As someone who is trying to get 1% better every day, I’m always working to do better in every area of my life. How do you think about self-improvement?
An area where I think there’s a lot of opportunity to improve is personal finance. Because it’s such a broad subject, there are a lot of ways to get better. And then there’s the reality that many people are struggling financially.
I think I’m in a position to help. I struggled financially in my 20s. I didn’t pay attention to my money, even though I was working in personal finance. Fortunately, by my late 20s, I had made the necessary changes and was headed in the right direction. Today, I’ve been helping others get better at money for 20+ years as a financial advisor, and I’m honored to have been named to Investopedia’s list of the top 100 financial advisors many years running.
I’m going to share five things you can start doing in order to do better financially:
- Check your priorities
- Put yourself first
- Put it on autopilot
- A little extra
- Stop paying interest
Let’s get started.
Check your priorities
When I was struggling financially, I didn’t give any thought to my priorities. Because of that, my money and my time went towards non-constructive things socially related (now that I say that, I’m not sure I’d change anything). My advice in this area is to always be aware and thoughtful of how you’re spending your most important resources.
We’re all going to go through different seasons of life, and our priorities may shift and change. What’s true no matter what, is that we each have finite resources of time, attention and money. The more intentional we can be about how we’re spending or allocating them, the better off we’ll be.
A single 25-year-old will have different priorities than a married 45-year-old. Neither is good nor bad, but I want you to be examining yours during every stage. We do this by consistently revisiting our goals and values.
I’m sure you’re aware of the importance of goals as well as values. You’ve probably also set goals and written down values at some point. And I want you to do it again.
We’ve created frameworks for goal setting and values creation that you can access for free. Goals and Values Courses. I’m confident you’ll get a lot of value from these.
Put yourself first
If we’re not paying attention to who we’re giving our resources to, someone else will gladly make those decisions. We’re all aware of social media algorithms, online advertisers following us from device to device, and the impact it all has on us.
When it comes to money, the golden rule of personal finance is “Pay yourself first.” I failed to do this in my 20s, and that failure carried a high price. You see, money has time value. The longer we wait to begin pursuing financial goals, the harder they become to reach.
Paying yourself first means you put some of your money towards your financial goals before you give it to anyone else. This can be easily done:
- Set up an automatic transfer from your checking account to a savings account at the beginning of every month.
- Enroll in your company’s 401(k) plan and set up automatic contributions.
- Open an IRA and set up automatic contributions at the beginning of every month.
- Open a taxable brokerage account and set up automatic contributions at the beginning of every month.
The fundamental idea is this: There will never be anyone more interested in your financial success than you are. When you start paying yourself first, you’re paying your current self as well as your future self. When you go to access that money when you retire, you’ll be awfully glad you did it.
Ideally and eventually, you’ll be putting 20% of your after-tax income towards your financial goals and priorities. If you’re currently putting 0%, start with 1%. If you’re putting 5% towards your goals, increase it to 6%. Get started.
Put it on autopilot
I mentioned “automatic contributions” several times a moment ago. Automation is really valuable when it comes to personal finance. If I had to manually pay all my bills, I can almost guarantee I’d screw it up and miss payments. The more we can take our hands off the wheel, the better.
You’ve probably already automated quite a bit of your financial life (Bill pay, automatic contributions, etc), and I’d like for you to continue doing as much of it as possible. Here’s one more idea for automating your finances- set up a taxable brokerage account with a robo-advisor.
Technology has made investing easier and more affordable. Robo-advisors are a great way to take advantage of tech-enabled innovation. Wealthfront, Betterment, and M1 Finance are three examples.
Each of these options provides a user-friendly and affordable way to save for mid and long-term financial objectives. While it’s important to pay attention to your investments, this is a “set it and forget it” approach to investing. The technology makes the investment decisions on your behalf and will automatically do important things like rebalancing your account to ensure your asset allocation (mix of investments) is still aligned with your risk tolerance.
Bottom line, it’s easy and inexpensive. Set up automatic monthly contributions and you’ll thank me later.
A little extra
How do you feel about your career? How do you feel about your income? Are you ahead or behind on your financial objectives?
I’m a proponent of doing a little extra. Today, there are seemingly limitless ways to earn money.
If you’re not in love with your career, a side hustle can be your way of moving towards full-time employment in the kind of work you truly want to do. If you’ve got a financial goal, but not the money to put towards it, a side hustle can help you achieve it.
If you have the extra time and energy, check out SideHusl.com. They’ve done a great job of vetting money-making opportunities. You could find something that works for you.
Stop paying interest
At the time of writing this, the average credit card interest rate was over 20%. I’m not sure what kind of returns you’re getting in the stock market (or any other market), but you if you’ve got credit card debt, you need to make paying it off your #1 priority.
Credit card debt is a burden. It caused me stress and anxiety for years. It prevented me from pursuing other important financial goals. If you’ve got credit card debt, it’s time to create a plan for getting out of it once and for all.
In service of helping you do it, you can access our Get Out of Debt course for free.
Getting out of credit card debt could be exactly what you need to get on the right track financially.
Closing
You can do better, and get better with money.
Take advantage of our three free courses: Our Goals Course, Values Course, and our Get Out of Debt course.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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