Money management isn’t a strong suit for most people. More than 25 percent of high school students don’t believe they’ll be prepared to manage their finances after graduation. Meanwhile, almost half of all American adults could be classified as financially illiterate. Developing long-lasting financial habits takes plenty of time and effort. If you need help along the way, just ask. Personal finance apps and financial coaches can help keep you on course even as the going gets tough. Personalized features, such as daily check-in texts and bi-weekly budget reviews, can provide the encouragement needed to establish habits — and stick to them.
One of the best things about a financial coach is that they are able to learn your financial situation on a personal level. One-on-one coaching helps ensure every plan or recommendation is tailored to your specific needs or goals. Instead of making decisions based on generic financial advice, you can rest assured you’re engaging in a highly personalized program. But before trying out a financial coach, it can be helpful to get some money management basics under your belt. From tracking spending to investing for the future, here are a few ways to develop habits that can put you on the road toward financial success.
Understand your expenses
The first step to saving some cash is figuring out where it’s all going. Combing through your credit card and bank statements can help highlight how much you’re spending on things you need versus things you want. To ensure you don’t come up short on necessities, put together a list of your monthly expenses.
If it looks like your spending needs to be adjusted, try to figure out which expenses you can cut back on. Whether it’s packing a homemade lunch twice a week or cutting the cord on cable, small changes can add up to big savings over time. As your priorities and needs continue to shift, remember to keep a budgeting plan updated along the way, and in today’s digital age that’s easier to do than ever. Doing so will help guarantee you still have an accurate picture of your short-term financial future.
Establish automatic savings
There’s a reason Einstein once referred to compound interest as the eighth wonder of the world. The sooner you start saving, the better. Grow your potential returns by making savings a part of payday. Automatically depositing a specific portion of each paycheck into an IRA or 401K will help ensure you’re not left empty handed when it comes time to retire. And since the money never reaches your bank account, you’ll never be tempted to spend it.
Far too often, people derail their savings plans with impulse purchases. Sidestep a similar situation by paying yourself first. While there’s nothing wrong with treating yourself from time to time, spending outside of your budget can eat into savings. Remove the risk of going overboard with automatic savings.
Maximize employee benefits
Companies want their workers to start saving sooner rather than later. In fact, many offer free money to employees who do just that. Contributing toward a 401K can often yield a match equaling anywhere from 1.5 to 6 percent of an employee’s salary. Make the most of such offers by adding to an employee-sponsored 401K early and often. After you’ve started preparing for retirement, stay on the lookout for other opportunities to capitalize on employee benefits. Improve your financial health by taking advantage of perks, such as transit discounts or monthly gym memberships, whenever possible. The more familiar you are with your employer’s benefits package, the easier it will be to avoid leaving money on the table.
Budgeting has long been a source of consumer concern. And given the lack of education surrounding personal finance, it’s not too difficult to see why. Take hold of your financial future by finding a good financial coach and establishing habits that can help guide your decision-making process. By taking a personal approach to your finances, a financial coach can provide more insight into your situation and the expertise needed to keep you on track. With their guidance, and your own consistent action, you can gain an improved understanding of money management.
About the author
Christopher Tracy is president of Mvelopes by Finicity, a direct-to-consumer budgeting tool and financial wellness platform. Christopher knows that money, and the way you manage it, is the great equalizer for people of all ages and lifestyles, and his passion for helping consumers better manage their finances drives him forward. Christopher graduated from Cal Poly before getting his MBA from Harvard Business School.