Welcome back to the Young Adults Perspective series, where we offer insights and tips for newly financially independent young adults. Last week, we looked at the blooming industry of FinTech, and covered tools that offer assistance for managing your personal finances. This week, we will be focusing on a much simpler type of tool: a personal finance checklist. Having an understanding of your full financial picture is a great first step towards financial security, especially if you regularly review the items on your list. Everyone experiences the occasional pitfalls of life that can cause debt to suddenly rack up and ruin a good plan. You can be bounce back from these setbacks more easily if you implement these strategies:
One of the most effective ways to track your payments and savings is to maintain proper financial records. While it may seem confusing and tedious at first, this simple strategy will help you to always know how much money you have. A common problem for many people is poor book keeping. This mainly arises because they fail to keep track of their balances in all of their accounts. While it’s incredibly important to keep track of your checking accounts, it’s also important to make sure your savings accounts are in line. That way, you will know your financial standing everywhere if you need to transfer money, which is especially critical if you need to make payments. Some people prefer using a physical checkbook to do this, but there are plenty of digital options like Quicken or NCH Software to help you for little to no cost.
You hear about stories like this all the time these days: people who believed that after decades of hard work they had worked finally saved enough money to retire happily… only to realize a few years down the road that they don’t have enough saved to maintain the lifestyle they want in retirement. As the cost of living continues to rise, it becomes more and more important to start saving for the future early, even if you are a recent college grad. Make it part of your personal finance checklist to set aside a little bit of every pay check towards retirement savings. If your employer offers a retirement savings match, take advantage of it by contributing everything you can to get the maximize match. It may mean you have a little less money today, but your future self will thank you.
Are you using a budget to track your income and expenses? If you’ve been diligent about following it, you’re one step ahead of the game! Having a budget isn’t enough, however. When was the last time you reviewed your budget? Consider all the items in some of your core spending groups, like your bills, transportation costs, everyday needs and entertainment. Have prices risen or fallen significantly anywhere? Are there things you’re paying for every month that you don’t really use? Have you discovered new spending categories that were not previously included? You may find that you’re suddenly paying too much for some things, or your spending habits need some attention. You should make it a personal finance checklist item to review your budget and expenses every month. You’ll certainly benefit from the investment of time!
Do you have any other items that you feel belong on a personal finance checklist? Tell us about them in the comments below. The team at CESI is committed to helping you make wise financial decisions and to helping you understand how to get out, and stay out of debt. For a free debt analysis, contact us and find out how we can help.
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
CESI is NOT A LOAN COMPANY