Whether you believe it or not, money has the power to shape our lives, sometimes in profound ways. Money can influence our choices, opportunities, and future outcomes. The problem is that most of us feel stressed about money.
Rising prices and stagnant pay can paint a dark future for some. However, knowledge is power, right? The more you know about money, the more informed decisions you can make to reach financial freedom.
Here are a few money moves that have the potential to shape your life. Use this list to potentially change your financial future for the better.
1. Creating a Budget
“Creating a budget is fun,” said no one ever. It’s true. Budgets aren’t sexy. However, they are important and will define your financial success.
Think about it: How can you be financially successful if you don’t clearly understand how much money you’re making and spending each month? Although you may have a rough idea, this is not the same as crunching the numbers after analyzing your bank statements.
Budgeting doesn’t have to be complicated. For example, you don’t need to pay for apps or memberships to stick to your budget. Start with the basics, and use a piece of paper or a spreadsheet to track your expenses.
2. Building an Emergency Fund
Only after you have a budget can you create an emergency fund. Doing so will require you to save money each month. However, having an emergency is much more than saving money. An emergency fund will give you options and the confidence to say no to toxic jobs. Aim to save at least three to six months of your monthly expenses.
3. Investing Early
You’re falling behind if you’re not consistently investing money each month. Investing for your retirement is one of the most important things you’ll do in your lifetime. Having enough money during retirement will define a large part of your future.
Start with what you can, but make it a habit to figure out ways to increase your monthly contribution. Many free online calculators will help determine how much you’d need to contribute each month to have enough during retirement.
4. Establishing Good Credit
It’s always better to pay for things in cash. However, most of us won’t have $300,000 to pay for a home. This is when having a credit score will come in handy. To establish a good credit score, get a secured credit card or have someone cosign a smaller loan. Consistently make your payments on time and watch your credit score go up.
5. Paying off Debt
Carrying too much debt can make you feel stressed. Avoid using credit for smaller purchases. Close all your credit cards, but keep only one or two if that’s not possible. You want to get into the habit of paying off your credit cards monthly, so you carry no debt. Life is much better when you have little to no debt.
6. Diversifying Investments
Investing for retirement is only half the battle. The problem with traditional retirement is that you have to wait until you’re 65 to withdraw your money. To make matters worse, you get taxed for capital gains.
It’s smart to invest in other things like real estate, a business or side gig, and much more. Your goal is to diversify your investments to hedge your risk during economic downturns.
7. Setting Meaningful Financial Goals
You can save for different financial goals once you have a budget and consistently save money monthly. However, it’s not enough to set generic financial goals. Instead, set meaningful goals that will keep you motivated along the way.
For example, saving for a big trip is more meaningful than saving $100 each month just in case. Even if you can save money with generic goals, you’ll feel tempted to use this money at some point. Saving with intention will motivate you to improve your financial situation.
8. Continuously Educating Yourself
If you’re not growing, you’re sabotaging your financial success. You don’t have to work toward being the next Bill Gates. However, making smart financial moves is challenging if you’re not growing.
For example, you’re limited to your investment options because you’re not learning about other options. Additionally, it will be challenging to earn more money since high-paying jobs require some sort of specialization. Do yourself a favor, and never stop learning.
9. Monitoring Credit Reports
You don’t need to review your credit score daily, but checking in a few times per year is smart. Consider that millions of people in the US are victims of fraud. No one is completely immune to fraud, but if you’re actively monitoring your credit, you at least increase your odds of catching suspicious activity sooner rather than later.
10. Negotiating Salaries
If you aren’t switching roles every two years or negotiating your salary annually, you’re leaving money on the table. Getting into the habit of doing one of these two things will drastically change your financial future. You’ll get into the habit of continuously improving to justify your raise or constantly looking for the next role that will pay you more.
11. Living Below Your Means
Keeping up with the Joneses is something most of us do to an extent. However, learning to live below your means will help you build wealth. You don’t need a luxury car or designer clothes. You can splurge on some things, but choosing to save and invest more often than not will help you build wealth faster.
12. Automating Savings and Investments
Automating your savings will make it easier to save. Take this a step further and automatically enable your direct deposit to direct a percentage of your money toward external savings accounts. This way, you’ll feel less tempted to spend the money you don’t see. The best part is that if you do this right, you’ll forget about this money and eventually see hundreds or thousands of dollars saved.
13. Creating Multiple Income Streams
Similar to diversifying your investments, you want to diversify your income streams. No one is immune to layoffs, and if you’re ever a victim of this, you’ll be better prepared if you have other income sources. A bonus of having multiple income streams is having the ability to say no to doing work you don’t enjoy.
We now have more options than ever to earn money online. Use this to your advantage, especially if you work remotely.
14. Planning for Estate and Inheritance
No one looks forward to their last day on Earth. However, if your will and estate planning are mapped out, you will feel more at peace. Your family will avoid arguments over your assets, and you will be better prepared for life-threatening scenarios. Consider speaking to a legal professional to help you with estate planning.
15. Prioritizing Health
You may be surprised that prioritizing your health makes it onto this list. However, being careless with your health will lead to higher medical costs in the future. Visit your primary physician and dentist regularly.
If you work from home, consider purchasing a walking pad to use while you’re working. Figure out ways to stay active. No matter how busy you are, postponing healthcare will be costly in the future.
16. Regular Financial Check-Ins and Adjustments
Never stop checking in on your financial progress. As with any goal, monitoring progress at least monthly is essential. Otherwise, how do you know if you’re doing well or not? Set recurring reminders to check in consistently. If you find that you’re falling behind in some of your financial goals, find the next steps you can take to get back on track.