Analyze your attitudes toward money. Are you negative and do you think you’re destined to be broke? Do you think rich people are snobs? Believe it or not, these beliefs can affect how you behave with your own money and can affect your financial success.
Implement supportive money habits that help you achieve your goals. Habits are what keep you going after motivation wears off. If you can implement supportive money habits, you can increase the likelihood of your financial success. Next step:
Your money blueprint is the programming you received about money growing up. If you were lucky enough to grow up with supportive money beliefs, that’s great. But if you weren’t so lucky, you need to be aware of the detrimental money beliefs you’re holding on to. These can get in the way of your financial success.
Look at the reality of your financial situation and assess it honestly. As Suze Orman says, “stand in your truth. Don’t avoid your mess. Take ownership of it so you can change it”.
You’re the average of the five people you spend the most time with. If you get around people who make good money decisions and have good money habits, they will rub off on you, too.
Generally, a good place to start saving for retirement is your employer’s sponsored retirement plan (e.g.: a 401(k) or 403(b)). First, if your employer offers a match, you want to contribute up to the match so you’re not leaving free money on the table. Second, it’s just usually easier for people to fill out a form at work to start contributing to a retirement plan than it is to go out and open up a retirement investment account with a brokerage firm. So, if you’re not sure where to start saving for retirement, look into your employer’s retirement plan.
Start saving for retirement as soon as possible. This will give you the advantage of time. Your money will compound over time and your retirement investments will increase exponentially (the value of compound interest).
“Christmas is not an emergency. It comes the same time every year.” – Dave Ramsey. This quote is an example of how you need to be prepared for expenses that you know are coming up. Save in advance. Plan savings for big expenses ahead of time, so you don’t find yourself in debt.
One rule of thumb for saving is to save 10-12% of your income. This is a ratio that you can use with your other financial goals to see if it makes sense for you. For example, I have an emergency fund set aside that I no longer contribute to, but I also save 10% of my gross income to my 401(k). I push myself to save this much in my retirement account because I know the value of compound interest. Time is money. 🙂 Next steps:
Save an emergency fund in a regular checking or savings account that you set aside for emergencies. How much you should have in your emergency fund depends on your income streams (the fewer sources of income, the more you need in your emergency fund). The biggest point to take away here is that you should have some cash money set aside for emergencies.