Assess your station in life
Taking an honest look at your wants and needs can help you prioritize what is most important to you right now. Do you feel good about your current station in life? Are you headed in the right direction?
Plan for life changes
Almost without exception, your needs are going to be different in five years than they are now. Whether you will be graduating, getting married, having children, or switching careers, there will be changes to account for. The best thing you can do is to be prepared for them.
Invest in yourself
The one person you have to live with your entire life is you. Taking care of yourself mentally, financially, and physically on a consistent basis will reap lifelong benefits. In addition, challenge yourself to improve and try new things because a good investment should focus on growth, not staying the same.
Write down your goals
Having goals gives you something to work toward. Writing these goals down makes your plans concrete and more likely to materialize.
Keep adequate records
In addition to keeping track of tax and other documents for an appropriate length of time, you also want to keep records of your spending habits. You might feel like you’re spending too much on something, like eating out, but being able to track your spending will help you find out for sure.
Pay yourself first
Saving money can be simple or nearly impossible. If you take money from your paycheck and immediately deposit it into a savings account, it’s easy (completely effortless if via direct deposit). If you try to scrape together what’s left at the end of a pay period and deposit it to savings, or keep it sitting in your checking account, it’s almost impossible. Be sure your bills are paid, but consider setting aside a certain amount for savings each pay period.
Even the most frugal among us have places where we can afford to cut costs in some capacity. For the average person, things like reducing bills, food costs, or under-used entertainment and gym memberships can make a significant financial impact in the short term.
Spend much less than you earn
Spending just a little less than you earn is a good way to perpetually live paycheck to paycheck. However, if you can reshape your
Pay down your debt
Debt can be an enormous stressor and it doesn’t get better by itself. Every dollar that you can pay back ahead of time is a dollar that doesn’t collect interest. This can save you a lot of money in the long run.
Create a budget and stick to it
After you’ve gone through the first nine steps, this one is easy. Once you have an honest assessment of where you are and where you’re hoping to go, you can begin creating your budget. Design your budget so that you can pay for your needs, as well as the wants you have prioritized. The key is following through on your budget! Remember that the budget is simply a spending plan of where you want your funds to go. If you fail to follow through, you will hurt yourself, both now and in the future.