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October 4, 2022
Navigating financial decisions can be difficult, but it’s important to consider your options options, prioritize your short-term and long-term goals, and make decisions that put you in a position to succeed now, and in the future.
There are so many decisions people have to make throughout their lives.
Some are trivial, like what to wear to your friend’s party, but others can be much more significant; like whether or not to go to college, which job to take, or whether you can afford to buy a house or have children.
Making these decisions can be difficult, but it’s important to consider all of your options and make the best decision for yourself and your future.
As a 25 year old, some of the goals I have for the next decade are to: get married, have and provide for children, buy a home, be gainfully employed, and save for retirement – all while maintaining an emergency fund and paying off student loans.
I don’t know about you, but for me quite frankly, the thought can be overwhelming. Having a comprehensive financial plan, however, can help to guide me toward better decisions.
It’s important to have a solid understanding of your finances, and what you can afford. It is equally important to consider the long-term implications of your choices.
Let’s get into how to become more financially secure:
There are many ways to make a budget. You can use a pen and paper, a spreadsheet, or an online app like Mint or YNAB. The goal is to just start and have an idea of all your expenses plus versus your income.
My recommendation is to start with a simple spreadsheet that lists all your current expenses, including all those subscriptions (yes girl I see you with HBO Max, Amazon Prime and Peacock).
The key is to track your income and expenses so that you know how much money you have coming in and going out each month.
This will help you to make informed decisions about your spending, saving and investing.
There are a few different types of budgets that are best for beginners. The first is a simple budget. This type of budget includes your income and expenses, and it helps you to track where your money is going each month.
The second type of budget is a zero-based budget. This type of budget starts with your income and then allocates every dollar to an expense. This ensures that you are not spending more money than you have coming in.
The third type of budget is a envelope system. This type of budget involves allocating cash to specific categories, such as groceries or entertainment. Once the cash in a category is gone, you cannot spend any more money in that category until the next month.
The 50/30/20 budget is a popular budgeting method that can be helpful for beginners. This budget allocates 50% of your income to essential expenses, 30% to discretionary expenses, and 20% to savings and debt repayment.
Essential expenses are those that are necessary for survival, such as housing, food, and transportation. Discretionary expenses are items that you can live without, such as entertainment or dining out.
The 50/30/20 budget can help you to stay on track with your spending and reach your financial goals. If you are new to budgeting, this may be a good option for you to try.
The pay yourself first budget model is a method of budgeting in which you prioritize saving and investing over spending. This means that you will save and invest a certain percentage of your income each month before paying any other expenses.
This budgeting method can be helpful because it forces you to make saving and investing a priority. It can also help you to reach your financial goals more quickly. If you are new to budgeting, the pay yourself first budget model may be a good option for you to try.
Examples of budgeting can be found on Money Her Way website. If you need help budgeting, this article walks through the different types of budgets you can choose from.
Moreover, check out our FREE budget planner calculator to help you figure out where you are with money.
If you find that you’re regularly spending more than you can afford, it’s time to make some changes.
Track your spending for a month and see where you can cut back. Maybe you can pack your lunch instead of buying it every day, or cancel that gym membership that you never use.
Need additional help budgeting? Check out Ms. Informed Latina’s simple steps to budgeting.
What is high-interest debt?
High-interest debt is any debt that has an interest rate above 8%. This includes things like credit card debt, personal loans, and some types of student loans (generally private loans not federal loans, but double check your interest rates)
Why should I pay off my high-interest debt?
The reason you want to pay off your high-interest debt is because it’s costing you a lot of money in interest charges to borrow money.. The sooner you can pay it off, the more money you’ll save.
How should I pay off this debt?
First, you should check what the interest rate charges are on all your current debts(credit cards tend to have some of the highest at 17%-29%) and then list them from highest interest to lowest, NOT from how much you owe.
Then start to tackle paying off more to the highest interest rate debt you have and slowly moving down your list. Don’t pressure or stress yourself out on a timeframe, but keep in mind even the smallest of payments can make all the difference.
It is important to pay more than just the interest portion of each billing cycle because this is the only way you will make progress toward closing out the loan!
Looking for more resources on how to manage credit card debt check out Ms. Informed Latina’s blog post on “why credit matters” and how to manage it.
An emergency fund is a savings that you use to cover unexpected expenses. This could be anything from a car repair to a medical bill to losing your income due to layoffs as we’ve seen in the last several years with the impact of COVID. Rule of thumb is between 3-6 months of living expenses.
Why do I need an emergency fund?
An emergency fund is important because it gives you a cushion to fall back on when life doesn’t go as planned. It’s also helpful in avoiding high-interest debt, because you can use your savings to pay for unexpected expenses instead of putting them on a credit card. Also, it keeps you from having to liquidate any investments at a time it may not be advisable to do so.
Saving and investing is important for two reasons. First, it gives you a way to grow your money over time.
Second, it provides you with financial security for the long run like for retirement. But don’t think of retirement as an age thing *cough* 65 years old.
This investment is like helping you achieve financial freedom so that you can choose to work rather than have to work, or of course pursue other ambitions you might be passionate about.
There are many different ways to save and invest your money. The best way to save money is by opening up a HYSA High Yield Savings Account because it tends to yield more interest than a traditional savings account does.
Ms. Informed Latina offers a great resource on HYSA accounts that you can learn more about, here.
Most HYSA are online digital savings accounts not attached to any specific bank. The best way to begin investing is to look at stocks, mutual funds or an ETF Exchange Traded Fund, you can typically do this by choosing a brokerage account and choosing these types of investment.
Working with a financial planner can help you save money. A financial planner can help you find ways to reduce your expenses and make wise investments. This can free up money that you can use to pay off debt or save for the future.
Financial planners will tailor savings plans to your unique situation.
A financial planner can also help you invest wisely. They can provide guidance on how to grow your assets and protect your wealth. This can help you reach your financial goals sooner and with less risk.
A financial planner can also help you to reduce your stress levels. This is because they can take care of all of the paperwork and number crunching for you. This means that you will have more time to focus on other things in your life.
Finally, a financial planner can help you plan for your future. They can assist you in creating a budget, setting goals, and making a plan to achieve those goals. This can help you avoid financial stress and live a more comfortable life.
They can do this by helping you to make wise decisions with your money and by providing you with the resources that you need to reach your retirement goals.
The key is to find a way that works for you and to start saving early. The sooner you start, the more time your money has to grow. This is called compound interest and the best thing you can do is start now.
Retirement might seem like a long way off, but it’s never too early to start saving.
The sooner you start, the more time your money has to grow. Compounding interest is a powerful tool that will help your money to grow over time.
There are many different ways to save for retirement. You can open a 401(k) or 403(b) account through your employer if offered, or an IRA/Roth IRA account.
You may even establish your own retirement plan by starting a business. In each of these examples, you take advantage of tax deferred – or in the case of the Roth IRA – tax free growth.
Still a bit confused on how 401K accounts work, check out Ms. Informed Latina’s blog on “Understanding the basics of 401K accounts”, to get better informed.
Why is it important to save for retirement?
Saving for retirement is important because, outside of a Social Security Retirement Income Benefit, it may be one of the only ways to provide income in retirement.
It’s also important to start early, so that you can take advantage of the benefit of compounding over the long-run.
A financial planner can help you determine how much money you will need to have saved in order to retire comfortably.
They can also assist you in making wise investments that will grow your retirement fund. The best way to figure out which retirement plan is best for you is to meet with a financial planner.
Additionally, a financial planner can provide guidance on how to reduce your expenses so that you can save more money for retirement.
The key is to find a way that works for you and to start saving early.
A financial planner is a professional who can help you to make informed decisions about your money. They can help you identify your short-term and long-term goals, prioritize your objectives, create a budget, save for retirement, and invest your money.
Don’t know where to begin? Our Financial planners will help you navigate your financial life decisions with confidence.
Why would I need a financial planner?
A financial planner is a professional who can help you to make informed decisions about your money. They can help you identify your short-term and long-term goals, prioritize your objectives, create a budget, save for retirement, and invest your money.
Where can I find a financial planner?
If you have a brokerage account or retirement account through an employer plan, a financial planner may be available to you at no additional cost.
Our Favorites are:
Have investments and savings of your own: This will give you a sense of financial security and independence.
How to save?
– Save a percentage of each paycheck
– Invest money in stocks, mutual funds, ETFs or a retirement account
Saving money gives you options and choices. It allows you to be in control of your finances and future. Have an understanding of your finances: This includes knowing your income, debts, expenses, and credit score. The more you know about money, the better equipped you’ll be to make smart decisions about it.
The steps to start saving:
– Determine your income and expenses
– Prioritize your goals
– Find ways to reduce your expenses
– Create a budget
– Automate your savings
– Invest your money
Saving money is important, but it’s not the only factor to consider when making major financial decisions. You should also think about your goals, values, and priorities. What do you want to achieve in life? What’s important to you?
Answering these questions will help you figure out what’s most important to you, and make decisions that are in line with your goals. For example, if you value family above all else, you may decide to start a family sooner rather than later. Or if you’re determined to achieve a certain level of success, you may decide to pursue a higher education or take a job that offers more opportunities for advancement. Each of these decisions will require a different financial plan.
No matter what decisions you have to make, taking the time to consider your options and plan for your future will help you to make the best choices for yourself and your family.
Being financially secure is one of the best things you can do for your future self when navigating potentially tough life decisions.
Saving: One of the most important things you can do is save for your future. This may seem difficult, especially if you’re living paycheck to paycheck. However, there are a few things you can do to make it easier.
First, try to create and stick to a budget. This will help you better understand your income and expenses so that you can make adjustments as needed. Second, make sure you’re automatically transferring a portion of each paycheck into savings. This will help you to make headway on your goals without having to think about it. Lastly, invest your money. This can be done through a retirement account or by investing in stocks or mutual funds.
Thoughtful decision making and sound financial judgment is an important part of navigating life-long goals. By taking the time to save and invest for your future, you are setting yourself up for success no matter what life throws your way.
The Bottom Line
No matter what life decision you’re facing, it’s important to consider your finances. Saving money and being financially secure will give you the peace of mind and flexibility you need to make the best choices for yourself and your family.
If you’re feeling overwhelmed, consider working with a financial planner. They can help you create a budget, save for retirement, and invest your money. By taking the time to plan for your future, you’re setting yourself up for success no matter what life throws your way.
Sources:
Ms. Informed Latina, is an online platform dedicated to helping young Latinas and disenfranchised communities of color navigate adult life by equipping them with the right resources and information around finances, career & health. You can follow her below.
MIL Website: https://themisinformedlatina.com/
Email: msinformedlatina@gmail.com
Not everyone is lucky enough to have financial planners as parents, but that’s what Money Her Way is here for. We want to give every woman, no matter their age, the opportunity to take control of her finances.
