Have you ever gotten an awesome paycheck and then a couple of days later ask yourself, where did it all go? *Sigh* Well, that just happened to me. While scrolling down my bank statement, I couldn’t help but notice how much I spend on eating out and pointless miscellaneous items. Since I’m too broke to do anything today, I decided to do some research on how to achieve financial freedom and from the looks of it, it all comes down to budgeting.
Here are a couple of things I’ve learned …
Tip #1 – Spend Within Your Means
Although I don’t have a credit card at the moment I do plan on getting one in the near future, but solely for the purpose of building my credit. While I do realize that the temptation to swipe my card for non-essential items will arise, I never want to max out!
If you’re credit card is maxed out that means you’re most likely living above your means. The key to getting back on track after you’ve reached your limit is to spend less than you earn. In order to stay on top of what you’re spending on, invest in a notepad and make a daily list of all items you purchase, that way you’ll realize what you may need to cut back on.
Tip #2 – No More Minimum Payments
As awesome as it is to only have to pay a minimum of about $25 towards your credit card per month, it’s actually more of trap! Think about it. The longer you pay the minimum, the longer it will take you to pay off your balance. The longer your balance remains the more interest you’re going to acquire. Therefore, start putting more towards your monthly bill. You’ll be glad you did in the long run.
Tip #3- Pay Yourself 1st
The older you get the more financial responsibilities you have. You’ve got your taxes, student loans, cell phone bill, auto insurance but what about paying yourself? As a target, it’s a good idea to try and save 10 percent of your income but if you can save more go for it.
So let’s say you’ve landed your first job after graduation and you make about 2,400 dollars a month. If you put away 10 percent of that, which is about 450 dollars, in three months you’ll have saved about 1,350 dollars. Keep this up and you’ll have a good amount of money to fall back on for a rainy day.
Tip #5 – Keep Your Eye on the Prize
In reality, if you have student loans and credit card debt (which majority of college students do) you have what is called a negative net worth, but that’s okay. By keeping up with your monthly payments you’re actually building your credit and net worth, so it all works toward your benefit.
I hope these tips have helped you all!