Guest Post : Contributed by Tina Roth of USA.
Leading a financially secured life is the last thing, which comes into the minds of many people under 30.
But, the thrill of leading life in king-size, might work as a hindrance in the path of saving money for your future. Lack of knowledge about personal finance management, might lead you towards experiencing a topsy-turvy situation later.
So, here is a list of the fundamental money concepts, which the people under 30 should know.
Net Worth
Your net worth is the real reflection of your financial health. Net worth has the capacity of showing you the complete result of your total assets minus the liabilities.
According to the experts, this is the most convenient way to understand your financial standpoint. You are in a good position, if your net worth reflects a positive standpoint. On the other hand, if your net worth is somewhere in the negatives, you need to work a bit hard to recover from the situation.
Net worth can also be used in measuring your improvement in finance so far.
Tax Strategy
You are never too young to build a tax strategy. However, people ignoring the importance of tax planning are not at all small in number. But, there are some essential tax perks that can also be taken by the people under 30 with limited income.
In fact, this technique is considered as one of the most effective financial steps, which can change your life completely. If you are not sure about making the decision all by yourself, then don’t hesitate to take advice from an expert.
Prefer Choosing the Short Term Goals
Life is full of surprises. So, don’t think about making too many long term goals. Try to set some short-term goals, which can easily be measured by you.
For an example - do not let your student loans or credit card debts upset your future plans. Instead, think about paying them off as soon as possible. Achieving your short term goals can be a stepping stone and encourage you to make some longer term goals and fulfill them successfully.
Inflation
The power of your money will automatically diminish due to the inflation. Even this critical situation can be handled well, if your income also rises following the same rate of the inflation.
You can also think about using the inflation calculator, if you are not earning enough to match up with the annual inflation rate. This will give you an idea of the shortfall expected in future.
Pick a Career Option Wisely
It is quite natural for you to switch a couple of jobs before reaching 30. So, if you are not settled in a single place in your 30’s, it might become critical for you to plan a future more effectively.
Find out your suitable profession and try to stick with a single job. Do not let others, to take decision of your life, on behalf of you. Follow your heart’s desire in picking a career option. But above all, you need to choose a career where paying all the bills will not be a tough call for you.
Thereafter, follow a routine investment plan to ensure that you have saved enough for shaping the days of your retirement. Also remember to diversify your investments in different stocks, bonds or other alternative options.
Liquidity
Having an easy access to your money is quite an essential thing, as mishaps can happen at any time. Think about having an emergency fund with cash or bank, as the liquidity of the cash or bank has the capacity of saving you from the impending troubles of life. Storing your emergency fund in the money market can also be your option, where you can also earn some extra interest on your money.
Understanding the liquidity of your asset is one of the most effective financial steps, which one can take earlier in their life. Assets like your retirement accounts or your home are less liquid than your normal emergency funds. As the invested money is not at your fingertips, the value of it will automatically gain over the time.
So, if you are approaching your 30’s, then do not deny the fact that now is the right time for you to take some serious steps to make your future bright.
Tina Roth is a personal finance blogger who loves to write about frugality and money management tips. Her personal finance blog is all about helping people understand personal finance to secure the financial future.
Leading a financially secured life is the last thing, which comes into the minds of many people under 30.
But, the thrill of leading life in king-size, might work as a hindrance in the path of saving money for your future. Lack of knowledge about personal finance management, might lead you towards experiencing a topsy-turvy situation later.
So, here is a list of the fundamental money concepts, which the people under 30 should know.
Net Worth
Your net worth is the real reflection of your financial health. Net worth has the capacity of showing you the complete result of your total assets minus the liabilities.
According to the experts, this is the most convenient way to understand your financial standpoint. You are in a good position, if your net worth reflects a positive standpoint. On the other hand, if your net worth is somewhere in the negatives, you need to work a bit hard to recover from the situation.
Net worth can also be used in measuring your improvement in finance so far.
Tax Strategy
You are never too young to build a tax strategy. However, people ignoring the importance of tax planning are not at all small in number. But, there are some essential tax perks that can also be taken by the people under 30 with limited income.
In fact, this technique is considered as one of the most effective financial steps, which can change your life completely. If you are not sure about making the decision all by yourself, then don’t hesitate to take advice from an expert.
Prefer Choosing the Short Term Goals
Life is full of surprises. So, don’t think about making too many long term goals. Try to set some short-term goals, which can easily be measured by you.
For an example - do not let your student loans or credit card debts upset your future plans. Instead, think about paying them off as soon as possible. Achieving your short term goals can be a stepping stone and encourage you to make some longer term goals and fulfill them successfully.
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| The baby (personal finance) steps you must take in your late 20s. |
Inflation
The power of your money will automatically diminish due to the inflation. Even this critical situation can be handled well, if your income also rises following the same rate of the inflation.
You can also think about using the inflation calculator, if you are not earning enough to match up with the annual inflation rate. This will give you an idea of the shortfall expected in future.
Pick a Career Option Wisely
It is quite natural for you to switch a couple of jobs before reaching 30. So, if you are not settled in a single place in your 30’s, it might become critical for you to plan a future more effectively.
Find out your suitable profession and try to stick with a single job. Do not let others, to take decision of your life, on behalf of you. Follow your heart’s desire in picking a career option. But above all, you need to choose a career where paying all the bills will not be a tough call for you.
Thereafter, follow a routine investment plan to ensure that you have saved enough for shaping the days of your retirement. Also remember to diversify your investments in different stocks, bonds or other alternative options.
Liquidity
Having an easy access to your money is quite an essential thing, as mishaps can happen at any time. Think about having an emergency fund with cash or bank, as the liquidity of the cash or bank has the capacity of saving you from the impending troubles of life. Storing your emergency fund in the money market can also be your option, where you can also earn some extra interest on your money.
Understanding the liquidity of your asset is one of the most effective financial steps, which one can take earlier in their life. Assets like your retirement accounts or your home are less liquid than your normal emergency funds. As the invested money is not at your fingertips, the value of it will automatically gain over the time.
So, if you are approaching your 30’s, then do not deny the fact that now is the right time for you to take some serious steps to make your future bright.
Tina Roth is a personal finance blogger who loves to write about frugality and money management tips. Her personal finance blog is all about helping people understand personal finance to secure the financial future.
