Brittany is no stranger to The YoPro Know and has provided her financial wisdom to this audience before. That's why she deserves a warm welcome as we welcome her back to being a blog contributor! Brittany and I met at a networking event several years ago and have stayed friends ever since. Her advice, both as a friend and as an advisor, are a gift and I am lucky to know her.
Your two biggest assets as a YoPro are time and human capital. There are many tips you can find on the internet, but the steps I’ve laid out below will help you create a foundation that you will benefit from years to come.
1) Create a budget.
Think of this as awareness of what is coming in and what is going out every month. I don’t care what tool you are using – mint, YNAB, excel, pen and paper – choose a method that you will stick to. Budgeting not only helps you understand what you are spending your money on, but also knowing the overall cost of your lifestyle will help you determine your financial goals.
2) Take advantage of employer benefits.
The biggest freebee is the 401k match. Make sure to at least contribute enough to get that match.
3) Create a cash cushion for emergencies.
Start with a mini goal such as $1,000 and build up to 3-6 months of your monthly expenses. Lean towards 6 months if you are single, rely on one income, or have fluctuating pay checks. Keep this in a High Yield Savings Account so that it’s easily accessible.
4) Look at how you are using debt.
If you already have high interest debt, tackle the one with the largest interest rate first by making extra payments.
Understand that some low interest debt does not have to be paid off right away so you can use that extra money for investing. Ex. Mortgage
Using a credit card for your monthly expenses and pay it off every month can be a great way to utilize debt. This way you are racking up points or miles and staying away from the high interest fees.
5) Automate as much as possible.
From short term savings goals to investing. If you must remember to move money to your savings, it is less likely to happen.
6) Focus on your savings rate.
This is the amount you are saving divided by your income. There are many metrics you can follow, but increasing your savings rate is the best thing you can do as a YoPro.
7) Set up a time to review all of this.
I call this a Money Date. Whether you are single or in a relationship, taking time once a month to review your finances and progress towards your goals can help you stay on track.
8) Keep it personal.
There are many rules of thumb and advice on the internet. When you read something, consider your personal situation before implementing anything (including this article). Just because it worked for your brother or coworker doesn’t mean it applies to you.
Bear markets and recessions will come and go, so focus on what you can control (like your savings rate).
Connect with the author here.