Don’t sweat it if you didn’t win the lottery this year because there’s still hope for your bank account. Even if you’re not rolling in it yet, you can smartly money-up soon enough if you start planning now. As stated in Self magazine and the bestseller, The Broke and Beautiful Life, experts share advice you can use to feel like a million bucks, and hopefully make them too!
Ace the knack of negotiating
If you’re not brave enough to negotiate your salary, you’re losing out. An income boost means more money you can save down the line. “Women tend to be great at pushing others forward but don’t take the same initiative when it comes to their own careers,” reveals Erin Lowry, founder of Broke Millennial. A lot of us may be too coy or uncomfortable asking for a raise but keep in mind, you have nothing to lose if you did ask. Learn to lose the bashful demeanour and convey your request to secure a better future.
Get serious about saving
Tonya Rapley, certified financial educator and founder of My Fab Finance, recommends using a lump sum of money (hello, bonus) to jumpstart your savings account, then putting away a greater monthly percentage to reflect each raise you earn. It’s also smart to set up a long-term savings account for retirement and major goals, like buying a home, and a short-term one for when you deserve to treat yourself to a nice vacation or designer shoes. And if you view that short-term fund as strictly for emergencies, have a clear definition of what kind of crisis is worth dipping into that off-limits money.
Take advantage of compound interest (and actually understand what it is)
“If you understand interest compounding, sometimes I think that’s all you need,” shares Annamaria Lusardi, Italian-born economist and Denit Trust Chair of Economics and Accountancy at George Washington University School of Business. In other words, it’s not hard to become a millionaire by the time you retire, it’s just a matter of planting your money in the right accounts (research which banks offer you the best rates) and getting that compound interest to make magic happen for you. If you start saving at 25, you’d have to put away about $400 a month to become a millionaire retiree. Wait until you’re 30, and the number jumps to almost $600 each month to make the same goal. The longer you hold off, the bigger that figure gets.
Slash unnecessary spending
All the saving in the world is worthless if you’re indulging senselessly with every chance you get. So you should work to get your spending under control if that’s an issue for you (shopaholics alert!). “It’s best to know what your spending triggers are so you can avoid them and better utilise your money for investments and things that you really care about,” shares Rapley. By the time you retire, a million bucks might not be as much as they seems. Rising living costs and longer lifespans mean budgeting will be as important as ever during retirement, so getting into the habit now is key to reaching your goals.
Be done with your debt
We know things like car loans can pile up and be evil enough to throw you off every month, and credit cards are often a necessary part of living your best life. But the longer you wait, the more the interest heaps up. “If you have credit card debt, consider going on a cash diet and putting your credit cards on ice,” says Alexa von Tobel, certified financial planner and CEO of LearnVest. “Once you meet your minimum payments, start by tackling your highest interest credit cards first.” Being debt-free will only get you a step closer to your ambitious money-making goals.
Secure your solo financial future
“It’s critical for young people, especially women to plan their financial lives under the assumption that they’ll remain single,” says Stefanie O’Connell, a millennial finance expert. No matter what your personal life looks like, planning to take care of yourself for the long run is an absolute non-negotiable. “Having an independent financial foundation and understanding of basic financial principles, regardless of what your love or familial life throws at you, will serve you for the rest of your life,” O’Connell adds. “Yes, there will likely come a time when you make financial choices in tandem with another individual, but you’ll both be better served if you already have a solid understanding of the financial basics.”
Published in The Express Tribune, February 21st, 2016.
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