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6 Signs You Are Better At Money Management Than You Think You Are

6 Signs You Are Better At Money Management Than You Think You Are

We know millennials have a strange relationship with money, not only because they lack them, but also because they grew up seeing the effects of economic hardships on a strong nation. The simple thought of money is enough to make millennials’ heads ache. They have a huge debt for their studies, they have no perspective of buying their own house, they have troubles landing a good job and many of them are forced to move back with their parents, when they can’t afford to pay the rent. This is why crowdfunding for your wedding is now millennials’ only option for affording a wedding.

As a millennial myself, I know how shattering it can be to wonder how are you going to live in retirement years or what will happen if you get fired.

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But experts in finances say you are probably better at money management than you think you are, if you are doing these things. I know I read this list breathlessly and I rejoiced at the end, when I realized I had checked multiple items off the list. I hope you will also score well!

1.You think about saving for retirement

As millennials are now in their 20s-30s, we have a lot of time until retirement. If you are thinking of your retirement years, despite this, you are on the good path towards proper adulthood/money management thing. According to money management expert Holly Perez, take advantage of your 401K and look for opportunities to maximize your savings, as well as finding reductions for your taxable income. You use recurring payments for the monthly bills

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In order to keep your credit score high, it’s very important to pay your bills on time. The most convenient way to do it is activating your recurring payments option. This way, you won’t need to remember paying the bills, as the bank will do it for you, automatically. If you are using this option, your financial status is not endangered by delays in payments and you are able to live off the rest of your money. The best time to set the automatic payments is right after payday, when your account has enough resources.

3. You also made automatic payments to your savings account

One of the best ways to ensure you do get to save money for your retirement fund is setting up automatic payments to your savings account. You can do this online, via online banking, at the end of each month, after you’ve paid for all the bills and groceries. If you are afraid you are not going to do this each month, ask your employer to direct part of your pay towards your savings account. For those of you who don’t like either of these options, simply set up another automatic payment, just like you did for your bills. If you already direct money to your savings, you know this is a great way to prevent overspending.

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4. You use financial apps and you value safe banking

If you are using financial apps to know the status of your account at any time, you are on the right track. People who are proficient in money management never leave their accounts to fate: they use financial and budgeting apps or strategies to make sure every dollar is spent wisely.

5. You are using your credit and debit cards wisely

All the previous things do suggest you are using your credit and debit cards wise, but this is so important, I had to reinforce it. Having a credit card and using it at providers who accept credit cards is a good thing, as it helps you build your credit history. This will enable you to get loans and benefits from low interest rates. However, you need to make sure you are not keeping debt on your cards!

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6. You have an emergency fund

The ultimate sign you are doing good is having an emergency fund. When you have to pay for something unexpected, you won’t have to take a loan, rely on crowdfunding or borrow money, which is going to make saving almost mission impossible. Having an emergency fund allows you to have peace of mind, as well as a base for future savings.

You don’t have to have millions of dollars in hidden, offshore accounts, in order to be financially stable. Money management is about knowing how to handle the payments and make the most out of your monthly revenue. If you recognized yourself in any of these signs, you’re more financially-savvy than you think you are, so congrats!

Featured photo credit: Good Vibrations Images/Elitedaily via cdn29.elitedaily.com

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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