If you use a credit card, make sure you’re mindful about how you use it. I would suggest not using a credit card until you have your basic budget running consistently. Credit cards can be convenient, but make sure you can pay off your purchases on it at the end of the month.
If you are just starting to get monthly checks, I would recommend just using cash until you are financially mature enough for a credit card. Using credit cards in the wrong way can get you caught up in excessive debt. However, once you are responsible enough to use a credit card it’s important to start building your credit history. This means paying back payments on your credit card so that you build a solid credit history so when you decide to make big purchases, your interest rates will be low. To do this, only spend what you have.
For example, if you want to buy that new 60 inch screen for your Super Bowl party, don’t buy the TV on credit if you can’t afford it. Make sure you have the cash, then pay for it on your credit card and repay the payment ASAP. Repeating this cycle will help you increase your credit score.
Continuing on credit, building a good credit score will significantly help you financially in the future. Using credit and credit cards in a responsible way will help you save thousands of dollars down the road because your interest rates will be much lower. Thus, when you buy a house or a car, you’ll be paying off your loan to the bank with a much smaller interest rate if you have a good credit score.
Retirement plan: Invest around 15% of your annual income into Roth IRA’s (Individual Retirement Account) and other pre-tax retirement accounts. Putting your money in an IRA account has long-term tax and retirement advantages. All you need to do is fill out a few forms and put down an amount.
The most challenging part is deciding where to open your account and which investments to purchase. Mutual funds are the best place to start if you don’t have much investing experience. Investing your money in a mutual fund takes out a lot of the anxiety of investing your money because there is less risk through the diversification of the securities you invest in. In other words if one security does poorly your investment is covered by other securities that will offset the poor one.
These companies offer a wide variety of investment options with lower expense ratios but lower yield, however your money will grow consistently in the long-term. If you think you have an idea of where you want to invest your money, you can create your own portfolio of stocks you want to invest in using companies like USAA.
Take advantage of using companies like USAA and Navy Federal to help manage all sectors of your life. They offer financial advice in mutual funds to grow your investments, retirement plans and IRA’s, real estate, college funds for your kids and insurance for auto, dental, Medicare, life, practically everything. When your first starting out with managing money, insurance, and retirement, USAA is the best place to start when managing all of the advice listed above.
So save wisely.