You don’t need a degree in finance to be smart with your money. It’s really all boils down to experience, learning from your mistakes, and adjusting your lifestyle to manage your finances better.
Do you feel that you could do a bit better than you did in 2018? We always feel that there’s something to improve upon, especially when it comes to how we handle money.
Here are 5 quick tips that will help you take charge and make 2019 a great year for you financially.
If you have money to invest now, GO FOR IT.
What are you waiting for? If you could stand to lose a bit of money right now, the smart thing to do would be to start investing it.
If you’re in your 20s, this is the best time to do it. Financial experts and common sense will tell you that the earlier you start investing, the more you’re going to gain from it.
So now that you’re still young, that mean you’ve got years ahead of you to work on your career and excel professionally. The savings and investments will just go uphill from here.
There’s a “little” thing that you’ll encounter a lot once you get into the world of investing and that’s compounding. To put it simply, this is what makes your money grow.
So let’s say Sheila invests $100 a month in a Roth IRA for 40 years with a 12% annual return. How much do you think that’s going to be worth when she reaches retirement age?
We’d say that would hit over $1 million. But remember, Sheila had to do this for 40 years, which means she must have started in her 20s.
So a person who starts doing this later on in life is naturally going to earn less.
Put your money where you can’t see it
If you’re focusing too much on saving and letting all your extra funds sit in the bank, gaining minimal interest, you could be doing so much better.
Right now, you could be protecting yourself from inflation, which is very likely to happen at some point.
Inflation decreases the buying power of money. So let’s say you put $1,000 in a lockbox somewhere 50 years ago. Today, that $1,000 would have the buying power as $137 back in 1969.
But if you would have invested that same $1,000 with compound interest at the rate of, let’s say, 6% return – that would have grown to $20,000 by now.
Yes, you’ve got to have a liquid savings account where there should be about six months’ worth of living expenses just in case. But anything more that you have in excess should be put into investments right now.