This post is brought to you by Finhabits.
When I graduated college just a few years ago, I had no idea what I was in for. I was incredibly lucky — my parents covered my education costs, and I didn’t have any student loans to my name — but also quite under-prepared for what the “real world” had in store. I moved to a big, expensive city right away, armed only with the plan to quickly get a temp job and start applying for more permanent positions.
I quickly found that life was a lot more expensive than I’d anticipated. Despite many conversations with my mom covering everything from negotiating a salary to saving for retirement, I just never wanted to think about the financial part of my life. Money didn’t seem like an important enough (or, I’ll admit, interesting enough) thing to think about, so I just didn’t. I got a job and was paying my own bills — but that was it. I was enthralled with the brand-new excitement of city life, constantly ordering food delivery, going out to eat, going to comedy shows followed by several hours in a bar. These were all very fun things, but I’d constantly see my checking account get down to a single digit and have to scrimp before getting my next paycheck — or, more frequently, cover whatever I wanted to do with my credit card, then have to pay it back the next month.
Eventually, I found myself with a few thousand dollars in credit card debt and a desire to actually get a plan together for my financial life. When you’re starting from scratch like I was, learning how to make a plan for your money in the long term is scary and, at least at first, hard. Having a platform like Finhabits — an easy, low-cost solution to saving for your long-term goals — would have made the planning and saving stages so much easier. Investing in your future is one of those “adult” things you know you should be doing, but maybe haven’t started yet. In the interest of setting your future self up for financial security, here are three critical financial things you should be doing — and how to crush them.
1. Saving for retirement.
Most personal finance experts will tell you the same thing: If your company offers a 401k matching plan, you take it.
While that’s great advice, it won’t work for everyone. You should take any retirement benefits offered to you through your workplace — however, the days when most corporate jobs came with excellent pensions or retirement packages are dwindling.
You know how important it is to take care of future you, but for those of us without retirement packages through an employer, investing in retirement is exponentially more intimidating. The biggest obstacle is simply getting started — but it sure can make a big difference in your future. For example, starting to save $100 per week at 25 could result in more than $545,000 in retirement (assuming a return of 5% per year over 37 years with a moderate risk level).*
Luckily, a service like Finhabits can help make planning your future a simple part of your everyday life. Finhabits is an online investing service that lets you prepare for your retirement by contributing as little as $5 per week. You can open either a Traditional or Roth IRA — and after you select how much and how often you’d like to contribute, they do all of the rest for you. For example, Setting aside money for retirement sounds scary, but it really doesn’t have to be. Make it as easy on yourself as possible, and your future self will thank you ten times over.
2. Being prepared for emergencies.
At one point or another, something is going to happen that’s beyond your control. Medical emergencies, car accidents, natural disasters, job loss — all of these things can be expensive, unpredictable, and even unpreventable. And because they might prevent you from being able to work for months at a time, they can be incredibly taxing, both emotionally and financially.
You already know you need to save for these unpredictable instances — but where do you even start? Most personal finance experts recommend you have at least three to six months’ worth of expenses saved up in case of emergency. This means you’d have enough saved to cover rent or mortgage payments, food, utilities, phone plan, and other bills should something happen that puts you out of work for several months. The amount you save should be easily accessible in case of an emergency, such as in a savings account.
But if you’re starting from zero, building up a robust emergency fund might be so daunting that you just want to say “screw it” and give up altogether. Don’t! Start small by setting aside whatever you can, even if it’s just a few dollars a week. Soon enough, you’ll have saved $100, then $1,000, etc. It takes time, but having even just a little set aside in case of emergency will give you some much-needed peace of mind.
3. Sharing your finances.
Let’s face it: getting financially vulnerable with someone you love is downright scary. You don’t know what they’re bringing to the table, and on the other hand, you may be unsure about their reaction to your own financial baggage. But if you and your partner don’t know each other’s financial backgrounds, it’s almost impossible to plan a future together.
That is not to say that someone needs to have a six-figure salary to be deemed worthy. In a financially healthy relationship, income is important, but not nearly as important as other factors — such as understanding each other’s current spending habits, debt payoff plans and shared future goals. Once you’ve spoken openly and honestly about money, you and your partner can start to build a future you both dream of.
And getting there is easier than you think. You don’t have to tackle all of it in one day — a series of smaller conversations will work perfectly. Start by revealing how much you each have saved in case of an emergency, whether you have any at all. Talk about your spending habits, including areas you think you could cut back on. Work your way up to discussing bigger things, like the amounts you owe in debt and how you’re working to pay it off, your retirement plans, and what you want in the future that’s going to cost money. After you start having the smaller money conversations, the big ones feel so much easier.
Once you’ve decided on your long-term money goals, it’s time to make a plan for saving. Whether you’re saving for a house down payment, your dream vacation, or simply increasing your net worth, any big goal feels much more attainable when you have a plan to save for it and a platform to build your wealth. Investing isn’t only for retirement — Finhabits lets you grow your wealth over time by investing in a diversified portfolio.
Especially in a culture that teaches us not to discuss money, it’s tough to navigate the grown-up world of finances — but you owe it to yourself to do so. Here at TFD, we believe in streamlining your financial life so taking care of yourself is as simple as possible. Once you get started, you’ll see that becoming financially responsible isn’t nearly as difficult as it seems. You already know you need to do these things, so get going.
*This information is based on hypothetical performance calculations, which are not an indicator of any investor’s actual current or future experience and is provided for illustrative purposes only. All investing involves risk, including the loss of money you invest. Hypothetical performance calculations are developed with the benefit of hindsight and have inherent limitations. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security.
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