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“I just got my tax refund, it’s time to go on vacation!” I can’t tell you how many times I heard this growing up and now see it on social media daily. I recognized early in life that the way I handled money was very different from most people I knew. This has always puzzled me as I have never understood how people can spend money without ever giving a thought to savings or retirement. The following are some basic habits you can start now to help secure your financial security in the future:
1. Saving for retirement as early as possible is the most beneficial thing you can do. Even if it’s just $50 a month, which is the minimum for most plans, you could set yourself up with thousands of dollars in retirement. the earlier the better. For example, a 25-year-old who saves $200 per month until age 65 and earns exactly 6% annually on the money saved will have accumulated approximately $400,000. But a 40-year-old contributing the same amount each month at the same income rate would have accumulated only $139,600 by age 65.
2. Never carry a balance with the interest rate on the credit card. It is one of the fastest ways to build up a loan amount that can burden you for the rest of your life. When you need to access credit and are unable to make the payment in full each month, look for a 0% interest card. Many promotions range from six months to a year or more. If used responsibly, they are essentially a free loan. Be sure to pay off their full balance before the end of the term or you’ll end up with retroactive interest that adds hundreds of dollars (if more) to your liability. no) can add.
3. Instead of buying a new car or lease, try to save up and buy a nice old car for the cash. The savings you make between interest, depreciation, taxes, plates and insurance will save you thousands. According to Edmunds.com, buying a two-year-old car is your best bet because you avoid the biggest depreciation drop. Holding it for three years and then selling will also benefit you as you see a further big drop after five years due to the longer maintenance that is usually required at that time. If you can’t afford a two-year-old car without borrowing, your best bet is to get a slightly older car with longer maintenance repairs (and fewer miles, if possible).
4. Avoid eating outside if possible. The average American spends an average of $232 per month, or about $2,700 per year, 4-5 times per week. If you don’t eat out for two years you can actually save enough to buy a nice used car, as mentioned in point three above.
5. The last thing, and arguably the most important, is to think long term. The worst way to justify spending is to do so on an individual basis versus a monthly or annual total. Take eating out for example: although it may only cost you $10 per meal, don’t fail to consider that if you do this three times per week for a year, you’ll be spending over $1,400. Must have passed This same logic can be applied to virtually anything—clothes, vacations, furniture, coffee, fast shipping, etc.
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