Let’s Talk Money

Money is one of the most important resources allowing us to participate in society. Almost everything we do and possess is associated with a price at some point during the process of acquiring, owning, or experiencing it.

Something else associated with money is happiness. A study by Matthew Killingsworth of the Wharton School of Business found that our sense of well-being increases as our income increases.

While money isn’t the only determinant of happiness, it’s important enough that we should consider how to best manage our income and finances.

Banking

If you don’t have a bank account, make that your first money move. It can help you stay accountable with your spending and saving to build up your cash assets.

Think of it as a method of safe keeping. Rather than allowing your money to float around and risk losing it or using it to make spontaneous (and often poor) purchase decisions, keeping it tucked in the bank ensures you know right where it is and must think about how you use it before you have the chance to do so.

Both savings and checking accounts allow you to easily access your money when needed. In addition to just storing it, a savings account also builds on the money you deposit by offering small levels of interest.

Before setting up an account, do some research to find out which bank might be the best fit for you. Asking for advice from friends or family you trust can point you in the direction of where to begin.

Sometimes, a $25-100 initial deposit is required to open the account, and some banks have a minimum amount that must be left in the account to keep it open. Make sure you are informed on these numbers, so you are prepared to keep the account in good standing from the very beginning.

Here is a guide that walks through what you need to open a bank account and compares your different account options.

Budgeting

It can be easy to lose track of where and how our money is being spent. We also could forget about certain streams of income if we aren’t actively monitoring them. Enter: the budget.

Creating a budget is one of the best ways to keep tabs on the flow of your money.

When creating a budget, you could choose to focus on different lengths of time. Some common budget timeframes include yearly, quarterly, and monthly. You could even look at doing a combination, such as a yearly budget broken down into monthly checkpoints.

Start with your incomes, as this will give you a foundation for the total amount of money you can distribute between budget categories. When looking at how to divide up your money, try to prioritize paying off debt, saving and covering your necessary expenses. After that, look at what income is left and consider your hobbies, dreams, habits, etc. Further separate the rest based on your personal lifestyle.

It may help to refer to some common budget categories or follow a step-by-step guide detailing how to best set up your budget. But remember, the one you create should be personalized to you and may not fit inside the box of any one guide.

By starting with a general outline and continually reviewing and adjusting, you can make a budget that is well-tailored to your life.

Investing

While it’s good to have some money sitting in the bank, it’s only earning minimal interest. Once you’ve built up a comfortable amount in your account(s), consider investing a portion of your money.  This provides a smarter option for earning income on what you already have.

There are so many ways to go about investing, but the first place you should start is determining what type of investor you are. Based on how aggressive or conservative your investing style is, you might choose different investment routes. Try taking this quiz to learn more about your personal level of comfort with investing.

After you review your results and get a better grip on where you stand, research the different opportunities available. These could range from self-managing stocks with an app, allowing an online broker company to manage your holdings on your behalf, or working with an in-person financial advisor to place your money in various funds.

There is a lot of information out there to further educate you on the investing process and to help you make informed decisions with your money. Here is a quick guide to help you get started.

Saving for Retirement

A retirement plan is a specific type of investment that helps you grow your wealth in anticipation of the time when you will stop or reduce your work hours. If you desire to enjoy a comfortable retirement period, then it is important to start building your savings now.

Many employers offer 401k options through the company. These will allow you to set aside portions of your earnings into a fund that earns interest. Additionally, many companies offer some level of employer match. That means, for every percent of your paycheck you choose to designate for your retirement account, your employer will deposit a matching contribution up to a certain percent. This is one of the easiest ways to save for retirement, as much of the process happens automatically and you receive extra money from your employer just for working there and participating in the retirement program.

If your employer doesn’t offer retirement plan options, don’t fret! You can also independently invest for retirement through Individual Retirement Accounts (IRAs). These are available through a variety of financial investment companies and allow you to contribute up to $6,000 per year.

There are some factors to consider when selecting an IRA. These include as how many years until retirement, your desired lifestyle upon retirement and anticipated costs of living. The company with which you choose to invest can provide you with guidelines on the best routes to take to personalize your savings plan.

To learn more about how to get started saving for retirement, check out this planning guide.

Money can seem stressful and confusing, but it doesn’t have to be. By focusing on banking, budgeting, investing, and saving for retirement, you can rest assured some of the biggest financial boxes are checked.