07/12/2023
5 Tips for Financial Success That I Wish I Had Understood at a Younger Age
Practice being a prolific saver. It can even be savings for a future spending occurrence - but the power of saving is a muscle that requires development and practice, just like an endurance runner. It doesn't happen overnight without training and a plan.
Pay yourself first. To be a prolific saver, I set aside my savings to be automatically deposited into a separate account that can't be easily transferred and then use the remainder to pay my bills. I would challenge myself to move from saving 10% all the way up to 30% of my earnings into my savings account.
Live below your means. To become a prolific saver, you have to live below your means. If you earn $1,000 a month working a part-time job and save $300, you must adjust your lifestyle to live on the remaining $700. Living below one's means allows you to practice prolific savings, paying yourself first. Often as people earn more, they spend more. Just because you make more does not mean you have to inflate your lifestyle. Instead, you should increase the percentage amount from your salary that you are saving. Of course, you can buy yourself a treat to celebrate your extra salary, but then pretend you don't have it.
Track your spending. For me, to learn how to live below my means meant tracking how much I was spending. I did this the first time when I was 17. In high school, I lived at home with my parents, so I often went out with friends to buy coffee and meals. I earned money working part-time, but I spent $600 a month. This is without any real bills! I always thought I didn't spend much money until I started tracking my spending. To learn how to live below your means, it's important to understand your monthly spending.
Understand how your decisions today impact your decisions later in life. And then, last but not least, our systems are not connected. If you plan to get an education and take out loans to achieve that, this decision can impact your pathway to buying a home later. Early on your homeownership journey, it's important to understand the best mortgage product and qualification criteria. Because once you start shopping for a home and try to get pre-qualified, that's too late. You must self-educate and meet with a loan officer before applying.
