When it comes to money, it can be hard to be an adult. And, it can get downright overwhelming as you struggle to secure your first paycheck, pay for health care and rent on your own, and save for the future. Yet, an important step that every woman must take at a young age is to get your finances in order. Here are four moves that will get you started.
Create an Emergency Fund
A recent study showed that about 59 percent of Americans do not have enough money in their savings account to cover a $500 emergency. Instead, people rely on credit cards or payday loans when they are stuck in a bind. This is a terrible route to take because you end up paying many times more than your original expense when you factor in the interest. Instead, create a budget, and squirrel away money here and there until you have an emergency fund of about $1,000. Then, don’t touch the money unless you have a real emergency (i.e., your car needs repairs, you need to travel to see a sick loved one, etc.)
Tackle Your Debt
Young women are going to college in record numbers. Unfortunately, while they are there, credit card companies are preying on them, and they are racking up student loan debt. The sooner you make a plan to tackle your debt, the less you will pay. If you have had problems with repayments in the past, then you might want to know how to fix your credit yourself. Begin by working off how to pay off your debts. There are a couple routes you can take. There are plenty of companies out there that will refinance student loans. As a general rule of thumb, you should pay off your highest interest debts first, or you can pay off the smallest debts first. Both have their benefits, but the latter option has the psychological benefit of helping you feel like you are making progress.
Start Saving for Retirement
When it comes to saving for retirement, time is your best ally. You will be much better off when you begin early. The best route you can take is to open up a 401(k). These accounts are great because your contribution comes out of your paycheck before taxes and the interest grows tax-free. In fact, if you file online taxes, most programs are already equipped with the necessary options for 401(k) and other savings accounts. Additionally, many organizations offer matching as part of their benefit plan, so you are essentially getting free money.
Have a Plan
What are your financial goals? For instance, if you would like to buy a house in the next few years, then you might want to start saving for a deposit. Or, you may have the goal of owning a business. Make a plan for want you would like to achieve financially over the next one, three and five years. Once you have your aims in place, you can then work out how you’re going to get to them. Your ultimate goals will guide your budgeting and saving and transform your future into a financially secure one.