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If You Don’t Do These 12 Money-Savvy Moves Now, You’ll Regret 30 Years Later

If You Don’t Do These 12 Money-Savvy Moves Now, You’ll Regret 30 Years Later

No matter how big the income you get from your job or business, if you don’t know how to manage finances, you will never be able to move from point A to point B. Point A is where you are, money-wise, and point B is where you want to be. Before leaving your 30s behind, you should have mastered this bit of money wisdom.

Just to add more to your financial education, here are twelve moves you can do to take care of your treasure house.

1. Save while you can. When parenting necessities and mortgage costs rise, it will be hard to save money. You want to maximize the opportunities you presently have to stash away some cash, even little by little, so when the economically slow years will say hello, you won’t say mea culpa.

2. Plan for long term goals and identify your priorities. Now that your earning power is at its prime, grab the opportunity to plan on buying a house (that’s if you still haven’t), or think about how to implement college savings plan. When you start to have more expenses due to additional parental responsibilities such as the birth of another baby, school-related expenses for your children, or due to a bigger budget for a bigger car, etc., you’ll have lesser capability to put your plans into work.

3. Start a home business. As early as now, try to learn some new skills you can offer as a service and turn it into a business. You can also use part of what you have saved to start a business you can run from home. No, you don’t need to give up your job, not just yet. You need to grow it first and when it reaches a stage when it starts earning even more than what your getting as an employee, that’s the time you can think of slowly leaving work behind.

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Or better yet, start saving buffer cash, so when you finally resign from your job, you have money to spend while building up your baby startup. A business, something you are qualified to operate, is one of the best investments you can have, and a money-savvy move you can’t miss. Just make sure of 2 things: One, you are confident you can manage the line of business you’re planning to put up (because you’ve thoroughly studied it). Two, you’re passionate about the business.

4. Create wise and solid money habits. It’s high time to develop money habits that will help you weather financial storms for the rest of your life. Kerry Hannon, a personal finance expert who wrote “Great Jobs for Everyone 50+,” says that in her 30s, she used up all available credit on her retirement savings accounts and even saved a part of her extra income from freelancing for retirement. She told us, those funds have served her well over the past years as reserved funds to help pay for vacations, emergencies, and more. She says, she still saves apart from retirement accounts scrupulously in her 50s, too. She’s proud to say, it’s a habit she started way back in her 30s.

5. Prepare for contingencies. It’s always wise to prepare for any eventuality. The worse that can happen to you at this time and era is to have a financial bankruptcy. Now, to avoid this you can prepare for one. The thing is, if you prepare, you will have a bigger chance of not having one. Nice paradox, right? Well I think this is the coolest realization for today. But, how do you prepare for one? There are three essential ways: by saving, by educating yourself, and by investing. Saving is self explanatory, but what I meant by educating yourself is reading books, magazines, attending seminars/workshops and talking to mentors about finances. Heck, we take time and make efforts to learn to drive, why not spend time learning how to manage our finances!

6. Want to leave a job? Roll over your retirement. Most people change jobs in their 30s several times, seeking the right spot where to grow and elevate their value for future career moves. However, this can lead to a patchwork of 401(k) plans at a number of past employers. A wiser move is to re-invest them into an IRA or into your next job’s 401(k), tax-free.

7. Save for retirement. The best time to save for retirement is now that you are young and capable. If you start saving when you’re nearing retirement age, that will decrease your chances of accumulating enough funds to have a comfortable life in your twilight years.

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Recently, I read a book about financial planning by Francis Colayco, and I find it full of tips on how to retire with a bank full of cash. In a TV interview, he was asked why some high-income workers find it difficult to save money for retirement. Mr. Francis Colayco explains: “The biggest mistake people with money can make is premature acquisition of assets. They have enough for a down payment, they make the purchase. When asked how they will pay the amortization, they answer, ‘I’ll find a way.’ You can’t think like that, because the agreement you’ve entered into is an obligation that you have to pay whether or not you’ve made any profits. If you have no guarantee that you can pay, don’t make the investment, even if you have enough for the down payment.”

These unwise purchases will hinder you from saving for your future.

8. Get comfortable with negotiation. Learn and start to negotiate for higher salaries. A 52 year old certified financial planner who hails from Park City, Utah, Nancy L. Anderson, says while she has done many financially wise things in her 30s like saving enough college funds for her child, investing in rental property, buying a house, and setting aside 20% of her income, she realized she should have been bolder and asserted her right to get a higher salary. She said “If I’d negotiated a higher salary each time I changed companies in my career, I’d be wealthier today.” Most people move to other jobs approximately 11 times in their lifetime, negotiating for a better salary in those transitions could have accumulated me around $600,000,” she added.

9. Scope out cash for a down payment – prepare for a down payment for your first house. Even if retirement accounts are almost sacred, and many believe it’s not a wise decision to touch them, some financial planners consider it fair to use them as down payment for your first home.

You must justify this strategy by making sure you have enough time to replenish the accounts before retirement. In case you’re 45 or older, better not consider this idea. You must also be strategic with what account to tap. With a 401k, for example, you will incur a 10% penalty on early withdrawals and taxes. With an IRA, the U.S. government waives 10% of penalty on a distribution of even up to $10,000 for people buying a home for the first time. Despite this, you will still pay taxes on the withdrawal. The main point is, in your 30s you must find a way to make a down payment for your first home and look for ways to have enough consistent flow of income to pay for the amortizations. 

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10. Talk about money with your partner. If you’re married, working together with your spouse to be on track regarding finances and settling any disputes early on can prevent conflicts in the future. “People often comingle finances with their partner, and open communication is key. Make sure you talk about your finances and life goals with your partner, and align on how you will get there together,” Suzanna de Baca, Vice President of Wealth Strategies at Ameriprise Financial, suggests.

11. Set a goal for college savings. I know it’s a tough game. You are funding your retirement, and you are also demanded to plan and prepare for your kid’s college expenses. However, you can be practical by aiming to go to a public school for three years and two years at a private school and think of a way to pay the rest using current income. It will also help to have your student assist you in the expenses by encouraging him to take summer jobs. Use the college-cost calculator at Savingforcollege.com to manage scenarios like these. Sandy Block and Jane Bennett Clark, Kiplinger’s Personal Finance magazine say, “To meet 50% of the total cost of four years at a public university, based on the current average annual cost ($17,131) and a 6% inflation rate for college costs, you’d need to save $222 a month for 18 years, assuming a 7% annual after-tax return on your college savings fund. If you covered half of only the tuition bill, you’d need to save $107 a month.”

12. Two salaries equals more taxes  It’s common, couples most often don’t realize one essential thing: they are taxed as a single entity. It’s true, the so-called “marriage penalty” has been diminished by legislation in the past recent years, so the obvious and easy way to reduce liability is for the husband and wife or both earners to save funds into tax-deferred accounts–IRA or 401(k).

Sources:

Business Insider.com, KIMBERLY PALMERU.S. NEWS & WORLD REPORT

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Financial Plan About.com,  

Money MSN.com, Sandy Block and Jane Bennett Clark, Kiplinger’s Personal Finance magazine

Forbes.com, Mitch Tuchman, Contributor

Featured photo credit: *money explore*/John via flickr.com

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Anthony Dejolde

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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