If you have just entered college or joined the workforce after graduation, you may be wondering what you can do to get into good financial standing. After all, managing your money well leads to good credit, fruitful savings and the ability to live a comfortable life going forward. In order to reach this point, there are several key phrases to know and good financial moves you can make. By following this advice, you will set yourself up for a better future and build an eventual nest egg, as oppose to those who spend their money without a plan.
Refinance Existing Debt
Refinancing simply means receiving a new loan to replace a current one you have with different terms. Usually, these new terms involve a much lower interest rate, decreasing your monthly payments overall. You can refinance just about any kind of loan, including student and car loans, along with mortgages and credit card balances. The advantages of refinancing, besides a lower interest rate, include the ability to use saved money for other expenses and set up a more flexible repayment period. For instance, if you want to refinance a student loan, you can use a student loan refinance calculator to see what your payment will be. After doing so, you can reach out to private lenders to see what terms and rates they offer.
Open a ROTH IRA
An IRA is an individual retirement account. Individuals use these tax-advantaged accounts to save for retirement. By starting this account in your twenties and saving money forty years in advance, you are setting yourself up for a very healthy and abundant retirement. Many young individuals opt to set up a ROTH IRA as money grows in this account tax-free. They are also easy to set up at various financial institutions and don’t require a certain amount of money to be made. In fact, if you make too much money, you won’t qualify for a ROTH IRA.
Develop Excellent Credit
Having good credit will provide you with the best in houses, vehicles and so much more. A good credit score demonstrates to lenders that you are a reliable borrower, qualifying you for higher limits, easier approval and better insurance rates. To maintain good credit, always make payments on time, don’t go over your current limits and keep your credit card balances at a minimum.
Budget Properly: The 50/20/30 Rule
Perhaps you have been budgeting since high school and think you’ve got it down. The truth is that once you are on your own, monthly payments are going to look a lot different. You will have rent, utilities, groceries, living necessities and more payments to make. Fortunately, there is an easy rule to remember in order to keep a steady budget, which is referred to as the 50/20/30 rule. You spend 50% on your needs, such as rent and groceries, 30% on your wants, such as going out and put 20% on your savings. Using this budgeting method consistently will ensure you have enough money every month.