It has been known that our backgrounds and social environment influence most of our decisions. Rich people are rich because they're surrounded by rich people. Poor people are poor because they're surrounded by poor people. But this isn't always the case. ANYONE can get financial education. Most of us were not educated in grade school to handle our own finances. Most of us learn on our own, and sometimes the hard way. I refuse to fall into this category of 20 somethings that know only how to live for "now" and not for the future. True personal gratifications can only come from financial freedom.
In no particular order, below is a list of things that I have learned (so far) to reach that financial freedom:
1. Pay yourself first. And I don't mean to spend it on five shots of tequila every weekend or going on shopping sprees everytime you get paid. Set aside 10% of your pay check in a Savings Account. If you have bills (and we all do!) and can't meet that 10%, try 1% and gradually increase when there is a little bit of room after bills.
2. Cut back. Do you really need to go out drinking every weekend? Do you really need to eat out? Do you really need to buy a new outfit to go out drinking next weekend and to eat out? REALLY? The key word here is NEED. Think about your necessities. Make a list of things that you want and need. Now cross out the things that you can live without. Other things to cut back on:
- lattes, coffee, tea that are not made in your house! these "little" costs add up
- check your phone and cable bill- see which features you have that you don't really need
- make your own breakfast! that time you spend in line at drive-thrus could be spent making meals
- pack your lunch. no excuses. anyone can do this.
- save on gas! don't go on useless drives. carpool whenever you can- that's more fun anyway :)
3. Don't go on dates. This is more of a joke (kinda). Dating has become very expensive. If you can barely afford hanging out with your friends, chances are that you can't afford going on dates- unless they are paying ;) ..Well, the thing is, you are bound to spend eventually whether the other pays or not. If you're happily in a relationship, go ahead and just laugh at this step.
4. Put your finances on paper or something visual. I have always monitored my finances by making an excel sheet of my income and expenses. This way, you know what's going on with your money at all times. By seeing all of your expenditures and cash flow in one place, you can easily judge whether you can afford that dinner out with your friends next Friday night.
5. Invest. Put your money to work. If you have the money to put on stocks and mutual funds then, by all means, go for it! If you have a couple thousands in your savings account, put at least $1000 in a CD. If you have at least $500, invest it in a Roth IRA. See your banker for other investing options that is well within your means. These investments will save your butt when you're in deep shit. And it's never too early to start investing in retirement. As you get older and gain more income, invest in things that will yield a higher return. Riskier investments usually lead to higher returns.
6. Get Educated. We are so lucky to have internet in our generation and it's FREE! Search for videos and articles that will motivate and help you to achieve your financial goals. There are THOUSANDS of them out there. Find yourself a mentor. Educate yourself.
XoXo
Cory
