Many young professionals struggle to stay on top of their finances. There’s often a lot to keep up with; income from your job, from your side hustles, and all the expenses that come with being a working adult. Money seems to come right in and come right out. If you’re looking to improve your situation and maybe start saving for retirement, for a downpayment on a house or even work to start getting out of debt, you’ll need to get a grip on your financial situation. To do so you’ll need to learn to stay more on top of your finances. Whether you need to get out of extreme debt or simply want to be more financially responsible, you should examine these seven suggestions.

Save Automatically

Saving money is one of the most challenging tasks. When your direct deposit paycheck arrives, it’s easy to overspend. As quick as it comes in, it seems to find a way to go out of your wallet! Or maybe it’s not the temptation to spend, it’s just all the other stuff that’s going on in your life that saving is just something you forget.

One of the easiest tips I can offer is to set up monthly transfers to your savings account. Figure out roughly how much you need to pay the bills each month and then from the leftover how much you’d like to save. It could be $25, $50, $100 or more, but it’s the act of actually saving that counts. By saving automatically, you won’t miss this money because you didn’t see it. You’ll be less motivated to spend money that never arrives.

Some financial apps, like Chime, make it even easy by transferring a percentage of each deposit to your savings account automatically. Or most banks will allow you to setup automatic transfers which makes it so easy.

Make A Rainy Day Fund

Life can be full of unpleasant surprises. An uninsured loss to your house, a car accident, an unforeseen medical emergency, or any number of other events could put you in considerable financial problems. Or think back to early 2020 when lots of people were getting laid off or furloughed. It’s not a matter of if an unexpected financial need will arise, it’s a matter of when!

As a result, saving for unexpected expenses is always a good idea. Try to save three months’ worth of living expenses. Three month’s of expenses might seem like a lot so perhaps start with $500 or $1,000. Set aside what you can until you hit that goal and once you do, it’ll be a major win! From there keep going as you’re able until you build up to that 3 month range. Once this money is saved, don’t touch it except in an emergency. Keep it in a separate bank account, or even better a separate bank to really ensure you’re only touching it in an emergency situation.

Stick To A Budget

A realistic budget is the most critical part of creating healthy financial habits. It’s not a tool that says ‘no’ to all your spending desires, it’s a tool that allows you to set goals (saving and spending) and helps you meet those goals. A budget can be more automated using one of the many apps out there, or it can be low-tech in the form of a spreadsheet. Find what works for you and stick with it!

You should:

• Prepare a budget
• Calculate your necessary costs
• Plan for your leftover cash
• Reduce wasteful spending
• Track your progress on an ongoing basis

Cut Unnecessary Costs

Almost anyone can reduce monthly expenses by eliminating needless ones. Some cut-worthy expenses could be old subscriptions that we don’t use anymore, or impulse buys we always find a way of purchasing. These could include spending categories like:

• Non-regular streaming services (i.e., Netflix, Hulu, HBO, etc.)
• Outings
• Food and clothing overspending
• Gym Membership

These and other fees can add up to far over $100 each month that could be better spent on paying down debt or saving. At the end of the month sit down and review your spending and try to identify areas you could cut back on in the coming month!

Invest In Your Future

One of the best things you can do while working is to invest in a retirement fund. Many young professionals shun this practice in order to save money. But you’ll be pleased you did when you’re older.

There are various retirement plans to select from, so do your research. Also, ask your company about retirement choices, as many firms match 401(k) contributions. Get started as soon as you can, and ideally start working up to setting aside 15% of your income for retirement. You should also make sure you think about insurances such as life insurance and store numbers for Personal Injury Lawyers just in case a setback occurs that is not your fault. 

Monthly Credit Card Payoff

To avoid paying interest on credit card balances, pay off the balance each month, and more importantly, don’t spend more than you’re bringing in each month. However, many Americans leave credit card balances for months or years. Worse, credit card firms generally impose exorbitant interest rates. If you are in credit card debt, recognize that the interest you are paying each month is holding you back from growing. Make a plan to get aggressive in paying off your debt and start saying ‘no’ to non-important expenses as you slowly but surely get out of debt!

However, many credit cards provide fantastic incentives like cashback and airline miles. To be financially responsible, you must pay off your credit card debt in full every month. I’m big into reward credit cards but my first rule to win with them is to not going into debt!

Make A Debt Payoff Plan

Treat your credit cards like debit cards. Unless there is a genuine emergency, only spend money that you have on hand. Once you’ve developed strong financial habits, you should make a strategy to pay off your existing obligations.

The snowball approach is popular. The snowball strategy involves paying off smaller bills first, then larger ones. This encourages you to keep paying off your bills as you feel good about clearing your minor balances. It’s amazing to start seeing progress and you’ll likely really start getting motivated to keep the trend going.

Or you can target your high-interest obligations. This strategy is appropriate for people who don’t need the extra motivation given by the snowball method. You can also explore utilizing debt consolidation loans to cut their interest rates and save money.

Whichever strategy you choose, be careful to stick to it!

Summary

Managing your finances can be stressful. These seven financial literacy tips will help you manage your bills and finances.