Finances can seem like a real drag, especially if it means you have to cut into your clothing or travel or entertainment budget in order to save money for that nebulous thing we call "the future."
But there's also a sort of peace that comes with organizing your finances. You feel mature, you feel empowered, and you feel completely in control of your own pecuniary destiny.
We spoke to a couple
financial whizzes about important financial lessons you should know before you
turn the big 3-0.
Save First, Spend Second
formula “Income – Savings = Expenses” is the key to your financial success. “It
always works no matter where you are in life,” says Martin Hurlburt, a
financial behavioral expert. “No strategy, technique or amount of income can
overcome it. Unless you commit to this formula, financial success and peace of
mind will always elude you.”
Open a Retirement Account Now
should have a retirement savings account, and everyone should contribute to it
every month, even if it’s only $50. The earlier you contribute, and the more
you contribute, the more you’ll have in retirement, thanks to a little thing
called “compound interest.”
Set Up Automatic Transfers
show that saving money in the future is easier than saving it right now,” says
Hurlburt. “Set up an automatic transfer from checking into [a savings account].
It should be an amount that you won’t miss too much.” He recommends $50 to $500
depending on your current financial situation.
Keep Increasing Your Contributions
If you get a pay raise or a loan gets paid off, use that extra income as an opportunity to increase your savings contributions, not your lifestyle.
Don’t Loan People Money
better off just saying, “no,” when people ask you for money, especially family
or friends. If that’s difficult for you, explain that a loan doesn’t fit within
your current budget, and that you don’t want to add a financial aspect to your
Know Where Your Money is Going
“Save every receipt and take three to five minutes nightly to add it all up for two weeks,” says Hulburt. “This will give you insights you otherwise wouldn’t have.” There are also apps that track your spending habits.
Be Thoughtful About Real Estate Purchases
“Buy real estate because it is somewhere you would be happy owning or living in for years, not to make a quick profit,” says Matt Towery, author of “Newsvesting.” On that same note, don’t buy if you’re planning to relocate within the next five years, either.
Planning Goes a Long Way
ahead and you’ll save big bucks. That can mean buying your Christmas plane
ticket home further in advance than, say, November. That can also mean waiting
for a retailer to have its annual sale, or buying a grill in December (when
demand is low) versus the week of your big summer BBQ.
Don’t Spend Money on Things You Hate
bar your friends always try to drag you to? Don’t spend money there. That
monthly subscription box that always disappoints? Cancel it.
Have a Couple Credit Cards
Yep, credit cards are OK, and yes, you should use them regularly. They help you build credit, and you can reap loyalty rewards. The key is to pay them off every single month, and to avoid using more than 20% of your total limit.
Take Advantage of Reward and Loyalty Programs
Look into credit card reward programs, store programs, and any other loyalty program offered by a retailer or company. These are typically free to sign up for, and can save you hundreds, even thousands, of dollars over the years.
Switch to 0% Interest
Speaking of credit cards, if you’re maintaining a balance and paying it down, transfer that balance to the lowest interest rate possible. If you have decent credit, you can often transfer to a 0% interest account.
Negotiate Big Purchases
Speaking of car buying, don’t be afraid to negotiate on big purchases, such as cars or houses. These big purchases are where you can save the most money. For example, saving $3000 on the
price of a car may not seem like a ton based on the total price, but that’s a year’s worth of car payments.
Don’t Rely Too Much on Convenience
Buy the block cheese and shred it yourself – it tastes the same and burns a few extra calories. Make your coffee at home – it probably tastes better. Skip Uber and walk. All these things add up.
Love What You Do
The ways in which you can make money are numerous, but being happy and making money is not as easy to do. Towery says to “be sure you love what you are doing and feel like you can do it for decades.” If you’re not feeling it, get out and move on to what you enjoy. And yes, you can make that change even after you’ve established a career. You’re more likely to experience upward momentum, raises and bonuses if you’re doing what you enjoy.
Don’t Put Things Off
Suspect car trouble? Get it checked right away or it could turn into a serious expense. Go to your dentist every six months and your GP once a year. If the sink is clogged, get it fixed. Waiting can wreak havoc on your bank account.
Spend Extra When it Makes Sense
Sometimes being a cheapskate can kick you in the rear. Spending a little extra on something that will last longer is better than wasting money on something that you’ll have to replace right away. Same thing goes for buying in bulk.
Don’t Tell People How Much You Make
Nobody needs to know how much money you make or how much you’ve got saved up. Maybe it’s a lot, maybe it’s not. Either way, it’s none of their business and keeping that information to yourself will save you a lot of headaches.
Companies Will Always Try to Keep Your Business
It doesn’t matter if they have a monopoly on your area, a company will always try to keep you happy. For example, Hulbert says to “call your cable or Internet provider and tell them you are looking at making a change. They will nearly always offer you a discount to stay. Do this annually.”
Always Comb Your Bank Transactions
You can save a lot of money simply by monitoring your transactions. For example, you may notice recurring charges you thought you cancelled, or even erroneous charges.
Generic is Often Just as Good
You don’t have to buy the brand name cereal or medicine or clothing. Buy generic when you can.
There’s a Coupon For That
retailer wants your business, and there’s almost always a coupon for what you
want to buy. Follow your favorite retailers on social media, subscribe to their
newsletters, and always research deals before you click buy.
Don’t Defer on Loans
It may sound nice to skip a year’s worth of payments on, say, your student loans, but while you’re not paying down that debt, the interest keeps accruing. Pay down your loans and your debt as quickly as you can, isolating the highest interest rates first.
Don’t Worry About What Anyone Else Thinks
Don’t spend money because you think it will make you look cooler, or because everyone else is doing it. Rock the thrift store dress, order the house wine instead of the fancy bottle, and say no when you need to.
It’s OK if You Screw Up
If you start saving now and planning now, even if you mess up along the way, you’re still in a better situation than you would have been otherwise.