How to Manage Your Finances

By: Ben Carpenter

One of the most important aspects of success comes from personal financial management. Despite being a key skill, virtually no young adult understands how to manage their finances well. Simply put, good financial management is nothing more than buying the right amount, of the right stuff, at the right time.

Although this sounds easy enough, many people, including myself, make many financial errors throughout their lifetimes. It’s important to catch these mistakes early, because while the consequences of early financial mistakes are generally less than later in life, these mistakes quickly grow in severity.  

To help you avoid some of these financial mistakes, take a look at these financial tips: 

  1. Fully fund the matching percentage of your 401(k) 

If you have the opportunity to work with a company that is offering to match your 401(k) contributions, make sure you find a way to match them. This is basically free money that the company is giving you, and an immediate 100% return on your investment.  

  1. Keep your expenses as low as possible  

For relatively successful people, there are two sides of achieving financial security:  how much they make, and how much they spend. Most people tend to worry too much about how much they are making when they should be worrying more about how much they spend. Have a financial plan and stick to it.  

  1. Pay off all credit card debt  

The interest rate for credit cards is usually in the high teens (17%). This is too high a rate for any business, or even country to pay without going bankrupt-and you are no different.  

  1. Pay off all other remaining debts  

Start in order of most expensive to least expensive. If you have debt and an investment portfolio it is as if you are borrowing to make those investments. If you wouldn’t do that, you need to pay back debt first.  

  1. Create an emergency fund  

Save six months to a year’s worth of living expenses, so that if your job was ever interrupted, you will have money to fall back on besides your retirement fund.  

  1. Invest in term life insurance  

If you have dependents, term life insurance is a relatively inexpensive way to protect the ones you love. This is the simplest form of life insurance, and should suffice while you are young. 

 While this list is nowhere complete on all matters related to finances, it can help you get off on the right foot to a successful life. I hope you take this tips to heart and look forward to a bright financially sound career.

Good luck!

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