Please welcome my husband Jacob to A Daydream Love today! I invited him to do a series of ” Smart Money Moves For The Young Adult”. One of the many things I love about Jacob, it’s that he is very conscious about the money he spends and how he spends it-he is the leader when it comes to our finances. A couple of years ago now, we started doing the Dave Ramsey Financial Peace University and it really motivated us to find ways to save and live a debt free life. Jacob took that, expanded on it and made it personal to his life. He loves to read and talk about smart financial moves and he definitely lives it out. So, here’s Jacob to share “5 Smart Money Moves For The Young Adult”.
Hi! I’m Jacob. I’m passionate about being smart with my money, finding ways to save, live debt free, and have healthy money habits. Rechael and I have learned to save for things we want to do or things we want to buy instead of going into debt over it. Here are my 5 smart money moves:
- Get yourself a money saving system-you may have heard about the envelope system, which is great. Rechael has been using that for years. However, the system doesn’t necessarily work for me, so I use the EveryDollar budget app to track my income and expenses. If you would additional info on the envelope saving system, I highly suggest checking out Dave Ramsey’s explanation. Every dollar has a purpose and should be assigned to a category. You need to tell your money what to do instead of having your money control you.
- Save up for it instead of going into debt over it-now I realize this may not apply to every circumstance or situation. However, at best, save up for that big trip you want to take, or that particular item you want to buy. Put aside money out of each paycheck for that particular thing. You’ll be thankful you did in the long run. Don’t fall for the 0% financing or same as cash gimmicks. 9 times out of 10 if you have the cash you can negotiate a lower price.
- Start knocking out your debt-your debt is costing you time and money. Rechael and I live, for the most part, a debt free life. We just have the mortgage on our home, which we are diligently working hard to be free of. To start knocking down your debts, list them from smallest to largest. First start off by paying the smallest debt while making minimum payments to the rest. Then work your way to up to the largest following this method. Use the payments you were making towards the smaller debts, accumulate them and add them to your next debt. This is called a debt snowball. Small victories are key to getting out of debt! This is why we pay off the smallest debt first.
- Emergency fund: after you have paid off your debts you want to build your emergency fund which should be about 3-6 months of your living expenses. You should put this into a savings account which shouldn’t be touched. This isn’t for investing, it’s for emergencies. You need to always be prepared for the unknown.
- Contribute to your 401K or IRA: once you have your emergency fund it’s time to start investing. You can do this by contributing to your retirement fund. You want to put 15% of your income into a 401k or IRA. It’s better to be thinking about this one earlier rather than later.
Now, this doesn’t all happen over night, but I encourage you to stay consistent. The goal is to live on less than what you make-live realistic and within your means. Not only will you be wealthy, but you’ll be leaving a legacy for your family.