1. Find your passion. Here’s the cold, hard truth. You can find a career or business that pays well, but you will always lose out to the person who is more passionate. You should choose a career that will let you reach your full potential based on the gifts you want to share with the world. If you’re doing something that you enjoy, you’ll stick it out when the going gets tough, and that’s when the real money starts rolling in.
2. Focus on saving first, then your income. Your primary wealth building tool is your income. However, you can’t build any wealth if you’re squandering every penny. Here at Personal Finance Genius, I recommend saving at least 20% of your income. If this will be too sudden of a change for you, I recommend that you read “The Easy, Painless Way to Save More Money Each Month”.
3. Start early! Compound interest works miracles. If your company offers a 401(k), sign up ASAP. If there’s no 401(k) then funnel some of your paycheck into an IRA. If you invest $200 per month starting at age 25, you’ll have over $500,000 at age 65, provided a 7% return. If you wait until age 35, you’ll end up with less than half that amount.
4. Choose your partner carefully. If you decide to get married or settle down, be sure to do so with someone whose money values match your own. If you’re a thrifty saver, your life will be a living hell if you’re married to someone blowing up your credit card statements. Speaking of credit cards…
5. Understand how credit works and use it responsibly. Some financial gurus will advise you to abolish credit cards completely – to cut them up and never use them again. I respectfully disagree. Be sure to comparison shop for your credit card and pay off the balance in full each month. Although a credit score is just an indicator of how well you repay debt, it’s a critical tool for areas like securing a mortgage. A higher credit score can save you thousands upon thousands of dollars over the life of your mortgage. Although if you can just pay for your dream home in cash, that’s cool too.
6. Develop a budget and constantly improve it. A budget is a plan for your money where you dictate where every dollar will be used before you get it. Sticking to a budget requires discipline, but planning ahead virtually guarantees that you’ll hit your financial goals. Once you have a budget, you should always look for ways to improve it. Do you qualify for lower insurance rates? Get them! Don’t watch TV anymore? Cut your cable! You’ll have more money to put in savings.
7. If you have student loan debt, enroll in automatic monthly payments. This is super helpful advice to avoid getting hit with interest and other fees by the monstrous loan companies. It’s also a “set-it-and-forget-it” type deal. You don’t have to worry about making the actual payments – you just have to worry about keeping money in your checking account.