This is probably the scariest moment in your life. You’re starting out and living on your own the first time.
Your parents are there, but not close enough.
Your don’t have any saving, or if you do it’s a small sum only. You don’t know much about money or investing because it was never taught in school or from your parents.
You’re earning a beginning income, which is eaten up with high tax rate, because you have no business, real estate property or family to take advantage of any tax deductions.
But it’s okay. This is a good thing, because you have “time” on your side.
You’re lucky at this stage.
Take advantage of this benefit as time waits for no one. The earlier you start saving the more your money compound as time goes.
Related article: Why you should start saving money early?
Get financially educated.
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Pay Yourself First
Now that you have some money coming in. Be sure to Pay Yourself First…put aside at least 3-5% of your income every month in your “rainy day” bucket. Start with a small insurance policy, because if something happens to you, your family immediately would have $100,000 or more. Once you have an insurance policy in place, put the rest of the money in an emergency fund that can provide for 3-6 months of your living expenses.
Live Below Your Means
And spend what is left after your saving. This is the money that you can use to pay off your debts, go out to nice dinner, buy a few nice things for yourself. Buy only what you can afford with your money NOW, not your future money. This is avoid getting into debts.
Manage Your Debts
Some of you may have college debts, and some of you may also have consumer debts. High interest on credit card debts can compound quickly and eat up your savings and slow your progress to financial independence.
Maximize Tax Benefit
Save and invest your money in accounts with tax benefits – Roth IRAs and B.Y.O.B.