By the time you are in your 30s, you have left college life behind you, and adulthood has hit you full force. You may be married, dealing children, buying your first home. Your career may be taking off, or you may have opted to start your own business.
Whatever the circumstances, retaining control of your finances is the best way to transition to the next phase of your life. Consider these seven money management tips and sleep stress free.
1. Live Below Your Means
Living below your means equates to earning more than you spend. For example, if you earn $5,000 a month, your goal should be to spend significantly less than you earn. The bigger the gap between earnings and spending, the quicker you have the potential to achieve your financial goals.
2. Track Savings as a Percentage
When you track savings as a dollar amount, it is easy to forget to save more when you earn more. Instead, base your savings as a percentage of income. That way, as you earn more, your savings will grow at a consistent level with your paycheck.
3. Proactively Track Your Money
While many people can tell you where their money went, not as many spend the time up front to create an action plan, or budget, for spending, saving, and investing. The problem with reactive money tracking is that you are less likely to have the money in the bank when something extraordinary happens, such as your job ends, you retire, or you find your dream home.
Instead, spend the time upfront to create a budget. Include not only the mandatory items, such as housing and groceries, but those dream items, such as a trip to Europe, a new car, early retirement. Revisit the budget frequently to make sure you remain on track to meet your goals.
4. Diversified Your Portfolio
There is a reason people say not to put all your eggs into one basket. If you put all your eggs in one basket and something happens, such as you accidentally drop the basket, you may end up with a mess of broken eggs and nothing for breakfast. You should look at your investments the same way. While it is a great first step to invest in a retirement plan, if something happens to that plan, you could end up working well past age 65.
Instead, diversified your investments. Put what you can afford not to touch for another 30 years or better in a retirement plan, but then look at other options for investing the rest of your money. Where you invest will depend on a lot of factors, such as your tolerance for risk, how the stock market is doing, what your goals are, and how long you foresee not needing the money.
5. Spend Better, Not More
When you start making money, it is easy to fall into the trap of spending more to keep up with your new status in life, but that line of thinking can lead you to reducing the margin between earnings and spending. Reducing that margin and means possibly not meeting your financial goals.
Instead, look at spending smarter, according your values. Buy only those items that enrich your life and leave you happier for having made the purchases.
6. Know When to Get Help
Knowing when to hire a financial planner to help you reach your financial goals is akin to knowing when to hire a personal trainer to help you reach the next fitness level. When you can no longer meet your financial goals, or you feel that your investing knowledge is a little slim, it may be time to call in a professional to help keep you on track.
7. Keep It Simple
While growing financial security, the best plan is to keep it simple. A simple plan makes it easier to focus on good habits and to maintain steady growth. Avoid get-rich-quick schemes, which may be a part of a scam or border on illegal, and be prepared to play the long game that it takes to build a solid foundation for success. Use that foundation, and the advice of reliable, experienced experts to grow your money into a secure financial future.
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