Money is a tricky subject. When it comes to personal finance and investing, there is so much to know and so much to learn. In a world obsessed with money, it’s safe to say that we all have the same long-term goal in life: to make enough money to live comfortably and happily. Another thing we can all agree on is that this level of financial comfort does not come easily. Educating oneself on the basics of personal finance is crucial to achieving financial stability
The first step in personal finance is learning to budget your money at home. It’s impossible to invest for profit if you have no money set aside for it. Learning to budget your money can feel like a burden when you have rent, energy bills, car payments, groceries, or loans to pay off. Everyone would love to save a little cash for a rainy day, but with all these expenses there’s just no money left at the end of the month. This is the problem. Most people try to save whatever is left over after bills and discretionary spending
You have to make saving money a habit early in order to establish a successful financial portfolio. If you make it a priority to set some savings aside before you pay bills and use money for discretionary activities, you will be able to save the money before you rationalize spending it. By saving money for yourself first, you give yourself a lot more freedom. This money may be used to handle emergencies, purchase a house, pay for your child’s education, or save for retirement.
In order to make saving a true habit, you have to make it nearly effortless for yourself. Try arranging with your bank to have a portion of your paycheck automatically moved to your savings account each pay period. This way, you are never even given the chance to spend the money. Once you become comfortable setting aside this money and building savings, you should look into opportunities to make more off of those savings
One of the best ways to make more off of money that is sitting in a savings account is by paying attention to interest rates. Starting a Roth Individual Retirement Account (Roth IRA) is one of the smartest moves you can make (especially if you are able to do so at a young age). A Roth IRA allows your investments to grow tax-free. Although this money is not accessible to you until you are of retirement age, it earns significantly more than it would while sitting in a traditional savings account and the government does not take taxes from that earning. Plus, without access to the money, there is no temptation to use it on frivolous expenses.
Another great option to boost your savings is by opening a high interest savings account. Your bank may offer high interest savings accounts or you may have to set one up with another provider. The money gained in these accounts is not tax-free like a Roth IRA, but it will earn more money than a traditional savings account. Again, be sure to set up an automatic transfer into this account. This transfer can be set up to withdraw from you regular bank account or can be taken directly out of your paycheck
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In the realm of personal finance, it’s important to remember that everything starts at home. If you can’t learn to budget your expenses and save your money at home, you’ll never be able to enter the world of financial security. Consider your savings a monthly bill that is no different from your energy bill or car payment. Money is a struggle. Saving is hard. But you must remember that it is not impossible. The profit of saving at home is incalculable.