#youngdoperich

1. Overspending and misusing credit cards

Ok, this is a big one. Overspending and racking up credit card debt can and will ruin your finances. If you don’t make the payments on time, then you’ll accrue a ton of interest and your credit score will take a hit. If you only make the minimum required payment, you’ll fall deeper into the hole. Save yourself the trouble and (if you can help it) only charge what you know you’ll be able to pay off each month. 

2. Not creating, maintaining, and sticking to a budget 

I cannot stress the importance of budgeting enough. You need to plan and know where your money is going. Without a budget you won’t be able to address and fix your cash flow issues. 

3. Not saving enough (or at all!) 

If you don’t already have a savings account, open one. ASAP. Start putting money into it consistently. Save as much and as often as you can. Work on building an emergency fund so you have something to fall back on just in case. 

4. Holding off on saving for retirement 

We have 30+ years until retirement, so we can wait and save later right? Wrong! Take advantage of time and start saving now. If your employer offers 401(k) with a match, don’t leave that free money on the table. Time is on your side, and you’ll be thankful for an early start as retirement nears. 

5. Not investing and taking risks 

When you start saving for retirement and want to invest and grow your savings, don’t be afraid to take risks. Higher risk investments bring about higher returns. Diversify your portfolio and make sure it includes some high risk, long term investments. There will be highs and lows in the short term. As long as your investment isn’t completely tanking, then let it ride. Also, don’t ever put all of your money into one investment.  

6. Not paying attention to credit score and credit report

Check your credit report at least once a year to make sure that everything on it is accurate. If you find anything that is inaccurate, dispute it. Your credit score will be increasingly important when you want to buy a car, rent a place, etc. If your score isn’t where it needs to be, start working to get it up to par. 

7. Not negotiating (salary, rent, car price, etc.) 

Not negotiating can cost you a ton of money. It can be tough to work up the nerve to negotiate, but try your best to make it happen. Do your research and if there’s some wiggle room (and there often is), then negotiate!

Learn how to change your money mindset with this FREE step-by-step guide.

https://www.youngdoperich.com/ebook/

Budgets can be intimidating, but having one is so important. Trust me on this. If you have any type of financial goals, you NEED a written budget. Having a written plan will help you keep track of where your money is going and is essential to knowing how much you can afford to spend and save. The 50/30/20 budget is a good place to start for first time budgeters.

The first thing that you need to do is figure out your take home pay. Be sure to account for taxes, insurances, and all other deductions. After you know how much money you will be bringing home, you can do your 50/30/20 allocations.

50% of your take home pay should go towards your needs (rent, groceries, transportation, essential utilities, minimum debt payments)

30% goes towards wants (non-essential “utilities” - add ons to your cell phone plan, cable, etc.; shopping, gym memberships, traveling, savings in preparation for a “want” purchase, entertainment)

Put 20% towards debt and savings (debt payments beyond the minimums, long term savings - emergency fund savings or savings in preparation for a big purchase, retirement)

You will get the most out of this budget model by sticking to these allocations, but these proportions aren’t firm. There may be times where you have to spend a little bit more in one area. Try to limit these instances and bounce back to 50/30/20 with your next pay cycle.

Understanding, and actively working towards improving, your relationship with money is beneficial to your overall financial health. The current state of this relationship may not even be your fault, but it is important that you cultivate and foster a positive money mindset. Holding onto negative views and bad experiences is limiting your financial success and the ways that you act towards money. Here are some things to consider as you work towards building and maintaining a healthy relationship with money:

Your money history

Your family’s financial situation

Memories of having or not having money

How you viewed the financial situations of the people around you (how did you feel about your wealthy or not so wealthy friends and/or family members?)

How do you feel about success?

Do you feel like financial success is attainable or do you have doubts that you need to work through?

Believing that you are worthy of and can achieve financial success is part of the battle. How do you define success?

Are you comfortable with your current financial situation?

Are you content?

Are you unhappy?

Are you settling for “good enough”?

Now as an adult, how do you view people who are wealthy?

Do you envy their success or view them as greedy?

Do you believe that you, too, can be wealthy or does it seem far fetched?

Are you happy for them, do you feel bad for yourself, or both? Neither?

After you think about your answers to the questions above, think about what steps you can take to turn your negative thoughts into positive ones. You can’t rewrite your money history, but you can work on changing your limiting beliefs and creating a better financial future. If you have thoughts or ideas of lack, work on changing your mindset to expect, invite, and accept abundance.

Half way in and I’ve done well so far. However this is the point where it starts to get more difficult. As I stated in the first post, there’s one exception to my “no shopping” rule. That exception being “no shopping unless it’s something that I need/want for my upcoming travels”. I have a few trips planned, some things to purchase for those trips, and I’m still planning to stick to my budget of $250/month. I made a couple of purchases over the past two months and managed to stay within the budget. Hopefully, I can keep that up for the remainder of the fast.

Just to be clear, now I have to buy food, gas, things for vacation, and pay for any other daily expenses that may come up with $250/month. Pray for me. Also in the first fiscal fast post, I mentioned that I’d be transferring any money left over at the end of the month into my travel savings account. Here are the totals of those transfers for the first three months:

Jan. - $46.83 Feb. - $16.25 Mar. - $17.14

I’m hoping that this exercise inspires someone else to give it a try. It’s definitely a test of discipline, but it’s also liberating in a sense. It has broken me out of wanting to shop often and the need to have more stuff. Stuff that I more than likely don’t actually need, and I think twice about every purchase now. This has allowed me to save a lot more and pay down my last student loan a lot quicker than normal.

As 20somethings, retirement seems like it’s forever away. Often it isn’t even on our radar much less a part of our budgeting process. However, we have time on our side and starting to save now will prove beneficial later on down the line. Here are some tips to help you start and consistently save for retirement:

If your employer offers 401(k), take advantage of the match and, if you are able to, contribute the maximum amount that your employer will match. 401(k)s are pre-tax (meaning the money will be taxed later when you withdraw the funds) and will lower your current taxable income and therefore the amount of taxes that you owe.

If your employer doesn’t offer 401(k), or if you have additional money to put towards retirement savings beyond what your employer will match, consider Roth (either Roth IRA or Roth 401(k)) accounts. These contributions are made after tax meaning that you pay taxes on them now at your current tax rate, and withdraw the funds tax free at retirement when you will likely be in a higher tax bracket.

Roll your 401(k) into a Roth IRA or into your new employer’s 401(k) when you have a change in employment. It’ll be very tempting, but try not to cash it out.

If you happen to be managing your own funds, diversify the investments within your retirement account. There are mutual funds (I recommend stock index funds), individual stocks, bonds, CDs, etc. Do your research, look for investments with low fees, and don’t put all of your eggs into one basket. That way if one of your investments fails completely or doesn’t do as well as you’d hoped, you won’t lose all of your retirement savings.