Financial Literacy Tips to Keep in Mind

In honor of Financial Literacy Month, please view these 10 tips provided by Great Lakes Investment Management.

Tip #1: Set up autopay for recurring bills

Stop wasting your hard-earned money on late fees. Set your bills on autopay and never pay another late fee again. 

Tip #2: Small reductions in spending add up to big savings over time.

Making one small change a day can make a huge impact on your ability to save. Making coffee at home instead of buying it out is a simple example that many people refer to. Let’s say it costs $0.50 per day to make coffee at home, and it costs $2.50 to buy coffee out. If you made the switch, you would be able to save an extra $2.00 per day. Over the course of the year, you could save an extra $730 just from that one simple change. If you invested that money at a 7% annual return, you would have saved over $10,000 over a 10-year period. That’s huge savings for such a simple change.

Tip #3: Don’t connect your saving and checking accounts.

Often when I meet with clients, when they tell me that they have a savings account that is linked to their checking account, they use it as an extension of their checking account rather than as a true savings account. If you want to build up your savings for longer-term goals, you cannot make frequent withdrawals from it. Sometimes it’s as simple as making it a little harder to transfer between the two accounts.

Tip #4: Start saving for retirement as early as possible.

If you are eligible for your employer’s retirement plan, get signed up and start contributing today. If you are not able to contribute to a plan through your employer, open an IRA, and start an automatic contribution. Do not procrastinate on this.

Tip #5: Create a budget and revise it as necessary.

There are lots of people out there that hate budgeting, so even if they do get around to making a budget, they never revise it—life changes. Your income will change. Your expenses will change. Your budget should be adjusted accordingly to help you continue to reach your long-term goals.

Tip #6: Automatically contribute to your savings account from every paycheck.

I’m sure that you have heard that you should pay yourself first. Setting up an automatic deposit from your paycheck into your savings account is a great way to make sure you do this. Remember that you want to spend what is left after saving, not save what is left after spending.

Tip #7: If your employer does not offer a retirement plan, open an IRA, and start contributing today.

I mentioned this in a previous tip, but so few do it that’s it’s worth reiterating. If your employer does not offer a retirement plan or you are not eligible to participate in it, don’t use that as an excuse to put off saving for retirement. Open an IRA today and start contributing. You can do it at discount brokers online, at your local bank, or with a financial advisor.

Tip #8: Contribute at least enough to your retirement plan to get the full benefit from your employer’s match.

If your employer offers matching contributions for your retirement account, make sure that you contribute enough to get the full match. This is a valuable benefit that is part of your overall compensation package.

Tip #9: You do not need to have a lot of money to start investing.

Have you heard of Acorns? You can literally start investing with spare change. While many financial advisors require a minimum amount of assets to establish a relationship, there are still lots of ways to get started investing without a huge nest egg.

Tip #10: If you are married, review your budget together each month.

Budgeting and financial planning together create a solid financial foundation for you both. It may take a little work to get started, but once you have things in place, it’s basically just a monthly check-in to ensure you are on track.

For more tips, please visit Great Lakes Investment Management.

The opinions expressed are solely those of the author and do not necessarily reflect the views of A Second Chance, Inc.

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