Writer Jackie Beens offers her insight on money management tips for young professionals
Working for a nonprofit means that you spend most of your time working for a cause or doing something to improve your community. But with all your efforts towards helping others, you should not forget to think about your own wellbeing — and that includes your financial wellness. Forbes reports that a lot of Americans are ignoring financial wellness as a concept, which is alarming because this is what prepares you to handle any financial crisis, now and in the future.
And for young professionals, the best time to focus on financial wellness is now. To help you get started, here are some money management tips for a solid financial foundation for the years ahead.
Creating a budget
You’ve probably heard this a hundred times, but creating a budget is really one of the best ways to help you save and manage your money. Now that you’re earning an income, you need to figure out how to allocate your funds to bills, savings, entertainment, and other expenses. Without a budget, it’s easy to mindlessly waste money on things you do not need or cannot afford. To help you create a budget and track your spending, there are plenty of apps that automate the process for you, such as Mint or PocketGuard. These are a great help for those who find it hard to track each expense on their own. And if you have difficulty sticking to your budget, there are several small ways you can cut down on expenses. This includes taking some time at the weekend to prep meals for the week ahead, as shared by our very own Kara Zucker.
Saving up for retirement
You might not be thinking about your golden years just yet, but the earlier you start, the better off you will be during retirement. And if you think that it’s too early to start saving up, just remember that your retirement could last up to 30 years. Saving up for it as early as possible will help you make sure that you won't outlive your savings. So, do your future self a huge favor, and get started on saving for your retirement today. You can do this by slowly working towards maxing out your 403(b) plan at work.
Building an emergency fund
Life is full of uncertainties and can be very unpredictable. Emergencies can occur at any time, and as such, having a rainy day fund is crucial for your financial wellness. But how do you start? The first step, as pointed out by the ‘Emergency Fund Guide’ published by Marcus, is to understand how much you spend on a regular basis. Your monthly expenses provide a way for you to understand just how much money you’ll need to save up should any untoward incidents occur. Include in this figure your rent or mortgage payments, average utilities, average groceries, and other necessary expenses per month. From there, most financial advisors agree that you should have around 3-6 months’ worth of essential living expenses saved up in your emergency fund. This way, your emergency fund can serve as a financial safety net, if (or when) major emergencies like losing your job or a major medical emergency happen.
Paying off your debt
While putting away money for savings and funds is a good way to take care of your financial wellbeing, you should also work on paying off your debt as early as possible. As debt is a reality for most young adults, being aggressive about paying it off and not letting your credit card bills spiral out of control will greatly help in reducing your overall financial stress. It will also free up additional money in your budget that you can save or use to invest for your future. But when you’re facing huge debt and barely see any developments with your finances, it’s easy to feel discouraged. To combat this, personal finance expert Danetha Doe shares that it's important to stay focused on your goals. Try to surround yourself with positive stories about people who overcame financial stress by listening to podcasts or reading books, and tackle your debt head-on instead of delaying it for the future.
Jackie Beens is a Rockford-based freelance financial analyst and a full-time mother of two. When she’s not working, Jackie enjoys urban gardening and yoga.