Sure, 2017 was all about “living your best life.” While many of you were doing this, you may have forgotten the importance of living on a budget. When it comes to your money, you want to make the best and most logical decisions possible. Let’s take a look at five awesome money moves you should be making this year.
Get on A Budget
It’s never too late to start living on a budget. When it comes to budgeting, you should strongly take into consideration the 50/30/20 rule. No more than 50% of your net income towards your essential living expenses, no more than 30% for things you want, and 20% of your net income should be deposited into a savings account. Money invested in a 401k or other retirement account does not count towards savings. Your personal savings is disposable income that you have immediate access to for emergencies. You’ll need this money for a variety of reasons and planning for those moments will put your mind at ease.
Pay Down Debt
We all have some sort of debt, whether big or small. In order to pay this down, you should start creating a plan to get rid of your debt. The easiest strategy is starting with the smallest debts and working your way up toward the larger debts. As you pay down the smaller debts, you’ll feel accomplished and you will be motivated to continue your financial journey. This will slowly put you on the path to financial freedom.
Invest in Your Retirement
Retirement planning is absolutely critical. Outside of your personal savings, you should have a concrete plan for retirement. If your employer offers a 401k program, take advantage of it immediately (they may even offer a company match).
If you are an entrepreneur, you’ll want to invest through a self-directed IRA (you can set these up on your own). While you won’t receive a match, your personal retirement account can provide a tax deduction. Take time to understand your investments and how various funds work with respect to expenses and market growth.
Set Savings Goals
Whether if it’s for your emergency fund or a home/auto down payment, you should know how much you want/need to save and also how budgeting will impact your savings goal(s). Erik Gordon, CEO of ErGo Ventures LLC, a private equity and venture capital investment company, knows this all too well. It’s important to start with a plan and execute it with fidelity. Remember the motto to live by: early is better than late and more is better than less.
Find Other Sources of Revenue
Sure, who can’t use a little extra money every so often? You should always be thinking about how you can add a new revenue stream to increase your income. If you are employed in a regular day-to-day job, never stay dependent solely on your paycheck. Rather, you always want to create new ways to bring in money. This will free up room in your finances and will allow you to pursue other opportunities.