Creating good financial habits can seem overwhelming, especially if you’re new to it. Learning to manage money is often learned through trial and error, however it doesn’t have to be this way. With the right habits and a little bit of discipline, anyone can master their finances.
Here’s a guide on how you can teach yourself to save money, create a budget, learn the basics of investing, and other skills that help you successfully manage your money in the short and long term.
#1. Educate Yourself
Fortunately, there are countless resources available for free. Start with the basics:
- Books: Some classics include
- “The Total Money Makeover” by Dave Ramsey
- “Your Money or Your Life” by Vicki Robin, and Joe Dominguez
- “The Millionaire Next Door” by Thomas J. Stanley and William D. Danko.
- Blogs and Websites: Websites like Investopedia, NerdWallet, and The Balance offer comprehensive guides on everything from budgeting to investing. Don’t forget to visit Slavic401k’s blog library that covers an extensive list of financial topics. Some of our favorites include:
- Raise Financially Savvy Kids: Best Money Tools for Kids and Teens
- Mastering Finances: How to Plan for Today, Tomorrow, and the Future
- Budgeting 101: Understanding the 50/30/20 Rule
- Podcasts: Listen to financial experts discuss money matters podcast episodes that are released daily or weekly and range from 10 minutes to an hour. Check out these shows:
- YouTube and TikTok Videos: There are so many videos related to money management, mutual funds, retirement funds, investments, debt and budgeting on these channels. Many are free, and some of the best include the Financial Diet, Break Your Budget, and His and Her Money.
- Premium LinkedIn: users can enroll in free online classes through LinkedIn Learning. Their extensive subscription library includes expert instructors for a variety of topics, and training sessions can be minutes to days long, depending on the subject. Luckily, the content is broken down into digestible chapters and categories, so you can learn in your own time.
#2. Identify Good vs. Bad Financial Habits
The first step in financial wellness is learning about your personal financial situation, which includes breaking bad habits and establishing good ones.
Bad financial habits have long-lasting ramifications to your overall financial health. While they may be hard to break, it’s important to identify your weaknesses and work toward making them strengths. Some bad financial habits include:
- Accruing credit card debt
- Not prioritizing saving for retirement
- Using shopping as an outlet for emotional stress such as boredom or sadness
- Making impulse purchases
- Not sticking to a budget (or not even creating one)
- Failure to set aside money for savings
Healthy financial habits are important at any age, but the sooner you can identify and implement them into your routine, the better. Some examples of good financial habits include:
- Creating a budget (and sticking to it)
- Living below your means
- Paying off debt in a timely manner
- Establishing an emergency fund
- Monitor monthly bank statements for inconsistencies
- Tracking expenses
- Maximizing contributions into a 401(k) plan
While some of these habits will require time to break or establish, it’s important to understand your own habits so you can work towards a more fruitful financial future. Without understanding where you currently stand, you won’t be able to learn how to improve.
#3. Plan for Retirement
It’s never too early to start planning for retirement. Consider these options:
Employer-Sponsored Plans
- 401(k) and 403(b) Plans: Many employers offer tax-advantage retirement savings plans. Contributions are often pre-tax, which reduces your taxable income. If your employer offers a match, contribute at least enough to get the full match – it’s essentially extra money.
- Roth: Contributions to a Roth are made with after-tax dollars, but the investments grow tax-free, and qualified withdrawals in retirement are also tax-free.
- Investment Options: These plans typically offer a range of investment options, including mutual funds and company stock. Diversify your investments to balance risk and return.
Automate Contributions
- Direct Deposit: Set up automatic contributions from your paycheck or bank account to your retirement accounts. This ensures consistent saving and takes advantage of dollar-cost averaging.
- Increase Contributions Gradually: Aim to increase your retirement contributions over time, especially when you receive raises or bonuses. Even a 1% increase each year can make a significant difference.
Additional Retirement Savings Vehicles
- Health Savings Accounts (HSAs): If you have a high-deductible health plan, contribute to an HSA (Health Savings Accounts). Contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, you can withdraw funds for any purpose without penalty, though they will be taxed as ordinary income if not used for medical expenses.
- Taxable Investment Accounts: If you’ve maxed out your retirement accounts, consider a taxable investment account. While you won’t receive the same tax advantages, these accounts offer flexibility and no contribution limits.
- Seek Professional Advice: Consider consulting a financial advisor to create a personalized retirement plan. They can help you navigate complex decisions, improve your investment strategy, and ensure you’re on track to meet your retirement goals.
- Bespoke: If you prefer a more hands-off approach, Bespoke is a digital advisor that offers automated investment management based on your risk tolerance and goals.
#4. Continuously Educate Yourself
The positives that come with financial education are endless and undeniable. When you have a solid understanding of finances and how to manage them, better savings habits are established, responsibility is heightened, and you will likely accrue less debt and save more for retirement over time.
Whether you’re watching a YouTube video, taking a finance class, or reading blog content, there are endless resources available to you to help you understand and manage your finances.
The Slavic401k blog has ongoing financial education tools at your fingertips. We offer calculators, financial education, and tips to help you achieve your financial goals.
