If you have recently graduated from college, planning for retirement may seem like a distant concern. However, this is an incredibly important time in your life to make financial moves that will help you lay a solid foundation for the future.
Personal finances can be confusing and difficult to take control of at such a young age: it requires discipline, focus, and a lot of effort to ensure your financial well-being. But if you work hard, you can create a strong financial foundation for yourself that will pay off handsomely in years to come. If you are looking for some essential tips to take control of your personal finances, check out the comprehensive financial checklist below.
1) Be Realistic About Your Goals
It takes a lot of work and a lot of time to build wealth; saving money does not come easy. Many graduates tend to take on a lot of debt after college with the expectation of making tons of money after graduation. However, in reality it will take many years to accumulate the necessary wealth to afford nice things like a car or house. It is important to be realistic about your personal value in the workplace and live within your means. If you commit to working hard and to taking the time to build wealth, you will find yourself in a great spot 30 years down the road.
2) Find the Fun in Penny-Pinching
Learn to enjoy a frugal lifestyle. Being smart with your money is a lifestyle choice. When it comes to buying food or clothes, try and find ways to do so for as cheap as possible. See how delicious a meal you can make for the cheapest cost. Or check out a secondhand store for some cool clothes at a fraction of the cost.
3) Spend Less Than You Earn
This is probably the most obvious piece of advice you could receive, but it is still an extremely point to highlight. If you want to build wealth, then you need to spend less money than you earn! However, many people fail to live by this central idea when it comes to their finances. It does not matter how much money you are making, if you are not spending less money than you earn (and saving that money) you will find yourself in deep trouble down the road.
4) Make a Budget
To spend less money than you earn, creating a budget is essential. But you cannot just create a budget, you need to take that budget seriously. A basic guideline for efficient spending and saving is to follow the 50-30-20 rule: 50% of your income should go to necessities like rent, bills, groceries; 30% should be spendable income; and 20% should go directly into your savings. If you are looking to create a more comprehensive budget, you should consider using the site Mint.com.
5) Track Your Spending
It is important for you to know how much money you spend every week, as this is the only way to stay true to your budget. It is hard to spend less than you earn without tracking your spending. When you know how much is going out every week, and where it is going, it will help you find ways to cut costs. In order for this to really help you will need to track everything, down to every single coffee or quarter spend on laundry.