1. Pay yourself first:
Put money away and invest in the future. Stores have found clever ways to entice the consumer to buy goods and services. Do not give in. By the time you are 25, it is a good idea to put up to 5,000 in savings a year.
2. Create a budget:
Commitment on paper is a good practice — it benchmarks and indicates confidence with numbers. Apps including IReconcile, Expenditure, Moneybook, Toshl, Mint can help you do this. People who have a written budget end up with five times more money in the future than those who do not, according to a study done by Harvard.
3. Make a list of 25 ways to save money:
This is one way to find the money you should be saving and investing. Consider starting the morning with drip coffee rather than a latte every day. It is much cheaper —where you work in the future will likely brew coffee for free, but not lattes or espresso drinks. Five 16 oz. lattes at Starbucks cost more than $15. Over a year, you will spend $806 on lattes. At least cut your latte intake in half.
4. Open up an IRA or 401(k):
Anyone who has earned income can start an Individual Retirement Account (IRA) or a 401(k) retirement savings plan sponsored by an employer. Even if you can only afford to put down $100 over a couple of paychecks, the return will be much higher by the time you retire. To prepare for uncertainties in the economic future, finance workers suggest that young adults save 15 percent of pay rather than 10 percent.
5. Invest in 401(k) options that will match your investment:
Nearly every plan offers matching funds; the most popular is 3 percent of your salary, according to the Profit Sharing/401(k) Council of America. IBM, for example, will match employee contributions up to 6 percent of your income.
6. Develop a plan to pay off your student debt:
It is ok to make minimum payments on your student loans after graduating, but it will be productive to build investing in your 401(k) at this time too.
7. Investing is simple: Diversify amongst many stocks.
The less expensive the shares are now — the more you will make in the long term. More expensive shares are not guaranteed to have the same value in the future. Spend and hour a week reading an learning about investments. “Who you trust is one of the biggest decisions you make."
8. Find a mentor:
Everyone should have a mentor to help them gain the expertise and confidence they need to manage their finances, Merriman said. If you cannot meet the right mentor in person, at least find a writer or expert online to build from.
9. Don’t let the strong opinions of amateurs take you off course:
Choose carefully whether you want to listen to the advice of Wall Street or ‘Main Street’ — friends, family and associates at work — or ‘University Street’ — highly respected Nobel Prize winning academics — who have created recommendations designed for the individual’s best interest. Opinions of amateur investors can point you in the wrong direction.
10. List 25 quotes that represent you’re investment beliefs:
Merriman had a couple motivational quotes of his own to suggest:
“Beware of expenses: A small leak will sink a great ship.” — Ben Franklin
“If you want to see the biggest threat to your financial future, go home and take a look in the mirror.” — Jonathan Clements
“In investing you get what you don’t pay for.” — John Bogle
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