MANAGE YOUR FINANCE!

How to save your future...

How you manage, spend, and invest your money can have a profound impact on your life, yet very few schools teach these important skills. Learning financial savvy can take a while, but the basics are fairly simple and never change. Here’s where to get started.

You were probably taught some basic math growing up, but too many people make it all the way to adulthood without ever learning basic money management. Skills like creating a budget, investing for the future, or even how credit cards work are startlingly rare skills. If you’re in need of a Money 101, we’ll cover the basics for beginners, while also giving you the resources you need to learn more.

The Golden Rules of Personal Finance

Managing your finances feels like nothing but a lot of paperwork and numbers. You make X amount of dollars, you spend Y amount, and you try to make sure Y is less than X. However, your finances are just as much about psychology, habits, and the values you choose to live by. Put another way, your mindset matters just as much as the math.

Beneath all the software and the budgets, there are a few rules that will always help improve your financial life:

• Spend less money than you earn: If you earn $30,000/year and you spend $31,000/year, you’ll end up in a spiral of debt that’s hard to walk away from. If you spend exactly as much as you earn every year, you’ll never be prepared for emergencies or major life changes. Spending less than you earn allows you the freedom to save, to prepare for the future, and deal with the inevitable crises that life throws at you. The bigger the gap between your income and your spending, the better.
• Always plan for the future: This doesn’t just mean retirement. When a store offers to let you pay off some gadget in 6 months with no interest, you need to know you can pay it off, or avoid that deal. Establishing an emergency fund will allow you to deal with unexpected car repairs or medical bills. Having a retirement plan will ensure you have income when you’re unable to work anymore. Your finances should always look forward beyond the current month.
• Make your money make more money: Want to know how the rich keep getting richer? It’s because money can grow while you sleep, provided you save some of it. Properly invested money earns more money over time. Don’t just sock all your cash away in a low-interest savings account. Invest in things that will earn you more money than you had before. Sometimes that’s an investment account, but sometimes it’s starting a business, or even getting an education to get a better paying job.

The most important personal finance rules don’t change. What your grandparents did may not work for you. There will always be newer, better tools to manage your money. However, spending less than you earn will always be beneficial. Investing your money will always be better than doing nothing with it. And planning for the future will always be better than blowing your paycheck as soon as you get it.

How to save your future

So, you’ve started budgeting your money, you’re building credit, and you’re spending less than you earn. Maybe it took you a couple months, but you’re finally in control of your finances. Great! Now comes the next part: saving for the future. If you’re anything like I used to be, you probably haven’t thought much about the future. Maybe it seems too far away to matter, or maybe it feels impossible and overwhelming. However, the earlier you start saving, the more money you’ll have later on in life—and the less effort you’ll spend trying to get there later on.

Having your money in a savings account will help you save for little things, like your emergency fund or a new computer. But your real, long-term savings are going toward something far more important: retirement. Yes, one day, you’ll want to stop working, and you’ll need a big chunk of savings to keep you going in your golden years, and a little savings account isn’t the best way to do that. That’s where investments come in. If you can put your savings into some fairly simple, low-risk investments, it’ll make money for you while you sleep—and over the course of years and decades, that can add up to an awful lot. This is how you save enough to retire one day.