Everyone makes mistakes and money-related mishaps make no exception. Whether you’ve wasted your money on things you don’t really need or failed to save for a comfortable retirement, you’ve most likely made your fair share of financial mistakes at some point in your life.
But it’s never too late to learn from your mistakes and listen to what financial experts have to say to improve and make the most of your money life. So, read on to find out 11 money secrets financial experts want you to know about understanding and managing money easily.
Around 69 percent of Americans have less than $1,000 in savings while a third of the population in the United States is living with no savings at all. Saving money can be challenging, especially when your paycheck is not that big and there are all sorts of obstacles that prevent you from achieving your saving goals. But it’s not impossible. One way to succeed is to opt for automate payments.
“If you don’t see it, you won’t spend it,” said Sharon Epperson, CNBC senior personal finance correspondent and host of CNBC’s “Retire Well.” “Have money automatically directed from your paycheck to a savings account that isn’t tied to your checking account.” Here are 8 Easy Ways to Save More Money Monthly.
Manage Lifestyle Inflation
Lifestyle inflation occurs when you increase your spending, and hence lifestyle, whenever your income grows. According to Ted Jenkin, a certified financial planner, it’s important to keep your purchases under control and increase your savings rate instead of your spending rate.
“Save one-third of every pay raise you get so you don’t succumb to lifestyle inflation,” he said. By starting this practice early in your career, you’ll develop good habits like saving, investing and paying down debts instead of spending it on more stuff you won’t care about in a few years’ time. Try these 15 Life-Changing Personal Finance Tips You Had No Idea About!
Don’t Waste Your Money on Useless Things
If you’ve just received your first salary or raise, don’t fall into the trap of celebrating by buying things you don’t really need. It might be tempting to buy that trendy pair of shoes or smartwatch, but it won’t do your finances any good.
“Don’t spend so much money on clothing,” said Michelle Schroeder-Gardner, founder of the personal finance blog “Making Sense of Cents.” “I’ve worked full-time since I was around the age of 14, yet I didn’t really start saving money until nearly a decade later.”
Don’t Buy Things to Impress Other People
Giving in to impulse purchase and wasting your money on immediate wants can affect your future needs, warned John Rampton, founder and CEO of Calendar. “Don’t waste your time on expensive cars or gadgets,” he said. “It’s better to save money for the long-term and for things that can keep generating money, rather than taking [your] money.”
Start Investing for a Comfortable Retirement
With more than half of Americans having less than $1,000 in savings, no wonder so many people struggle to make ends meet in retirement. When you’re young, saving for retirement might not be your top priority but it should be! The earlier you start saving, like in your 20s, the higher your chances to build your nest egg and live a comfortable retirement. There’s nothing better for your retirement savings than compound interest!
“Start contributing to a Roth IRA with that taxable income you’re earning,” said Erin Lowry, author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together.” “I wish I’d started investing earlier with something as simple as Roth IRA in college.”
Don’t Be Afraid of the Stock Market
Rule number one of investing: don’t be afraid of taking risks. Stock markets may be volatile, but they are not as volatile as to stop you from investing. Stock market fear can seriously impact your investment choice, so, even if it seems scary and intimidating, take the risk.
Even if it’s a smaller scale investment, stock markets are worth investing in, said Tom Hegna, financial author, speaker and economist. Certified financial planner Jeff Rose feels the same way. “Invest sooner,” said Rose. “I started investing at 24, but I started working when I was 16 and could have invested a little bit of money sooner.” Read more about 15 Reckless Things You Should Never Do with Your Money.
Step Up Your Investment Game
“Invest in the market, and lock in gains by purchasing income,” Hegna said. “Once you have your basic expenses covered with income, buy more.” Investing seems more intimidating than it is. You can ask for the help of a financial advisor you trust to make smart investments with high return rates. That way, you’ll be able to build your nest egg and supplement your Social Security benefits, allowing you to live your golden years the way you deserve. And stay away from these 10 Money Mistakes You’re Making, According to Financial Experts.
Invest in Yourself
Financial investments are not the only things influencing your future. Investing in yourself is one of the best returns on investments you can get. So, make sure you do everything in your power to learn and discover as much as possible about personal finance and money basics. “No one will care about your financial success as much as you will,” said Marsha Barnes, a certified financial social worker and founder of The Finance Bar. “Learn as much as you can today.” In the long run, and even in the short-term, you’ll be the sole beneficiary.
Listen to Yourself and Take Initiative
“Figure out what you want in life, then make decisions based around this goal,” said J.D. Roth, founder of the financial website Get Rich Slowly. “Once I got clear on what my larger aims were, I was able to make financial decisions that supported these goals.” Once you determine what are your saving goals, you become much more determined and much more willing to work harder to achieve them. There’s nothing more satisfying than achieving a goal and thinking about what you can accomplish next.
Don’t Let Worry Get in Your Way
Whatever your goals, don’t let worry get in the way of going after what you want, said Jen Sincero, New York Times bestselling author and success coach. “Worrying is praying for what you don’t want, so stop worrying about money and focus on what you do want,” she added.
Keep in Mind That Money Isn’t Everything
Obviously, you need money to pay for all sorts of essential and non-essential expenses but don’t make money your supreme goal in life. Ask for what’s yours but let it define your success. “Ask for more money and learn to negotiate as soon as possible,” said money expert Brittney Castro. “[But] don’t chase money, because it’s not the holy grail. Enjoy it. Make lots of it. But always remember it’s a resource, not an indication of who or what you are in the world.”
“Do not link money with success,” said Dominique Broadway, a millennial personal finance expert and founder of Finances Demystified. “Money can come and go. Focus on saving and growing your money, and don’t focus on ‘shiny things’ to keep up with other people.”