal, who hosts a finance/business podcast. Not only is it super entertaining and fun to listen to, but he keeps it “real, relevant, and relatable” according to his motto. His street cred? He actually used to work for Dave Ramsey (the GOAT of personal finance).
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Thanks for reading! 😊
Hope you enjoyed this article of 9 to Thrive!
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Until next time, stay healthy, wealthy, and wise!
Sincerely,
Sarena