There are countless numbers of people who are in their 30s and 40s paying for financial choices (aka mistakes) that they made in their 20s. Unfortunately, life isn’t the most forgiving of your ignorance; thus, it is a hard pull to fix credit and build savings. So, avoid it if you can. As you sacrifice today, you’ll be happier tomorrow, and you’ll laugh about the things that you thought were so necessary. I mean, do you really need your closet and makeup bag to represent all that you own in the world? Below are seven tips to starting your financial future on a good note!
#1. Limit the number of credit cards that you have and minimize your use of them. No matter how many credit card offers you receive, I can’t see why anybody would need more than three. One card that you never use that really is for the OMG emergency, one that you use for specific purposes and pay it off monthly (to cover fluctuating expenses like gas), and MAYBE your favorite store card (I can’t judge you because Banana Republic calls my name).
#2. Know which of your creditors reports to the main credit agencies and make sure you pay them on time. No matter what, always strive to pay at least the minimum. If you can’t pay them, CALL THEM TO DISCUSS OPTIONS. Also, call as soon as you know you can’t make the payment. It isn’t necessary or wise to wait until the due date. You need to know all of your options. When you wait until the due date to talk, you take some of your options off of the table.
#3. Pay cash for as much as you can. I actually believe paying cash is better than swiping your debit card because you have to “make do” with what you have in terms of managing your budget. Consider this: you set a grocery budget for $60; however, you put $65 worth of groceries in your cart. If you are paying with cash, you have to put something back whereas if you’re swiping, you’re likely to justify spending the additional $5. Lots of studies agree with me: the more you swipe, the more you spend!
#4. Create a budget, and make sure that it includes some mad money. Lets be honest, you’re going to want a slice of pizza or an occasional movie. Now, if you’re doing this every week, and you don’t make enough money to meet your real needs and goals, then, you must scale back. Even so, give yourself a little something-something.
#5. No matter how much you owe, save something! Put aside some money for a rainy day or an awesome opportunity. If you want to get a head start on being extra grown and sexy, consider starting a money market account and aiming for a mutual fund once you hit a savings amount that you choose, i.e., $250, $500, etc. Check out the money challenge below! It is worth a shot!
#6. Create your own version of broke, i.e., $200 = broke and REFUSE to spend down to zero unless it’s a bonafide emergency. There’s a certain peace and confidence to knowing that you have something even when you have nothing. Nah mean?
#7. Plan a “prize” for yourself that is at least six months out. This goal will help you maintain discipline when you’re faced with hard choices. For example, I’m going on a cruise in December 2015. Every time I am tempted to go into Victoria’s Secret, I ask myself which is more important more Pink stuff or going on the trip.
#8. If you can do 1 – 7 consistently for a year, start researching financial advisors to make your discipline pay off!