Get a Financial Life Summary


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Originally published at: https://blog.12min.com/get-a-financial-life-summary/

Get a Financial Life Summary

Personal Finance in your Twenties and Thirties

It is never too early for saving. It is time you read our Get a Financial Life summary and start investing for the future.

About Beth Kobliner

Beth Kobliner

Beth Kobliner is a writer, a contributor to the New York Times, and a former a staff writer at Money magazine

"Get a Financial Life Summary"

If you have so far tried to save money many times but without much success, you share similarities with most people.

However, living like that should not be an option.

There is no better time “to get your financial life in order” than now.

And to do that, you can look at the following seven steps which will help you in your quest.

First, get health insurance.

If you do not have it, a single health problem can take you to the verge of bankruptcy. If your company does not offer it, buy it yourself.

Second, reduce your debts.

The interest rates on some of the loans are far greater then what you would get if you invested the money. So, put all spare cash into reducing your debts.

You can do this by either paying it off entirely, if you have big savings, or you can refinance it, by transferring money from high-interest debts to ones with lower interest rates.

Third, start saving for retirement early.

As we already said, the best time to start saving is now, while you are still young.

Next, reduce your banking costs, such as ATM and checking account fees. Some banks do not charge them if you have a minimum balance.

Furthermore, save up for emergencies, before you think about investing.

A good rule of thumb is saving enough money that could cover your expenses for the minimum of three months, in case you experience a setback.

After you do this, it is time to become an investor.

To reduce your risk consider joining a mutual fund. Just make sure it is one with low expenses and that you embark on this journey wisely.

Lastly, reduce your taxes, by calculating if you can save money by moving from standard deduction to itemizing your deductions.

Key Lessons from “Get a Financial Life”

1. "The Debt Rule" 2. "The Housing Rule" 3. "The Savings Rule"

"The Debt Rule"

Your total incurred debt should never exceed 20% of your annual salary. Of course, student loans and mortgage payments should not be calculated as part of it.

"The Housing Rule"

Never spend more than a third of your monthly salary on housing. If you live in a big or an expensive city, you may consider moving in with roommates to succeed obeying this rule.

"The Savings Rule"

Savings are a serious matter, and you should treat them as such. They are just as serious as your bills.

Save at least 10% of your pay each month. Some months, when you feel you can handle it, put away 15%.

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“Get a Financial Life” Quotes

[bctt tweet="Many people in my generation - those now in their 20s and 30s - do not expect to live as well as their parents." username="get12min"]

[bctt tweet=“Be forewarned that you’re likely to come across people who’ll tell you you’re too young to lock up your money in a retirement savings plan. Ignore them.” username=“get12min”]

[bctt tweet=“Saving isn’t easy for most people, and putting aside a fixed amount each month seems like an impossible task.” username=“get12min”]

[bctt tweet=“One reasonable approach might be to put about half your holdings into stocks, one-third into bonds and the rest in money market funds.” username=“get12min”]

[bctt tweet=“The good news is that there has never been a better time to get your financial life in order.” username=“get12min”]