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To put the "pay yourself first" idea into practice, enroll in your retirement plan or consider contributing more today.
As with exercising regularly and eating nutritious foods, healthy financial habits are good for you. But getting into the routine of managing your finances takes time and effort. These five tips can help you make positive money habits part of your everyday life.The hardest part is getting started
1. Consider your reasons
Think about why you want to create better money habits. What financial goals are you trying to achieve? Knowing your goals can motivate you to set aside time and money to achieve them. Try writing them down and putting them somewhere you can see them.
2. Create a budget
Having a budget is one of the best ways to track your finances. It's easy to get started with our budgeting tips and worksheet. A budget will allow you to:
3. Start investing early
The earlier you begin saving for a long-term goal like retirement, the better off you’ll be. That’s because the sooner you start regularly adding to your account, the longer your money has to grow, thanks to a concept called compounding. Here’s what it would look like if an investor saved $250 a month, earning an average annualized 7% rate of return on their investments. As you can see, waiting just 5 years could make a tremendous difference in the amount you have available when you retire.
This illustration is hypothetical and is not meant to project the results of any specific investment. If fees and expenses were deducted, the results would have been lower.
4. Pay yourself first
Pay yourself first by contributing to retirement and other savings accounts before spending money on non-essentials. An easy way to do this is to make saving automatic. You’re less likely to miss money that you don't see in your checking account first. You could:
5. Focus on debt
By eliminating what you owe, you can take the money you're putting toward debt and use it for savings instead. When you make only minimum payments, it can take years to wipe out loan and credit card balances. To get rid of debt faster, pay more than the minimum amounts due. Also, consider using the amount you’d been paying on one debt toward another as each debt gets paid off.
Remember, small steps have a big impact
Though it may seem slow at first, making financial wellness a priority will reap benefits over time. You may find that you’re less stressed because you know where your money is going. You may even find that you can afford things you couldn’t before as you keep an eye on your spending. Start creating financial wellness habits now. Your future self will thank you.
Ready to put the "pay yourself first" idea into practice? Enroll in your plan or increase your contributions today.
To learn more about investing concepts and investing through your plan, visit our resource center.