Tired of living paycheck to paycheck? Not feeling that sense of financial security knowing you’ve got a little bit of cash tucked away? We feel you. The road to rock-solid personal finance isn’t quick or easy but you can start today with our simple steps. It all starts with a basic three-part plan, spend less, save more, and invest some. Follow these essential tips, add in some easy-to-use tech solutions and you’ll be on your way to building that nest egg.
Step 1: Spend Less
Let’s start with the basics and evaluate those expenditures. Don’t worry, we’re not going to take some lame unrealistic stance and expect you kill your social life or anything like that. Rather, it’s about taking a scalpel to multiple areas. Take a hard look at what you’re spending on food. Dinner and drinks out is expensive and $30-$50 per person on a regular basis adds up quickly. Maybe cut out the dinner part and stick to drinks, or, mix and match your social spending to cut down.
Tech Help: Check out mint.com to start tracking your spending and then create a healthy budget. Or, think like an accountant and sign up for Quickbooks to create a personal P&L.
App It: Try Level Money, it suggests spending levels based on your income and expenses.
Pro Tip: Leave credit cards at home and start managing your cash, it will help you learn how much you spend and those impulse purchases (and rounds of shots) will go down.
Step 2: Save More
Sometimes it’s the basic things that are the easiest to switch out. For example, if you’re hitting Starbucks every day in the lobby of your office building that’s $1,825 a year. Make coffee at home and save $1,000 a year easily. Save some dough on lunches and stock up at Trader Joe’s for food for the week and meal prep. Brown bagging it a few days a week can add up quickly.
Tech Help: Credit card review websites can help you find the best low-interest rate credit cards with the best rewards. Investigate your credit with free credit reports from sites like Credit Karma.
App It: The Digit app transfers a nominal amount based on your savings into a separate savings account and manages it for you automatically. Robots for the win again!
Pro Tip: Speaking of financial robots, open an auto-draft savings account that pulls 5% from your checking account to your savings account each month or pay period. Out of sight, out of mind savings are the way to go.
Step 3: Invest Some
We’ve discussed before but start some research on your investment options. A shoebox of dollar bills under your bed is one thing but a proper investment strategy can be simple and it’s never too soon. A financial advisor can offer educated options and you should learn the differences between a Roth and traditional IRA. If your company offers a matching 401k, use it - it’s free money!
Tech Help: Let Reddit be your guide, r/personalfinance and r/financialplanning are great resources.
App It: Download Acorns, it collects your digital spare change and invests if for you in a thoughtfully diversified portfolio.
Pro Tip: Want to invest more? Try Motif Investing, it lets you dabble in the high-growth sector rather than the wider stock market and features many unique and user-friendly features and technology.