That Personal Finance course that was “recommended” in college? Yes, we should all be taking that. Sure, Badminton 101 is fun, but it pays (literally!) to be financially savvy in today’s modern age. Ladies, money is power, and getting your finances in order is not just an option -it is vital to your independence and long-term well-being. If you’re struggling to get a hold on your finances, here are some steps to empower yourself and get on the right track.
Read, read, read!
Warren Buffet, one of the most successful investors and billionaires of all time, spends most of his day doing one thing – reading. Buffet estimates that he spends 80% of his day reading various financial reports and newspapers. Granted, not all of us have the time to read that much, but switching out Candy Crush for The Wall Street Journal, CNN Money, or FinMason is a great start to getting smarter about your finances.
Know what you’re spending….
Do you know how much you’re dropping on happy hour every Friday? If not, you should start crunching those numbers. Save your receipts and keep tabs on what you spend. Apps like OneReceipt and Piikki are designed to help you keep track of your receipts (without carrying around a giant wad of paper). Use these apps to learn your spending habits, and set aside time each month to document your spending. Writing your expenses down holds you accountable for what you spend.
…and what you’re not spending.
It’s important to set aside money from each paycheck for your savings. While the amount you set aside will vary based on your salary, you should aim for twenty percent of your income to go towards your “financial priorities.” This includes student loans, credit card debt, and, yes, general savings. If your employer allows you to use direct deposit, set a percentage or certain dollar amount to go into a savings account every month. And, most importantly, once that money is in your account – leave it alone. Your savings are for emergencies only, not Seamless. ☺
Account for the other eighty percent
If twenty percent of your income is going towards debt and savings, then what should the rest of your income go towards? Base your budget off of the 50-30-20 rule. As mentioned above, twenty percent should be saved. Fifty percent should go towards your basic monthly expenses, i.e. rent, bills, car payments, subscription services, and other fixed expenses. The other thirty percent is for flexible spending. This category includes groceries, eating out, gasoline, and shopping.
Keep in mind that the 50-30-20 rule is a starting point, not an immovable rule. No two people have the exact same income and expenses, so customize your budget to fit your needs.
Make it app-en!
If all of the above seems like a lot to start with, take a deep breath and turn to your smartphone. There are several more resources available to you to help you stay financially savvy and many of them are free to use. Mint helps track your spending, account balances, and reminds you when bills are due. Wally and GoodBudget are also great, intuitive options, and Splitwise is great for sharing a budget between roommates.
