Atlantic Solutions (Somerset, NJ), is home to plenty of young professionals. When you’re young it is especially important to manage your money properly in order to prepare for the future. Of course, it is also important to effectively manage your money in older years; however, it is crucial to craft a strong foundation for yourself while you’re young. Here are 5 easy ways that will help your money management skills.
- Budget and Reduce Spending
In order to manage your money adequately, you’re going to need to have some money to manage in the first place. Spending money on groceries, rent, utilities, etc. is totally okay and obviously necessary. However, the cost of entertainment is what really kills savings accounts. Entertainment is not only going out to the movies or grabbing drinks on the weekend – it’s eating out, shopping, or getting a coffee every morning. Those expenses really add up. At Atlantic Solutions, we sure love to treat ourselves when we can – but priorities are priorities!
Pack lunches, make your own coffee and buy new clothes only when necessary. Those entertainment expenses are killer so chop them down any way that you can. Your future self will thank you!
2. Start Building an Emergency Fund
Emergency funds are essential for many reasons. Firstly, you never know when something is going to happen. This could be unexpected costs such as funerals, medical bills, unanticipated auto-work, home repair, and a number of other things. Real emergencies. In other words, an upcoming Drake concert doesn’t count as an emergency.
These funds should be equal to 3-6 months of expenses. For example, if you spend $1,000 per month on expenses – your emergency fund should be between $3,000-$6,000. After taking money from the account, it is important to do the best you can to replenish it.
3. Pay Off High-Interest Debt
Debt is the worst – but we all have it. However, like a sickness, it will only get worse if you ignore it. There are two different methods for tackling accumulated, high-interest debt.
- The Snowball Method is when you pay debts starting from the one with the smallest interest rate. This can give you a morale boost because you can actually watch debts disappear – yet, the debts with higher interest rates are still remaining untouched, thus costing more money in the long run.
- The Avalanche Method is kind of what it sounds like. Paying your debts down, starting with the one with the highest interest rate. It can be overwhelming at first; however, this method saves you the most money in the long run.
Also, be careful with minimum payments! If you can budget properly and consistently keep an emergency fund, there’s no reason not to eliminate your debt while you can!
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