When you were a child or young adult, there's a good chance that one of the major lessons you learned from a parent is the value of a dollar. As you get old enough to start managing your own bills and other living expenses, it's important to set your own financial goals to help protect your future. It's never too early or too late to improve our financial habits.
Budget Your Money
In my days as a financial advisor, I found most people who claimed to be broke, weren't broke at all, they had a broken budget. Creating a budget will help you to identify where your money goes after you receive your paycheck. It will take a few months to get a comfortable average, but once you identify how much money you need for each bill during the month, you can start to eliminate the money drains that often cost you throughout the year. Right after we got married in August, my husband and I started stuffing our receipts into an envelope and we (really he) tallies everything at the end of the month. It's really helped us create a realistic budget, that allows for what we need and things we want as well. All work and no play can lead to a very dull life. Even if your budget is tight, I'd suggest you set aside a small amount each month so that you can enjoy yourself. Maybe it's $10 dollars to see a movie, think of it as a reward for staying on track.
Build Your Savings
It can be difficult, at times, to have the money to pay off every bill. That's expected, especially during certain months when your utilities may spike. It is important, however, to get in the habit of putting a small percentage of your income into a savings account. Set a percentage you want to put aside each month, and deposit it in the bank every payday. If you get paid via direct deposit, you can even schedule your savings contribution to happen automatically on payday. There will likely be some months when you can save larger amounts too, which helps offset the months when you can't save the usual amount.
Manage Your Spending
When you start to create your budget, take a good look at how you spend your money. As mentioned, it's important to identify your money drains. Cutting out that coffee stop on the way to work is one we hear so often, it almost makes me cringe. But it has it's merit. So do all the other frequent, seemingly small purchases that really add up. How you handle them can make or break your saving habits. The convenience of having soooo many items at our every disposal, is a costly one for sure (on our bank account and our waistline). Do you pick up snacks/ beer/ soda/ etc when you fuel up? Or pull in when you want a treat when passing by the gazillion of drive thrus and gas stations on your way to everywhere? Do you really need the upgraded package on your cable bill and all those subscriptions-- Apple+, Netflix, Prime, iTunes, Sirius XM etc-- they all add up. I'm not saying cut out all the fun, not at all, but it's worth asking yourself, Do I really want this? Will I use it enough to be worth it? And really, do I have the extra in my budget to cover it or am I running out of money before I run out of month?
Mitigating the small, routine purchases, will also help you learn how to cut spending in other areas, like your cell phone plan with way more data than you use. If a good portion of your earnings goes towards gas every month, maybe start a carpool and share the expense. If your out to eat budget is out of control, hit the grocery store and make your meals. My husband and I switched our shopping to Aldi for most of our groceries and saw a significant savings. We combined that with less meals out and making our lunches for work every day and really saw an impact.
Simple goals that are set when you first start taking care of your finances can turn into lifelong habits that will allow you to live comfortably once you reach retirement age. It's never too early to start setting good financial goals.