Navigating personal finance can be tough for young adults, especially with limited education on the topic in school. Sound financial advice is crucial for making smart decisions about budgeting, credit, and investments. Learning these skills early helps avoid debt, poor money management, and financial mistakes. Here are the top 10 best financial advice tips for young adults to set you on the right path.
1. Create a Budget
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Creating a budget is key for managing your money. It helps you track your spending and ensure you’re not living beyond your means. A simple step to managing your money properly.
To learn more: How to Budget Money
2. Manage Your Debt
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Managing debt is crucial. Keeping debt low and paying it off quickly helps maintain a healthy credit score and financial stability. As a young adult, it best to stay away from the temptation to spend on credit.
To learn more: How to Get Out of Debt in 5 Easy Steps
3. Invest Your Money
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Investing is vital for a secure future. Start early and let your money grow over time. It’s all about patience and consistency. Start by investing a minimum of 10% of each paycheck.
To learn more: The Simplicity of Investing
4. Start Saving Now
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Start saving early. Even small amounts can grow over time. An emergency fund can provide a safety net for unexpected expenses. Use a money saving challenge to make saving more fun!
To learn more: Top 20 Epic Money Saving Challenges Unveiled to Save Money
5. Limit Your Expenses
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Limiting expenses helps save more money. Track all your spending, even small purchases, to understand where your money goes. This will help you to invest the rest!
To learn more: How to Budget Money on Low Income: 20+ Tips to Cut Spending
6. Build Passive Income Streams
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Building passive income streams can boost your financial stability. Find ways to earn extra money through hobbies or skills.
To learn more: Find a Side Hustle that Works for You
7. Create a Cash Reserve
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Having a cash reserve prepares you for unexpected expenses. Save three to six months’ worth of income for emergencies.
To learn more: Breaking Down the Purpose of a Rainy Day Fund
8. Learn About Taxes
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Understanding taxes is important. Know the difference between your gross and net pay to manage your finances better.
Learn More: Difference Between Earned Income, Passive Income and Investment Income
9. Consider a Term Life Insurance Policy
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A term life insurance policy is affordable for young adults and provides financial protection for your future family.
10. Take Action
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Taking action is essential. Set clear financial goals, break them into steps, and stay persistent to manage your finances effectively. Don’t delay starting your financial stability!
Learn More: 10 Smart Financial Goals That You Need
Find More Ideas for Young Adults
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These tips for young adults will help you manage money well and not make the mistakes many others were guilty of. You can build a strong foundation with money. Make your finances a priority and you can quickly reach financial independence.
To learn more: Financial Advice for Young Adults: 10 Easy to Follow Money Management Tips
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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Inside: These are the absolute best life hacks to saving money. This list of frugal living tips with a big impact with greatly improve your budget and finances.
There are many ways to save money. Today, we are going to focus on frugal living tips with a big impact.
Those money saving tips that will save you the most money in the shortest amount of time.
These are the big impact ones of the all of the frugal living tips out there.
If you are a frugal living beginner or desire to save money, this is what you need to start with.
For many households, you are busy and want to find the life hacks that will make the biggest impact in the shortest amount of time. Saving money is important to you. You have bigger and better aspirations in life.
For us personally, we choose to implement these frugal living tips with a big impact because we want to increase our savings percentage each and every year. We have financial independence – all thanks to the Money Bliss Steps to Financial Freedom.
You should check them out. You might be surprised how your perspective will change.
For now, we are going to stick with the frugal living tips that will save you the most money with the least amount of work. Does that sound like a good deal? You want real life hacks – not just clickbait titles. Right?
I thought so… Let’s dig in to the frugal living tips with a BIG impact!
How to Stay Frugal
The better question is why do you want to stay frugal? What are your personal reasons for being frugal?
In this particular case, we are talking about saving money.
In all honesty, staying frugal means that you are constantly wanting to save more money. You have bigger plans in your life and don’t want to be a slave to your money. You desire to make a plan for your money and that is of utmost importance for your household.
Learning how to stay frugal will turn into a frugal lifestyle. Then, for many, it will morph into a thrifty lifestyle.
It is easy to learn how to stay frugal when you have dreams and plans in your life.
In order to fund those dreams, you need to stop living paycheck to paycheck and begin to give purpose to how you spend and save your money.
If you don’t believe me, then check out this case on why being frugal leads to a millionaire’s success story.
Top 10 Frugal Living Tips with a Big Impact
Like it was stated before, there are hundreds of frugal living tips that you can implement right now to start saving money.
However, for too many people, the list is too long and they want to see immediate progress right now.
These are the TOP 10 frugal living tips that will change how you think about money, spend money, and ultimately save money.
If you want to enjoy life and money (and maybe one day reach financial freedom), this is where you want to start. With this list. Right now. Make these easy lifestyle changes and begin a new relationship with money.
1. Wait 24 Hours to Buy
This is the simplest tip to help improve your money management.
Wait at least 24 hours before you buy something.
During that time, you will figure out whether or not you actually want or need the item. If you still want it, then you can purchase it. However, many times you realize that you didn’t need it or it wasn’t exactly what you wanted. So, you end up saving some money.
Obviously, the wait 24-hour rule applies to anything outside the realms of housing, food, gas, and utilities.
One of the smallest wins is to save $50 a week using this rule because over a year, you will save $2600!
Say what!?!?
That is a big chunk of cash that you probably even didn’t realize you were spending. Now, you are one step closer to reaching financial independence.
2. Make a Plan for Your Money
How do you want to spend your money? Have you ever considered where you want to spend your money before you spend it? Don’t worry if you said no. Most people don’t make a plan for their money.
What does it look like to make a plan for your money?
Before you are paid, you decide how and where you plan to save and spend your money. Did you catch the first part? It is the biggest hint I have for you – decide where you plan to save money first. Then second, how you plan to spend the rest.
Many people call this a budget.
The key is knowing where your priorities lie before putting in all of your variable expenses. You must plan to reach your money goals first. Then, figure out how to live on the rest.
That is called making a plan for your money.
3. Say No to Debt
There is nothing frugal about taking out debt.
Around here, we call debt – the cash flow killer.
It is extremely hard to move forward when debt (specifically the debt payment) is holding you back. It is like taking two steps forward only to be taken back a step now and three steps back in the future.
How to get around not going into debt?
You save up for big purchases, and then, you can pay in cash.
Side note… For this discussion, we are not talking about mortgage debt. In many cases, mortgage debt can be considered a “better” debt because purchasing a home may have a lower mortgage payment than current rents in the area.
4. Understand Where You want to Spend Money
Spending money isn’t a bad thing… IF you are spending money in areas that are important to you.
However, too many times we are blindly spending money and not realizing where our money went at the end of the month.
Is that what you set off to do?
Probably not, but for now, you feel like you are a slave to your bills and not being able to enjoy the fruits of your labor. The time is now to figure out where your priorities lie and the area you want to spend money.
To make this process simpler, it is easier to decide where you don’t want to spend money. For us, a no spend challenge helped us visually see where we wanted to spend money and where we actually spent money. The experience was eye-opening and very valuable.
Now, we know where we want to spend money and that has made a big impact for our finances. What could it do for you?
Just to Note… There are times where you want to spend money isn’t possible because you are barely managing to pay your basic bills. This frugal living tips with a big impact is to help you understand where your goals to spend money lie and what is unnecessary spending.
5. Know Your Reason to Live Frugally
Let’s be honest… living frugally doesn’t come with a lot of materialistic perks. You are sacrificing spending money in order to save money. It is hard to watch people mismanage their money only to get bailed out again and again.
To stick with frugal living and a desire to implement saving money hacks, then you must know your reason to live frugally.
Your answer will vary from everyone else’s answer. That is okay because we all have different money goals.
Have you thought about your reason for living frugally?
Our reason to live frugally is to travel. We don’t want to wait until we retire and the kids are grown to travel. We want to travel now and explore as much as possible while we can. Over time, that has morphed into our desire to reach financial freedom and not be a slave to our jobs. (Don’t worry… I love what I do here and don’t plan to change anything.)
What is your reason to live frugally?
6. Keep your Grocery Budget Trim
This is one of the biggest frugal living areas that will have the most immense impact – how you eat food.
Food is one of the basic expenses that you need to survive. However, how you choose to fuel your body will make a difference in your budget as well as how you choose to shop.
By becoming cognizant of grocery spending, you will learn to save money on groceries, which will make a huge impact over time.
Let’s take this example… You can save $200 a month on your grocery spending. That equates to $2,400 in one year. Almost $5000 in two years. At the end of 10 years, you saved $24,000!!
That is no small chunk of change. While spending an extra $200 a month doesn’t seem like much, over time it adds up to a greater amount. That is when you realize that implementing grocery money saving tips will have a bigger impact than you realized.
Overcoming your grocery budget is a learned trait; here are the best items on your grocery budget list.
7. DIY First
I’ll be the first to admit that making something yourself can be overwhelming when you don’t have a clue where to start.
Thankfully, there are plenty of tutorials to get you started with a simple Google search.
Frugal living tips with a big impact is knowing how to do it yourself first.
Here is one that has saved us over $10,000 in the past 10 years… I learned how to cut everyone’s hair in the house. The reason we started cutting our hair was because we were looking for ways to get out of debt faster.
The worst case scenario with DIY… if it doesn’t work out how you expected then you can always call for professional help. The best case is you just saved yourself a lot of money.
Especially if you own a home, you must learn to DIY first. Many of the skills that you would hire a handyman to do used to be taught by the generation before. Too bad that this isn’t still the case. However, thanks to YouTube, you have plenty of opportunities to learn how to do it yourself.
Another option is to trade services with a friend.
8. Find a Cheaper Alternative
One of the traits of a frugal person is searching for cheaper alternatives. This is a simple money saving hack.
This could be as simple as searching for a better price online and price matching. Or even waiting for a sale or clearance.
Finding cheaper alternatives is a great way to save money. Some options include:
Buying in bulk
Buying generic
Buy less items
Finding items that have dual purposes over single use. (like instant pot / air fryer combo)
You need to open up your eyes to finding cheaper versions or figuring out how to buy what you need at a lower price.
Another alternative is to buy used. This especially holds true for new cars since they lose most of their value within the first 5 years.
Just to Note: A cheaper alternative doesn’t always mean the quality is the same. A thrifty person would want an item that will last longer than the knockoffs.
9. Choose FREE First
Oh my! This hack is one of the best frugal living tips with a big impact.
Why choose FREE first?
Then, you don’t have to spend your hard-earned income on something that is used for a short period of time.
This could be for everything you spend money on.
Find free things to do with no money.
Source items you need in Buy Nothing Facebook groups or Nextdoor.
Choose the library over buying the actual books.
Ultimately, you’re looking at how to get things and do things for free first. This doesn’t make you cheap at all. It makes you frugal. Plus it gives you the chance to spend that money on something else that aligns with your reason to be frugal.
10. Think Long Term
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Too many times, we are so focused on living paycheck to paycheck that we don’t stop to make plans on what we want the next year to be like. Or the next 3 years? 5 years? Even 20 years away?
If you are ready to make a big impact in your life today, start by dreaming and thinking long term financial goals for all of your spending and saving.
Frugal Family Tips
Really quick, we are going to spend a little time discussing frugal family tips for your household.
Why?
Well, kids are expensive and it can be hard not to want the best for your family. And it can be easy to spend money to make that happen.
But first, why should you implement frugal family tips for your household?
Hint: so you can raise financially savvy children who make smart and wise decisions with money as adults. More is caught than today.
Kids learn by example.
So, why not be the best example for your kids with money?
The above list of the top frugal living tips with a big impact is solid money management tips that will build a solid foundation of success.
There isn’t a specific list of frugal family tips. It is taking the above life hacks and talking with your family about why you are making these money decisions. Have conversations about spending money and saving money.
In the long term, teaching frugal family tips will open the door to many opportunities.
That right there, my dear friend, is the gift that will keep on giving.
Tips for Living with Very Little Money
Typically, there are two types of people who are living with very little money and they are on opposite ends of the spectrum.
First of all, don’t compare yourself to others. That slippery slope of comparison is a trap; one which will cause you great harm, stress, and financial strain.
You are looking for tips for living with very little money.
If you are struggling living paycheck to paycheck, then you are in a tough spot right now. Remember, I said right now. You can always change your financial situation. It starts with your money mindset first.
The other person is that extremely frugal person who is consciously choosing to live with very little money. That means you are prioritizing the saving percentage you save each month.
In addition to all of the tips above, you must become EXTREMELY cognizant of your plans to spend money.
You know how and where you plan to spend every single penny that you earn before the money is in your hands.
Consistently, you are finding ways to spend less money and save more money.
A no spend challenge becomes a normal way of living for you. The key is you can’t hold a grudge on your choice of extreme frugality.
Just remember, you can lead a fabulous life with very little money. Money won’t buy your happiness. Finding contentment with your life is the target.
Which Frugal Living Tips with a Big Impact will You Try First?
Okay, so in all honesty, most of these frugal living tips are great money management tips that will completely turn your life in a completely different direction.
You are here because you want to save money with simple life hacks.
This list of the top 10 frugal living tips with a big impact will flip your life upside down for the better.
You need to make a big impact on your finances. Now, you need to embrace these saving money tips and have them become natural habits.
Regardless of income, you are capable of saving your first $10k, then saving $100,000 and ultimately being a millionaire. All it takes is thinking long-term and deciding what is most important for your family and your household.
You hold the keys to a brighter financial future. Grab them and begin to open up doors to more opportunities.
In case you want more frugality in your household, in this post, we outline over 175 + of the best frugal living tips, which are great once you master the money saving tips that will have a longer lasting impact.
For now, what frugal living tips with a big impact will you try first? Comment below and let us know!
You can become the next millionaire with no money!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Have you ever thought about life lessons about money?
Honestly, most of us haven’t because we go through our day-to-day lives without taking the time to reflect or even journal about our experiences.
This past week, I had the chance to visit my kid’s elementary school during lunchtime. It has been a LONG time since I have stuck foot in a lunchroom. Wow – that room is loud! Really quickly I realized some lunchtime lessons we tend to forget in life.
These are the best money lessons you need to know.
The teachers were present to keep the lunchroom in order. My hats are off to them! They are amazing ladies with gifted talent (and personally, I am thankful for each of them). They kept control of the chaos to make sure the students did what they needed to do – eat lunch while still enjoying their friends.
After observing the students and the teachers, I realized habits start at a young age. If those habits, don’t change. Then, the cycle repeats. As kids, we learn behaviors whether good or bad (and most of them stick with you through your adult life).
It is a matter of choosing which path we want to live.
So, you are probably wondering what does an elementary lunchroom and money have in common??? I’m going to unpack four lessons learned in grade school that people struggle with in their money life.
These are the financial lessons you must embrace to enjoy a life of financial independence.
How Can I Learn About Money?
Just like reading, writing, and arithmetic, financial literacy is important. It is a building block to becoming financially secure. More specifically, being smart with money opens up doors of opportunities.
You are in the exact place you can learn about money.
Here at Money Bliss, we believe people want to learn to alter money management, so they can enjoy life and money.
Unfortunately, financial lessons are not taught in school or at the home.
So, that means as a college student or young adult, you must become self-taught. There are lots of various opinions and advice that you can get. Some of the best money books are highly rated because they have solid money management tips that are life-changing.
Stick around our Money Bliss tribe! I guarantee you will find insightful tips as many others have that will change your personal finances.
Money Lessons You Need in Life
The important lessons in life are simple.
They are basic practices in life. These are not specific tactics to help you get out of debt, budget better, or save more money.
Your mindset will determine success or failure – just by how you are thinking.
Research has proven that your mindset will determine your outcome.
These are the daily money lessons you need to remember that will help you reach financial freedom.
These life lessons about money are you already know, but you may need to practice them more often.
1. Stay Disciplined
The first lesson is about discipline. Going back to the lunchroom, the kids know the expected behavior. It takes discipline to sit down and actually eat lunch vs. throwing food and chatting with friends then no food is eaten. As adults, we know how much income we make and how much we can spend. With money, it takes discipline to stay within a budget or as I prefer to call it – Cents Plan.
In today’s society, there are many ways to fast cash whether by using credit cards, payday loans, or even a home equity loan. It is super easy to rack up thousands and thousands of dollars in debt in a short amount of time. While it may be fun spending all of that fast cash, it comes at a steep price called interest.
Discipline is living within your means.
It takes discipline to say, “No, you can’t afford this.”
Even better is learning how to live below your means and save more money each month.
2. Avoid Pushing the Boundaries
Oh, children are the best at the second lesson! How far can I push the boundary? At what point, do I actually cross the line? During my time in the lunchroom, I observed students after students trying to push the boundaries. Remember, they have wonderful teachers who have taught them the expected behavior.
However, it is natural behavior as humans to test the boundaries.
With money, pushing the boundaries typically starts out small. $20 over on groceries this month. $100 on eating out because we had to celebrate a birthday. Picking up that one item just because it is on sale even when there isn’t enough money to cover the basic expenses. Then, after time, it starts a snowball effect.
It just keeps rolling and rolling, getting bigger and bigger until overspending is out of control and the person is now smothered in debt.
With money, is pushing the boundaries truly worth it? Why should you test your own boundaries when money is at stake? The answer is no. Stop pushing the boundaries.
In the end, you are only hurting yourself financially by testing the limits and causing undue stress.
Related Money Management Posts:
3. Keep the Focus
Um, hello? Are you listening? Still, reading? Good! Yes, focus is the third lesson.
The lunchroom serves one primary purpose – fill up the belly with food before the next class comes in. However, my observations proved that was the last priority on any of those kids’ agendas. Thankfully, the wonderful teachers were present to provide guidance and focus them back on the task on hand. Did it take one reminder? Um, no. Many reminders to stay focused on their primary purpose.
In our society, there are MORE distractions than ever before. Plus the distractions will keep growing exponentially as technology advances and history has proven. So, what does that mean for you and your money?
Develop a plan and stay focused. Don’t stray. Don’t let others change your plan. Focus.
When we paid off our student loans, we were focused on ONE thing. Pay off our loans as soon as possible. Thus, freeing up cash flow in our Cents Plan. We didn’t stray. No changing our minds when things got tough. We stay focused on our vision – PAY OFF OUR STUDENT LOANS.
Staying focused means creating an overall money vision and making money goals.
Every single day, you are focused on making decisions that will make sure reaching your money goals is attainable.
4. Accountability
Teachers through school help keep kids accountable. They were present in the lunchroom making sure chaos didn’t break out. These teachers provide a firm guiding hand with a huge dose of caring love.
Wouldn’t it be great to have an accountability standard for money? Unfortunately, we don’t have many great examples around us. The U.S. Government is trillions of dollars in debt. Most Americans carry debt on their shoulders while living paycheck to paycheck.
We have never been taught to be accountable with money.
The first step to being accountable with money is an accountability partner – either your spouse, friend, or coach. Someone who will keep your best interests in mind.
The second step is to have benchmarks to hold yourself accountable to. Understand how our tagline “Where Cents Parallel Vision” means to you and how to apply it to your life. Make sure to set long-term visions with attainable short-term financial goals. Also, journaling your journey is a great way to stay focused and track progress!
If you are struggling to find accountability, make sure to join the Money Bliss Tribe!
Related Money Management Posts:
What’s the best lesson you’ve learned about money?
Personally, for me, it is living with millionaire habits and possessing their mindset. This all happened well before becoming a millionaire and deeply in debt.
It started by believing that I could be successful with money.
These powerful money lessons helped shaped my perspective, and ultimately, the desire to change money statistics with this blog and online business.
If you are stick in the negative mindset of always being poor or broke, that is where you will stay (unless you decide to take control of your mind). Living paycheck to paycheck is an unfortunate place to be.
If you believe that you can become a millionaire, then that is the best lesson you will learn about money, too.
Every money decision is a building block towards financial freedom. There isn’t one thing that will take you from negative net worth to over $1,000,000.
It is a cumulative effort of many daily resolutions that will change your personal finances.
You Need these Important Lessons about money
All of these money lessons we learned early in life, but still need reminders on a constant basis.
In all honesty, they will help every facet of your life. Build the life of your dreams and find money success.
Don’t forget these personal finance lessons:
Stay disciplined
Stop pushing the boundaries
Focus on money goals
Keep accountable
Think like a millionaire
In order to succeed with money and become financially free is to put into practice the lessons taught in school. We don’t have teachers watching over our every move to guide us.
We need to remember why it is so important to stay disciplined, stop pushing the boundaries, stay focused on our plan, and find accountability.
One of the benefits of the Money Bliss Steps to Financial Freedom is it provides a guide with all of these money lessons on how to succeed the fastest.
The steps are to be done in order, therefore, stay focused on the current step and not be distracted. Ten steps to walk through your life’s journey. They won’t happen overnight.
Just like in school… you took one grade at a time, learn what in needed to advance to the next grade.
Take these important lessons about money and willingly use them in every aspect of your life. You will be overcome with how much you are capable of accomplishing!
The Money Bliss Steps are developed to build upon one another and lay the foundation for financial freedom.
Learn how to manage your money, your way. Not have your money manage you.
Side note on teachers and mentors… I am thankful to all of the teachers who dedicate their lives to enriching students’ lives. Each and every one of you makes this world a better place! Thank you.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: These festive money saving ideas you need to have a magical frugal Christmas! Rediscovering a Christmas with no money is still possible with a little bit of planning, fun, and creativity.
Just like throughout the year, the word frugal can have a bad connotation. When you put the two words together – Frugal Christmas, most people think of a sad holiday with no joy or excitement.
However, just like with a frugal lifestyle, being frugal means you are looking to stretch your dollar to the fullest.
A frugal Christmas means to be economical with the spending of your Christmas funds. You prudently set money aside for Christmas ahead of time, but remember your overall money goals. When it is time to buy Christmas gifts and decor, you are not wasteful with your money and make your money go further.
Everyone’s level of frugality is different.
The same holds true at Christmas. Your frugal Christmas will look different than your neighbor’s or a friend’s. There is no reason to trap yourself in a comparison mode.
Why a Frugal Christmas Traditions Matter?
If you are looking at Christmas with no money, don’t despair! There are plenty of money saving tips in this post to make sure you still enjoy a festive season.
If you want to stay on course to pay off debt or reach FI, then a frugal Christmas would be part of your innate nature to do. You just need some frugal living tips related to Christmas.
You can create a magical frugal Christmas.
More importantly, these frugal money saving ideas for Christmas will help you stick with your budgeting goals and lower your stress level.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
How to Survive Christmas with No Money
Before we just into the Christmas frugal living tips, let’s discuss the big elephant in the room… what if you can’t afford Christmas gifts?
First of all, that is an unfortunate circumstance that you are in right now. I say “right now” because you have the power to dictate your future.
And it all starts with your mindset… you are focused on surviving Christmas with no money.
Not the fact that you are surrounded by your loved ones. With the chance, to enjoy time together, laugh together, create traditions, and make memories.
That is what Christmas is about.
So, before you move forward, you need to change your mindset. Your current money mindset is focused on having no money, being poor, and being broke.
If you want to change your financial future, then it all starts with your thoughts consuming your mind.
Start with writing down three positive things that happen in each of your days. Make sure one of them is related to money.
Frugal Christmas Tips & Money Saving Ideas
Okay, now, we are going to dig into specify ways to make a frugal Christmas a reality.
These are frugal traits that will improve your money management throughout the holiday season, but you can also start to carry these over to all aspects of your life.
To keep in the spirit of Christmas, let’s dig in and learn how to create a frugal Christmas that won’t leave you broke!
1. Focus on the Important Things
When you make the conscious decision to become more frugal, your center of attention is on the bigger picture.
For a frugal person, they view Christmas as part of a bigger puzzle. Their spending at Christmas needs to align with their money goals and desires.
This is the point when you must ask yourself the hard questions… Would you rather stay on track to pay off debt faster? Keep on saving money so you can take some time off next summer.
These are where you decide what is important in your life.
Just to be clear, I am not saying Christmas isn’t important because it definitely is. I am saying the Christmas that has been defined in our culture that focuses on gifts may not be the overarching focus of Christmas.
2. Plan to Spend Half of “Normal”
Did you know most people plan to spend an AVERAGE of $800-900 on Christmas?
For most folks, that will break any budget with a lot of debt hangover coming in January.
Challenge yourself to a Frugal Christmas of $400 or less.
When you create your frugal Christmas budget, plan to spend half of what you did the previous year. Don’t know how much you spent previously, then stick to the $400 or less.
If you are tempted to overspend, then set your budget at $200.
Now, you need to use Christmas budget template to plan your gifts into your budget.
3. Make Your Frugal Christmas Plan
Now, that you know how much you can spend on Christmas, you must make your budget line up with your gifts, Christmas decors, parties, etc.
This step is often overlooked and we typically fly by the seat of our pants.
However, one of the best money management tips is to plan how you will spend your money before you start spending anything!
In our free printables areas, we have worksheets and spreadsheets to help you.
Also, this is the chance, to be honest with friends and family about your desires for a frugal or no money Christmas. You have the time to plan a no gift holiday, gift exchange of unwanted items, etc.
4. Ask Around for Gifts
Oh my goodness! This is seriously my favorite money saving idea all year round.
Ask around and see what others don’t want anymore.
Another man’s trash is the next man’s treasure.
A recent example in my life… Someone posted in our NextDoor group that they were looking for fly fishing equipment. I politely responded that once the original poster got what they needed I would be interested in anything leftover since my hubby took up this hobby. A neighbor messaged me and we got a bunch of fly fishing equipment for a fraction of the price.
You can always find Christmas decorations and maybe even gifts for no money.
Don’t be afraid to post in Facebook groups or NextDoor. Search Craigslist or thrift stores. You will be AMAZED by what people are happily willing to get rid of.
5. Shop Based on Price
This is where you go into the store and look for gifts that can suit those on your list – more importantly, at your price level.
This is a great chance to pick up items on clearance or deeply discounted sale.
For instance, my son loved LEGOS (okay, what boy doesn’t go through that phase) and they can get quite expensive. Throughout the year, I would always look for LEGOS when they were on sale or being discontinued. This is one example of enjoying a frugal Christmas
6. Creative with Gift Exchanges
With gift exchanges, you don’t need to go out and buy a brand new present. This is a chance to find something in your house that will make a great gift for someone else.
Here are various types of gift exchanges that cost little or no money:
White elephant gift exchange
$5 gift exchanges
Unused item gift exchange
Cookie Exchange
Used toy, puzzle, or book exchange
Coffee mug exchange
Charity donation exchange
Craft supply gift exchange
Dollar Store Finds Gift Exchange
Fabulously fashionable clothing exchange
Dropped that hobby gift exchange
There are just a few ideas on how you can get creative with holding gift exchanges. Not everything must be expensive to be an awesome winner!
7. Buy in Bulk and Divide Up for Gifts
A frugal trait is buying things in bulk to save money. When the holidays roll around, this is where you use your DIY skills to come up with frugal Christmas gifts.
If you find a lot of people on your list to buy small gifts for, you can create nice packages of presents to give. Typically, these holiday gifts are ideal for teachers, neighbors, co-workers or other special people that you want to wish a Merry Christmas.
For example, you can buy scented candles in bulk and wrap a beautiful bow on the glass jar. That is an easy way to divide them up for multiple gifts.
Another idea is to buy Christmas treat bags and divide up assorted miniature candies to quickly put together many small presents.
These are ideal gifts because they are thoughtful, but also budget-friendly.
8. Plan At-Home Parties
One of the most expensive areas for any budget is entertainment and eating out. The same holds true at Christmas.
To combat extra costs, plan at-home parties where you can control the prices of food, drinks, and decor. And as a bonus, your friends and family may be relieved to spend less as well!
You can hold a potluck or cookie exchange for a fraction of the price of a night out or booked Christmas party.
There are plenty of ways to make it fun. You can still have cocktail hour with the festive dresses that are already in your closet. Don’t have something to wear – pretend you’re a teenager and shop your friend’s closets!
9. Stop Christmas Shopping
When you are done, you are done Christmas shopping. Block your eyes and ears from all of the last minute shopping and stocking stuffers.
One of the frugality traits is to make a plan for your money and stick to it.
Remember, marketers are good at their job of getting you to open up your wallet and spend money. Be stronger and stop shopping for the holidays.
Don’t go over your Christmas budget and your plan.
10. Track How Much You Save
Every frugal person likes to know how much they save.
Not everyone likes numbers, but it is pretty motivating to see how much you save.
With a financial freedom mindset, you know that every penny saved is a penny earned.
This is where you realize your out-of-the-box thinking to create a frugal Christmas is worth the time and effort. You can see your savings on the gifts, decor, and thinking adds up.
Bonus Tip: Eliminate the Stress
One of the traits of becoming frugal comes with learning to live with less. It doesn’t have to be full minimalism. A better term is living simply.
The more you do around Christmas (buying gifts, putting up decor, hosting parties, attending parties, participating in cookie exchanges, cleaning for guests, traveling for events, the list can go on and on) will cause stress.
Look for ways to take a step back and focus on what is most important to you.
That was the first tip mentioned in this post because it is the one that is overlooked the most often. You don’t decide what you want Christmas to look like. You let others and life decide how your month of December rolls out.
Eliminate the undue stress surrounding the Christmas season.
Frugal Christmas Ideas for Kids When You Have No Money for Gifts
Okay, we are going to spend a little more time around one area that causes us the most stress around the holidays – giving gifts.
There is extreme pressure to provide the Pinterest-perfect, movie-ready, Insta story each and every year.
Regardless of what you spend on Christmas, you will never be able to live up to the self-created expectations you put on yourself.
Just remember that statement when you have no money for gifts.
This is where you get super creative and honest with your loved ones.
Be Honest with Your Finances
The first step is to be completely honest with your financial situation at the moment. You aren’t looking for handouts. You just want a dose of empathy and maybe a hug.
Just like everyone else, you want to give your family the world and shower them with gifts.
However, the center of Christmas is coming together as a family and spending time together. You don’t need money for that.
Time for Creativity and Maybe a Little DIY Christmas
This is where you get creative and start digging to find gifts.
Unfortunately for society, we are flooded with materialistic items. (Just look at any donation center or walk around on trash day.) There are plenty of gifts floating around that would cost you no money.
Post in a No Buy Facebook group or Nextdoor and see if anyone is getting rid of what you want.
More than likely, you will find Christmas gifts for no money. Sometimes, you may have to a fraction of the retail price.
Another option is to use your DIY skills – learn to sew, knit, bake, etc. Give away some of your treasured handmade gifts.
No-Spend Christmas Activities
For frugal individuals, like me, the key enjoyment of the festive season does not rely on these costly aspects, but rather on the spirit of unity, shared experiences, and thoughtful gestures. This is where the concept of ‘No Gift Christmas‘ comes in, emphasizing value-driven festivities that foster warmth and happiness without the need to break the bank.
The good news is you can enjoy the holidays with plenty of things that don’t cost money.
Fun and Frugal Christmas Activities at Home
Enjoying a festive holiday season doesn’t have to break the bank. In fact, there are several fun and frugal Christmas activities you can do at home!
Roast marshmallows: Whether you have a fireplace or a stove, roasting marshmallows at home can be a delightful way to savor the season.
Christmas movie night: Why not curl up on the couch with some popcorn and a Christmas movie? Consider a crowd-pleaser like The Christmas Chronicles on Netflix.
Bake cookies: Get the whole family involved in baking and decorating Christmas cookies.
Make a popcorn garland: This is a festive and fun craft you can enjoy together and later use to decorate your Christmas tree.
Play Christmas Charades: Searching Google for free printable charade cards can give you a night of fun that is sure to create hilarious memories.
Hot Chocolate Night: Warm up and gather around with the sweet treat of homemade hot cocoa.
DIY Christmas Cards: Create and send handmade Christmas cards to local nursing homes or soldiers abroad. A personal touch to your season’s greetings will mean a lot to the recipients.
Christmas Light Scavenger Hunt: Turn your Christmas light viewing into an adventure! Print out a free scavenger hunt, bundle up, and enjoy a hands-on game during your neighborhood stroll. Remember, the true spirit of the holidays can be found in the joy of being together—not the amount of money spent.
Taking Advantage of Free Christmas Events in Your Town
There are usually plenty of free Christmas events in your town or city if you know where to look. Here are some festive events you can attend without spending a penny:
Visit the Christmas tree in your town square: Most towns have a community tree lighting ceremony that often includes free musical performances too.
Check out community holiday parades: Many towns host Christmas parades that are open and free to the public.
Look for free events at local libraries and community centers: Many libraries and community centers host free Christmas-themed activities for children, from story readings to crafts or even visits from Santa!
Go Caroling in your neighborhood: Gather your friends and family for a simple and heartwarming tradition of spreading Christmas cheer through carols.
Visit Church ceremonies: Attend church services or watch local choirs perform their favorite Christmas hymns.
Volunteering: Use the season of giving to volunteer at a local food bank, soup kitchen, or charity. It’s free and can be a rewarding experience.
Christmas Lights Tour: Drive around or take a leisurely evening stroll to enjoy the holiday light displays in your local neighborhoods. Remember to check your city or town’s events website for a complete schedule and details. The holiday spirit is abundant and can be found without breaking the bank.
For more ideas, check out the Christmas bucket list that has plenty of fun holiday-filled events.
Shopping Strategies for a Frugal Christmas
While we have plenty of tips for shopping smart on our website, we are going to focus on two areas when preparing Christmas for the frugal.
Tip #1 – Start Buying Christmas Stuff in January
Starting your Christmas shopping in January means you get to spread the cost over the whole year, taking advantage of these deep discounts.
It’s very budget-friendly and helps control the infamous last-minute Christmas shopping spree.
Now, it’s important to note that you should only buy items you are reasonably sure you will use the following Christmas, to avoid clutter or unneeded spending.
Expert Tip: make a list during the holidays of the items you need, so you know precisely what to look for in the January sales.
tip #2 – Using Money-Saving Apps for a Frugal Christmas
To save money while shopping for Christmas presents, consider using money-saving apps. These apps give you cash back, coupon codes, and discounts while you shop, reducing the overall cost of your purchases, and essentially making you “earn” while you spend.
Here are some trusty tools to help you achieve a frugal Christmas:
Rakuten (formerly Ebates): This cash back app provides discounts on purchases from thousands of retailers when you shop through its site or the app.
BeFrugal: This app offers coupons, promo codes, and cash back offers to save on everything you buy. Sign up here for your $10 bonus.
Ibotta: Ibotta allows you to earn cash back on everyday purchases online and in-store with a snap of your receipt.
Honey: Honey automatically searches and applies the best coupons when you shop online.
Hip2Save: This deal website and app posts about a wide range of heavily-discounted products, from toys to housewares. One of my favorites!
Bonus: Paribus: Although not exactly a cash back app, Paribus is worth mentioning as it scans your digital purchases, seeking price drops and getting you a refund if an item you’ve bought goes on sale or if it finds the same product cheaper elsewhere.
By keeping these apps at your fingertips and using them proactively, you can stretch your Christmas budget further and end the year on a high note, financially.
Ready to a Magical Frugal Christmas?
The best part of being frugal is focusing on what is most important and saving money along the way.
That is why frugal living tips are so very helpful!
As a frugal person, there are some years that we can have Christmas on very little money, and in other years, we choose to spend a little bit more. Never ever have we spent close to the average Christmas spending.
That right there my friend defines a frugal Christmas.
If you are still on the fence about a frugal Christmas and spending $400 or less, then let’s think about it like this…
For 20 years, you spend half of the average spending at Christmas time, you will save over $8000. That amount doesn’t include inflation.
So, you need to ask yourself, how much are you willing to spend on the Pinterest perfect Christmas? That spending must be able to be paid in cash in full – not charged to a credit card.
We have shared many frugal living tricks to make your Christmas magical. What else would you add to the list?
Happy frugal Christmas!
More Christmas Gift Ideas:
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Learn how to set smart financial goals and change the trajectory of your personal finances. Download our setting financial goals worksheet.
Financial success doesn’t happen just in January. It happens every single day of the year with every single decision you make.
Now, is the time to take your New Year’s resolutions and make them into smart financial goals.
Financial goals will help keep you on track.
There are two ways to look at goals.
You can either set them,
or ignore even making financial goals.
A lot of people don’t like to set financial goals because they feel like they are setting themselves up for failure. (And that is a money mindset that needs to be broken!)
However, by setting smart financial goals, you are more likely to make progress on the things that matter to you most, and that at the end of the day is the most important.
Too many times we see that people are stressed about money and their finances. They prefer to ignore their money situation and dig their head into the sand. You can quickly see that will only make the situation worse, and progress will NEVER be made.
Today, we are going to examine smart financial goals, give a few examples of goals to start with today, and then let you think BIG on long-term financial goals.
Let’s dig in and change your financial future…
What is a Financial Goal?
A financial goal is writing down what you want to accomplish with your money.
It can be big, it can be small.
The size and scope of the money objective does not matter.
The most important part is that you are making a decision, ahead of time about what you want to do with your money.
Everybody has different goals.
Comparing yourself to others is worthless. Each person is on their own financial journey. The only comparison that needs to happen is what is going on with you and your situation.
What are the 5 smart goals?
First, you need to make your goals with this template in mind.
Then, you will become the next millionaire with no money.
S – Specific
An overarching vision for your life is fabulous and will help you to keep on track of what you want to achieve. However, when it comes to making smart financial goals, they need to be specific.
You must clearly identify or define your goal. Be specific.
M – Measurable
With your goal, you must consider how you plan to measure it. Thankfully, this one is easy to quantify with personal finances.
You can gauge progress with dollar amounts or percentages.
If you are paying off debt or starting your journey to saving money, then using dollar amounts makes sense. If you are striving towards financial freedom, then you are looking at savings percentages or metrics to increase your net worth.
A – Attainable
With the smart goal format, we are quick to back off our goals because we don’t think we can achieve them. Don’t sell yourself short.
It is better to reach 80% of your goal than to walk away from it completely because you are 80% closer today than before you set your goal.
Go for a stretch financial goal; you will probably surprise yourself with what you can accomplish. Use those money mantras to keep you on track.
R – Realistic
Think about your financial goal logically. In a levelheaded voice, ask yourself if you are capable of reaching this goal today.
You have to be realistic about the season you are in and what your next financial step is. With the smart goal template, this is the point when you break up your goals into smaller pieces to set reasonable goals.
State your goal in a positive statement.
T – Time-Bound
The last part of the 5 smart goals is probably the most forgotten. Yet, it is the most important to reach your goals.
Changing your perspective on time planning will vastly improve your results.
Keep your financial goals within a timeframe of under 3 months.
Loftier financial goals that are long-term – that is great! You must break them down further into mini-milestones to reach your long term goal.
SMART Goal Example:
A great smart financial goal example would be these statements…
Starting today, I will save $96 each week for the next 52 weeks by transferring money when I get paid.
I will pay off an extra $3000 of student loan debt six months from today.
This year, I will increase my savings percentage to 15% by paying myself first and living off the rest.
These are just a few examples. We will provide more in a little bit.
How To set Smart Financial Goals?
Financial goals will help you make faster progress than you thought possible.
You just must be willing to make changes, be realistic about what you can accomplish, and keep a positive mindset.
Let’s dig in on how to set smart financial goals. This is exactly how you achieve financial goals.
1. Know Where You Stand Financially
That means knowing two important factors. First, what Money Bliss Step to Financial Freedom you are on, and second, what is your net worth?
Those are two benchmarks that will help you to determine what your next financial goal should be.
Without knowing where you stand, you won’t be able to track your progress. Also, knowing your liquid net worth is helpful.
2. Define Your Vision
What is the overarching theme for your life? Think long term 10+ years from now.
Here, at Money Bliss, we like to refer to it as your Dream Big Vision.
This will be the starting point for all of your smart financial goals.
What is the one thing that you want most? This doesn’t have to correlate to money. It can be a LIFE goal.
You must first define your vision to clearly make smart financial goals. Think of it as building blocks. You will progress faster with be stable by building your goals one step at a time versus trying to jump over a few key steps and sinking fast.
Also, make sure you do not have a money block holding you back.
3. Create a Plan
Once you know your Dream Big Vision, you have to create action steps along the way to help you reach it.
That is where the Money Bliss Steps to Financial Freedom will help you define the big financial moves to make along your journey.
Then you can take your personal situation (where you stand financially) and your personal vision to create a plan. Many times your personal finance plan will have many short term and long term financial goals along the way.
Smart Financial Goals Examples
What are some good smart goals? These are the top financial goals we truly believe everyone must accomplish.
Everyone is on their OWN journey.
Here is a list of money goal examples that can be further defined by your situation.
1. Be a constant learner
The first smart financial goal is to be a constant learner. With money management and personal finance, there is so much to learn! We all complain that we weren’t taught how to manage money in schools.
Yet, this is a life-long skill.
Add one or two of these finance books to your booklist. Many of us strive to read books monthly that will enrich our lives.
Recently, I made the decision to want to learn more about investing. While there are a ton of investing books out there (and I have read many of them), I wanted to dig deeper into the investing world. So, I signed up for this course and found a wonderful trading community.
Also, since tax laws are constantly changing, it is wise to stay current on news events and find ways to improve your personal finance situation.
Example #1 – I will read one personal finance book each quarter.
2. Pay Yourself First
This is one of the best long term success factors with money. Yet, it is the hardest for us to grasp.
You must pay yourself first … meaning you save money today for another purpose later.
This is one of the best ways to not be knocked over by unforeseen circumstances and to stay out of debt.
Early on, you must fully fund an emergency fund.
Then, consider saving for a rainy day fund, a down payment on a house, or retirement. This is one of the best money management tips you don’t want to skip.
Example #2 –I will set up automatic withdrawals of 10% of my paycheck to move into a savings account and $200 to Roth IRA when I get paid.
3. Multiple streams of income
A conversation I would love to have with my grandpa is about working for one company for 34 years and retiring with a pension. In today’s world, this is a foreign concept and side hustles are the norm. What would our previous generations say?
Now, you need multiple streams of income.
If you say your job is stable and you’re fine. You are….until you’re not.
That is why you need to be proactive in creating multiple types of income. The quick response is picking up a side hustle. Another would be investing in the stock market. Possibly flipping second-hand items. Maybe picking up a second job.
There are many ways to make money fast. But, you must find ways to make money before you actually need the extra cash.
Example #3– I am going to sign up with Neighbor to lend out the space I don’t use to create extra income.
4. Get out of Debt and Live debt free
You can’t move forward when you have debt hanging over your head and holding you back.
Progress is impossible when you are living with and trying to pay off debt.
The faster you can pay off debt, the better off you are. Then, you need to stay debt free.
This is one of the best smart financial goal examples!
Example #4 – I will pay off the total balance of my student loans before I turn 30.
5. Spend less Than You Earn
This is a simple example. Yet, it is more difficult to achieve with the amount of easy access to credit in our society.
This is an ongoing mandate to live by.
You can easily reach many long term goals, by staying on track in the short term.
Example #5 – I will participate in a no spend challenge for the next 30 days to identify what my spending priorities are.
6. Increase your Saving Percentage
This is one of the best ways to slowly increase your net worth and not notice the difference.
Ultimately, you want to save at least 20% or more of your income. There is no limit to how much you can save.
Save more money today, then work less later.
Yes, there is a trade-off to live below your means. But, the long term impact is well worth it plus you can sleep well at night.
Example #6 – I will increase my saving percentage by 1% each month for the next 12 months. Then, I will be saving 12% of my income.
7. Let money flow through your hands
Too many times, people become so focused on their goals that they forget to let money pass through their hands. This could be with giving money to charitable organizations or paying it forward in the drive-through line.
Don’t make this overall complicated.
Just like Dave Ramsay says about giving, “If you can’t live on 100% of your money, you will still have to make changes to live on 90%.” Start small with giving and increase each year.
Example # 7 – I will research organizations I want to donate money to. Then, pick one to contribute $100 a month for the next year.
8. Keep a Financial goal Journal
Research has shown that if you write down your goals, then you are more likely to achieve them. In fact, statistics show you are 1.4 more likely to reach your goals when you write them down.1
So, be smart and keep track of your financial goals! Plus it is great to look back and see the progress you have made. Each milestone that you have crossed. That is great motivation to keep trucking on your current target.
Example #8 – Buy a money journal and track my progress each month. You can even use Google Keep to create a digital journal.
9. Teach others solid money management skills
Throughout your life, you will learn many valuable lessons. Most of them probably came from the school of hard knocks.
Don’t let those valuable lessons go to waste. Help others learn from your mistakes. We all made them and had to overcome them.
One sentence may positively change the trajectory of someone else’s financial path.
This may seem like an odd example of a smart financial goal. However, your journey has been pivoted by others stepping in to help or maybe be watching others fail.
We need more individuals in this world who understand proper money management. Pass down your knowledge to your kids, local school, friends, neighbors, or by volunteering.
Example #9 – Make monthly meetings with my teenager to discuss money. Discuss a success and failure I did in my past.
10. Retire on Your Terms
The final top financial goal is to retire on your terms when you want.
This looks different from one person to another. Some may want to FIRE. Others love their job and never want to leave. Some are forced to work well beyond what they want.
The key to retiring on your terms is to have enough saved up for you to continue your lifestyle without bringing in earned income.
Honestly, putting off saving for retirement is not a smart financial goal.
Example #10 – Open a Roth IRA and deposit $583 each month to reach the maximum contribution amount each year.
Setting Financial Goals Worksheet
If you want to make progress, you have to take action. If you don’t, then you watch from the sidelines and your dreams go up in smoke.
Take thirty minutes to fill out our financial goals worksheet.
Start with your overall vision. Then, break it down into small bite-sized milestones that you can accomplish. Review monthly and set new money goals once you accomplish previous ones.
Which Financial Goal Examples will you Start With?
Throughout this post, we reiterated this concept. But, it is SO important that it is worth repeating again…
This is your journey. Your journey will be different than anyone else. So, don’t spend time comparing yourself to others. Spend time focuses on what you can accomplish.
From the top financial goals, what is your next priority?
Personal finances are a long term game. You must assemble building blocks to slowly climb one step at a time.
Start with some of the best financial books to get started.
Also, use these millionaire quotes to stay motivated along the way.
Comment below on what your current financial goal is.
Source
Forbes. “Neuroscience Explains Why You Need To Write Down Your Goals If You Actually Want To Achieve Them
https://www.forbes.com/sites/markmurphy/2018/04/15/neuroscience-explains-why-you-need-to-write-down-your-goals-if-you-actually-want-to-achieve-them/?sh=c59f73c79059. Accessed May 8, 2024.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Do you really do need to know how much you make in a year?
When you are an hourly employee, you understand what your hourly rate is, but when you try to translate that into a weekly, monthly, or even yearly amount is may be a struggle.
That is totally fine. In this post, you are going to get the math behind exactly how much do I make per year.
All you have to do is follow a simple equation and plug in your numbers for your personal situation. The end result is you will know how much do I make per year.
Right now, there is not going to be a super fancy calculator to help you all through this. (Just kidding… We have calculators below for you!) In all honesty, though, this is something very basic for you to figure out.
You will figure how do I calculate how much I earn a year.
At the end of the post, we are going to go into detail about ways to increase how much you make per year, as well as tips to thrive on your current salary.
Calculating an Annual Salary from an Hourly Wage
When you are an hourly employee, there are many variables that can go into your annual salary or annual income. Primarily, the first variable is how many hours do you work in a given week. Next, is how many weeks do you work in the year. Finally, if you get paid time off.
For example, you may work less all year, but then in the busy season around Christmas, you might increase the number of hours you work. Or vice versa, if you are in the landscaping business, you are more likely to work more hours during the summer, and less in the winter (unless you find other jobs off-season of your main job like snow shoveling duties).
To calculate your annual wage, you need to multiply your hourly pay times by the number of hours that you work in a day.
Then, take that number and multiply it by the number of days that you work in a week. Next, take that number times the number of weeks that you work per year.
The most you can work in a year is 52 weeks. Do you know how many work days in a year you work? This answer may surprise you.
Steps to Calculate an Annual Salary from an Hourly Wage…
Write down your hourly rate (before taxes, FICA, 401k contributions, etc)
Figure out how many hours you work in a week.
Figure out how many weeks you work per year.
Hourly Rate * (weekly hours worked x weeks worked per year) = Annual Salary
– or –
Hourly Rate * weekly hours worked = Weekly Salary Weekly Salary * weeks worked per year = Annual Salary
**Either formula will get you to the right answer.**
Example #1 –
Your hourly wage is $14.26 that is before anything is taken out like FICA, taxes, insurance, or 401k contributions. In a typical work week, you work 34 hours. You receive paid time off, so you can count working 52 weeks per year.
$14.26 * (34 x 52) = $25,211.68
– or –
$14.26 * 34 = $484.84 $484.84 * 52 = $25,211.68
Example #2 –
Your hourly wage is $22.70 that is before anything is taken out like FICA, taxes, insurance, or 401k contributions. In a typical work week, you work 45 hours. You receive do not receive paid time off, so you can plan on working 48 weeks per year.
$22.70 * (45 x 48) = $49,032
– or –
$22.70 * 45 = $1,021.50 $1,021.50 * 48 = $49,032
Calculating an Hourly Wage from an Annual Salary
A lot of salaried people do not take into account how much they make per hour because they just are paid a flat salary rate. That salary is divided up by the number of paychecks over the course of the year.
You need to take your full yearly salary and divided it by the number of weeks per year, and then, divide it by the number of hours worked per day.
This will give you an estimate of your hourly pay as a salaried employee.
Steps to Calculate an Hourly Wage from an Annual Salary…
Figure out how many hours you work in a week.
Figure out how many weeks you work per year.
Write down your annual gross salary (before taxes, FICA, 401k contributions, etc)
Annual Salary / (weekly hours worked x weeks worked per year) = Hourly Wage
Example #1 –
Your annual salary before anything is taken out like FICA, taxes, insurance, or 401k contributions is $76,500. In a typical work week, you work 52 hours. You receive paid time off, so you can count on =working 52 weeks per year.
$76,500 / (55 x 52) = $26.75 per hour
Example # 2–
Your annual salary before anything is taken out like FICA, taxes, insurance, or 401k contributions is $42,800. In a typical work week, you work 45 hours. You receive do not receive paid time off, so you can plan on working 49 weeks per year.
$42,800 / (45 x 49) = $19.41 per hour when working
How to calculate how much you make a year?
As presented above, figuring how much I make per year is fairly straightforward.
A little math won’t hurt anyone. Plus it makes the money earned more real and difficult not to spend.
But, here is a calculator to help you out.
This will show you how to calculate how much you make a year.
There are two versions based on if you are starting with hourly wage or annual salary.
When budgeting your income, it is always better to underestimate how much you can make in a year.
For tax purposes, choose to overestimate your income, and then you won’t have big surprises come tax time.
Overtime can influence these numbers if you are paid time and half. In that case, run your numbers without overtime and gain just for overtime pay. Then, add those numbers together.
How much Do I Make per Year Before Taxes or After Taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with all salary ranges
The amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Thus, on average you can take out 23.65% just for taxes!!
Your gross salary is before taxes are taken out. Your net salary is when taxes are taken out.
Since every tax situation is different and varies greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Un-Factored Costs of How Much Do I Make per Year
One factor that does not come up in this calculation is everything required for you to get to your job. In these examples, the assumption is you are getting paid for every hour that you are actually working.
However, you should take into account everything that needs to happen for you to actually get to your job.
Some examples include getting ready in the morning, driving to and from work, attending the “must-attend” social events after work, the amount of time to decompress from your day, etc.
It is important to know how much do you make after you account for those variables, because the answer may be surprising to you!
Here is an example…
Your workday is normally a 10 hour day, but you have an hour commute on each side. It takes you an hour to get ready in the morning and two hours to decompress from your day.
Thus, you have already added on an extra five hours of your workday on top of your normal 10 hour workday.
So, in essence, you are working 15 hours a day in order to be able to do your job and function as a human being.
That is much less than the 10 hours per day that you thought you were putting in.
Once you account for those variables, many people may realize the extra hours to make life bearable at their job or their commute is not worth it.
Here is a great calculator to figure out your true hourly wage.
So, they make look at changing jobs, even though they will be paid less per hour, they gain an extra three hours back in their life. Making their real workday just 12 hours. So, even though the pay is less, they are actually earning more when you account for these additional variables.
This is called time freedom.
3 Ways to Increase Income
While it is great to know how much do I make per year, it is more exciting and more enticing to actually figure out ways to increase your income.
Even better if you can find ways to increase your net worth.
By increasing the types of income sources that you have, you are going to fast-track your net worth. Then, you can look at retiring early or finally enjoy your work.
There are plenty of ways to increase your income, but we are going to focus on the ones that will make the most impact right now.
1. Ask for a Raise
Too many people are afraid to ask for a raise because they are nervous they may actually lose their job.
When in reality, if you believe that you are underpaid and overworked, then ask for a raise – especially if you do a great job!
There is no reason that you shouldn’t ask for a raise.
While your raise may not be huge, it may only be 50 cents an hour. That adds up to an extra $1,000 over the course of the year! That is still more income in your pocket than you had by not asking.
Don’t settle for the average cost of living increase that most companies typically give out; you deserve more for your continued years of work. Even worse, do not accept that getting the minimum wage increase is enough because it is just not fair. You need to find a new employer ASAP.
You work hard, so you should be paid for your hard work.
2. You Gotta Hustle (Like Another Job or Side Hustle)
In today’s society, you cannot have just a paycheck as earned income.
You must diversify your income sources to more than just trading your time for money.
You would be pleasantly surprised by the increase in TOTAL income at the end of the year.
If you want to make progress further this is something that you need to start doing today.
You can do simple side hustles, such as walking somebody else’s dogs, pet sitting, house sitting, watching somebody else’s kids, or cleaning somebody’s house. Basic skills.
It may not be a huge amount, but let’s say your side hustle made you an extra $100 a week. That right there will help increase your income over the course of the year to over $5,000!
That makes a solid difference on your bottom line.
Let’s say you want to hire out your specialized skills… You make $250-500 per gig and can handle four per month. That is an extra $1000-2500 a MONTH!
Passive income is one of the best ways to increase your income on a consistent basis. You put the hard work in upfront and then you get to reap the rewards, aka the money that flows in without you actually having to work on that. Possibilities include rental income, affiliate marketing, or online courses.
3. Start Selling Stuff
One of my good friends makes at least $500 each month by flipping kid’s toys and clothes. Yes, you read that right. She buys used clothes and toys and resells them for a profit. She has become very good at what she does and is well known in the local market for her items always being quality and at a fair price.
She is increasing her income by doing flipping stuff. It’s not a hard concept.
There are people that will go into goodwill and buy designer brand clothes with the tags still on them for a fraction of the price and flip it on Poshmark. The next day for a profit of over 900%.
I am not joking with you; you can sell things to increase your income.
And all of this selling is during your free time, so it should not take up a whole lot of your time. Maybe an extra hour a day, maybe four hours on the weekend, but would you be happy to walk away with little extra cash in your pocket.
Watch this free course on how to make money flipping stuff.
There are so many options for you to increase your income.
How to Live on what I Make per Year
These money management tips are simple to embrace.
That is because you can focus on a few key areas and not be distracted by every piece of financial advice.
Pick up one new habit and focus on building another on top of it. Slowly and surely, you are more likely to make long-term progress.
1. Spend Less
The formula for this one is the same regardless if you were making minimum wage, or if you are making over $100,000 per year.
You have to live on less than you make.
That is the simple thing. It does not matter what your situation is or how much income you make.
If you are spending more money and have greater expenses than your income, you will never get ahead. Period. You will be on a hamster wheel and living paycheck to paycheck, and for what my readers say – they don’t enjoy that life.
Also, I know many of my readers that they have broken that paycheck to paycheck cycle. They followed the Money Bliss Steps to Financial Freedom.
You need to live below your means.
2. Save more
Save for the future now; stop delaying saving for tomorrow.
Because when tomorrow comes, you are not going to feel like saving money; thus, you are not going to have any more money than you do today. Start saving.
Even if you start right now with saving 5% of your paycheck, that is a WIN!
Make sure your saving is set aside in a separate bank account. Even better, open an investment account and begin your saving journey.
If you know you are a natural spender, then save more money than the minimum of 20%. If you consistently save 20% of your paycheck by the time you retire, or maybe even sooner, you will become a millionaire.
It doesn’t matter how much you make per year if you do not prioritize saving sooner than later.
3. Set Goals
First, you will never make any progress if you do not set goals.
Yet, most people say they will start setting goals tomorrow; and tomorrow comes and no goals are set.
Carve out time to set goals in all areas of your life – personal, professional, health, wealth, family.
Create a bucket list for your long-term goals and make smaller short-term goals to make sure you reach those big goals.
As with anything in life, if you set a goal, you’re more likely to achieve it.
If you write down a goal, you have a greater probability of achieving your goal.
When it comes to your money and your finances and your income, you need to set smart financial goals.
You have to drive and decide what you want to do in your future.
If your goal is to have more time in life then you need to figure out how to make time freedom a priority. If your goal is not to work until you are 65 and afraid to learn what happens if you don’t save for retirement, then start putting money into a retirement account.
You have to put the plan together to reach your goals. Focus on taking action, not being in motion.
4. Positive Mindset
There are two ways that you can go in life:
You can control your future.
You can let your situation pass you by and let life get in the way.
It is totally up to you what you want to do, but you need to have the mindset that you choose to make the most out of this life here now, and that all starts today.
You make be wondering… what does this have to do with how much I make per year?? Well, if you are focused on that number not being enough, then you will struggle to get pay raises and increase your income.
Your mind is a powerful thing. Stay positive.
5. This is Your Journey
Lastly, this is one we tend to forget. Count your blessings.
Be grateful for what you have today as well as the opportunities in front of you.
Don’t worry about what the future holds today.
Be reminded that this is your journey with twists and turns, hills and valleys. Every step you take is guided on a path only made for you.
How Much Do I Make Per Year:
How Much Do I Make Per Hour:
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
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Money is a tricky concept.
It can be both the best and worst thing in your life depending on how you manage it.
Understand how to manage your money wisely and apply a few helpful tactics to your daily life. Simple habits will help you manage money better every day.
You must make money management easier and understand what types of pitfalls to avoid while we’re at it!
The following are a few ways to manage money. You can save it, spend it, or invest it.
There are many ways to manage your money wisely, but you should always start with your own control. You might not make all the choices that are right for you, but you must be prepared for the future.
This blog post provides tips for managing money, avoiding common mistakes by other people, reducing debt, spending wisely – these are just some examples of topics covered.
If you are ready to learn how to manage your money like a millionaire, then you are in the right place!
How to Manage Money Wisely
The key to managing your money is following the steps that are outlined in this article.
Financial stress can be managed by following the steps of managing money wisely. It is important to prioritize spending, don’t overspend on things that are not necessary, and learn about saving too because it will help you move towards financial stability.
You can learn how to properly manage your money with these swift mindset changes.
Below are 10 money management tips that will help you make better use of your finances.
1. Build a Firm Foundation
In order to make money better, people should set a firm foundation for themselves. This means setting up a financial strategy and making sure you have a plan in place. It also means having the right mentality about money and spending less than what you earn every month to avoid debt.
The first step is to establish a firm financial foundation, which means you must spend less than you make, save money for emergencies, and get out of consumer debt.
2. Design a Money Management Blueprint
A financial blueprint is a tool that can help you to build and maintain your money.
The problem for most people is they are starting at one place in their financial journey and are stuck on how to move to where they want to be.
That is where you need to follow the Money Bliss Steps to Financial Freedom. These are the exact steps to help guide your journey and a helpful blueprint to follow.
By taking each step one at a time, you will be able to make progress faster.
3. Define Your Goals
You must identify what your financial goals are.
What do you want?
Are you looking for more income?
Work fewer hours?
Something else entirely?
By setting money goals, this process will help you set a timeline and map out your journey.
4. Analyze Your Current Situation
This step is about taking stock of what you currently have to work with, such as income and expenditures, debts and assets, and savings.
This will help you decide what changes need to be made so that your goals can happen.
Honestly, this is probably the hardest step, and when most people give up. Taking a look at your true financial picture can be scary and painful to do.
5. Get on a Budget
Money is a source of stress for many people. It can be difficult to manage money when it’s not well-organized and set up properly.
In order to make sure that your money does not continue being a source of stress, create a budget and track spending!
A budget is a plan that helps you organize your money so that it can be spent effectively. It also shows where your money goes and what you are spending it on. Budgeting is an important part of managing money wisely because it helps you stay within your financial means, which ultimately saves you from living paycheck to paycheck or needing to borrow more than needed.
To create a budget, first set aside time for research and planning (this will take one day). Then create and write down the basic budget in a well-organized manner. It is important that you have a budget that works with your lifestyle and spending habits, so take the time to create one that fits what you need.
Some people go into budgeting with the goal of changing everything, but this is not necessary.
It’s important to make sure you’re realistic about your goals and target in order to get the most out of it. This will ensure you can meet your financial targets without breaking account after account or losing track of what has been spent already.
6. Say No to Debt and Create a Plan to Pay Off Debt
Creating a plan to pay off debt is crucial in order to reach financial goals.
It is important to create a plan to pay off your debts in order for you to be able to manage them better. High-interest rates should be tackled first, then work your way down through the rest of the debts.
The other key aspect is to stay out of debt. There is no need to buy something you cannot pay for in cash today.
Tools and tips to help you pay off debt:
This includes creating a budget and sticking with it, getting out of the habit of using credit cards, and saving money for an emergency fund.
7. Track Spending
Tracking expenses can help you see where your money is going so that you can make better decisions. For example, tracking your spending will allow you to know if the $200 concert was worth it.
Tracking spending will help you manage your money better.
It is important to be aware of how much we spend and what we spend it on so that you can make the best financial decisions possible.
This will help you to manage bills and save money.
8. Save Money
Every month, save money and put it in another account to be used in the future.
In order to make large purchases, it is important to have money set aside for that purpose. It is also a good idea to budget and save money in case there is an emergency.
An important phase in making smart money management tactics is to start investing as soon as you can. This is how you make your money work for you. Learn how to start investing.
9. Invest in your Financial Future
Almost a third of older Americans have nothing saved for retirement. That is a statistic you do not want to be a part of.
It’s never too early or too late to start saving for your retirement.
You should always be mindful of the future and plan accordingly. Whether it is through a 401k, IRA, Roth IRA, or other investment vehicles that you can contribute to in order to save up money for when you retire; make sure that whatever vehicle you choose gives an appropriate return on your invested funds (e.g., stocks).
In order to learn how to properly manage money wisely, you must be contributing to your retirement accounts. It may seem like a long way off until it is not.
10. Be Persistent
Managing your money can be a difficult task.
There are many ways that you can take control of your money situation and make it easier for yourself.
When it comes to managing your money, persistence is key. You’ll need to be persistent at all income levels in order for your savings and investments to grow.
How to Manage Money Effectively Now
Only do what you need to, not what you want to or can afford. Set up a budget and stick with it. Pay yourself first before buying anything else. Always save for the future, even if that means sacrificing now on some luxuries like eating out more often or setting aside money for retirement since your employer doesn’t offer one of those options yet.
A budget is a plan for how much money you will spend in each category every month. This will help you to pay off debt and reach your financial goals.
1) Create a monthly budget.
2) Track your progress in the spreadsheet throughout the year.
3) Make sure you’re saving at least 10% of your income/income minus loan payments, bills, and other expenses for emergencies and savings.
4) Pick one of these how to manage money books.
Take Action!
This step is all about taking the necessary steps to achieve your goals.
Again, this will vary for each individual and goal setter, but might include: cutting out unnecessary spending on luxuries; increasing income by asking for a raise or starting up a side hustle; and spending less on debt repayment by extending the term of your loan.
Be Patient!
This step is about being mindful that not every goal can be accomplished overnight, but it will happen with dedication and patience.
Be patient with yourself, your progress, and the change that is happening in your life as you work on achieving these new goals!
Are you Ready to Manage Money Better?
Learning how to manage money can be overwhelming when you haven’t built a strong foundation with money.
We have covered ways to make your life easy and money management better.
You need to learn how to manage your money.
You have to be the one to implement these tactics.
Proper money management ensures better outcomes with your finances.
From all of the free and paid budgeting apps, here are our top budgeting apps to check out!
This section may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. Please read the full disclosure below.
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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College life is all about getting a great education, getting to know your roommates and classmates, exploring interests and activities, and forging your own adult identity. But it’s also a perfect time to establish some good money habits that will set the scene for success today and tomorrow.
From developing a budget to opening bank accounts, you’ll have ways to make your money work harder for you and grow over time so you can achieve your goals. And it can be pretty simple, too, so it won’t interfere with study sessions or hanging out at the student center.
Learn the 10 best strategies for good money management here.
10 Tips for Managing Your Money As a College Student
Here are 10 money management tips that help you spend less and save more both during and after college.
1. Setting up a Basic Budget
Budgeting may sound complicated, but making a budget is simply a matter of figuring how much is coming into your bank account each month and how much is going out, and making sure the latter doesn’t exceed the former.
To get started, you’ll want to list all of your sources of income, such as from a job or family contributions.
If you are going to be living off a fixed amount of money for each semester, say from summer earnings or money from your family, you may want to divide this lump sum by the number of months you need to make this money last.
Once you know how much you have to live on each month, you’ll want to make a list of fixed expenses that you will be responsible for paying, such as cell phone or car payment, or maybe even rent if you live off campus.
Next, you’ll want to subtract your fixed expense from your monthly spending allotment. This will give you the amount you have left over to cover variable expenses, such as eating out, buying clothes, and entertainment. You can then come up with target spending amounts for each category.
Doing your best to stay within these spending limits can help ensure that your money lasts until the end of the semester, and help you avoid running up costly credit card debt.
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2. Opening up a Savings Account
You might feel like you don’t have enough income to start saving money yet, but even just putting a small amount away each month can add up over time.
For example, if you’re able to set aside $50 a month now, you may soon have a decent nest egg that can help pay for something fun, like a road trip over the next school break.
What’s more, being diligent about saving money each month can help cultivate a habit that will serve you later when you can afford to save more in your nest egg and also for retirement.
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3. Buying Used Textbooks (and Selling Yours When Done)
Textbooks can be so expensive! Fortunately, there are a number of ways to save money here.
One option is to buy used whenever you can. You’ll want to be sure, however, that you are getting the version the professor wants. If you have an earlier edition, you might struggle to find the content if the book has since been modified. Getting the digital version of a book can also yield savings.
Another option is to rent what you need from a third-party bookseller, such as Amazon or Chegg. You can often rent textbooks for an entire semester for significantly less than buying new, and may even be able to highlight them.
For books that you purchase (new or used) that you won’t need to refer to in the future, consider selling them when you’re done to recoup some of the expense.
4. Using Credit Cards Sparingly
Credit card companies love college students, and many may try to lure you into applying for cards. You’ll want to proceed with caution, however.
While having a credit card as a student can be a good idea–for convenience, as a backup for emergencies, and to start building credit history (more on that below), you’ll want to be careful that you don’t run up credit card debt.
If you charge more than you can afford to pay off at the end of the month, you can end up paying a high-interest rate on the balance, which can make it even hard to pay off.
As a result, it can be easy for college students to find themselves digging a debt hole that can be hard to climb out of.
If you choose to sign up for a new card, you may want to look for a rewards credit card. These can let you rack up points you can use to get products or travel perks, but only charge what you can afford to pay back quickly.
If you choose to sign up for a new card, you may want to look for a rewards credit card that will let you rack up points you can use to get products or travel perks–and only charge what you can afford to pay back quickly.
5. Establishing Your Credit Score
A credit score is a three-digit number, typically between 300 and 850, designed to represent your credit risk, or the likelihood you will pay your bills on time.
Building your credit history might not seem like a priority when you’re still in school, but you’ll need it in the future if you want to finance a car, buy a house, or qualify for the best credit card offers. Your credit can even affect your job prospects and your ability to rent an apartment.
One good strategy is to use your credit card judiciously. If you make small purchases and regularly pay the balance off in full, you can avoid racking up interest charges but still get that boost to your credit score.
If you have student loans, you may also want to consider making small payments (even just $25 to $50) while you’re still in school to start paying down interest and have some positive repayment history on record.
If you start building a solid credit history now, you will likely be able to get better deals on lending products like mortgages, car loans, and credit cards in the future.
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6. Finding Free Stuff
One highly effective way to stretch your money is to find freebies.
Facebook has groups where people can post items they no longer want. You might be able to score free clothes, furniture, or room decor.
Freecycle and NextDoor also have listings for things that people are giving away. You can also find free items on Craigslist (you’ll find the “Free” section under the “For Sale” heading on the main page for your city).
7. Learning to Cook and Eating out Less
You may find you get tired of cafeteria fare and ramen. At the same time, you may not want to don’t blow your budget on eating in restaurants every weekend.
If you have access to a kitchen, you might want to consider purchasing ingredients from your local supermarket and putting together some simple, tasty meals, instead of eating out. This can be a major way to save money on food.
If you’re not much of a cook, you may want to go to some food blogs and recipe sites like Allrecipes or Serious Eats to find some easy recipes and watch a few how-to videos. You could also find tons of cooking videos on YouTube.
Having some go-to recipes in your arsenal can pay off now, and also down the line when you’re working and living on your own (and don’t have to rely on expensive take-out or unhealthy fast food for dinner every night).
8. Starting an Emergency Fund
Starting an emergency fund or back-up savings fund is an important part of anyone’s long-term financial health.
Life can be unpredictable, and your emergency fund serves as a safety net that you can fall back on for those “rainy days” where you find yourself facing an unexpected expense or other financial setbacks.
Having an emergency fund can also help keep you from having to rely on credit cards to get through a financial challenge.
How much you should put aside for emergencies each month is up to you and your financial situation. The key is to start saving something each month, no matter how small the amount may initially seem.
When starting your emergency fund, it’s a good idea to fund the account regularly. Consider setting up an automatic transfer to your savings so you do not have to think about it.
Ideally, your emergency fund should also be set up in a separate savings account so you won’t be tempted to spend the money on something else.
9. Getting the Most out of Your Student ID
You may only think of your ID card as a form of identification and a way to get into college sporting events. But there are actually a number of additional benefits that come with a student ID, and many can help you save money.
You may find that businesses, especially those near universities, will offer students discounts when they show a student ID card.
Next time you go to the movies, shop for school supplies, or get a new haircut, it can be a good idea to ask if they offer any discounts for local college students.
In addition, many national and online retailers, including major clothing, sneaker, and computer brands, offer discounts to college students.
You may also be able to use your student ID to get a better deal on your cell phone plan and streaming services.
10. Getting Started with Investing
Investing when you’re young is one of the best ways to help your money grow over time.
That’s thanks to compound earnings, which means that any returns you earn are reinvested to earn additional returns. The earlier you start investing, the more benefit you gain from compounding.
Investing in the stock market also isn’t as complicated as you may think. You can open a retirement account, like a traditional or Roth IRA, or a brokerage account (for nonretirement investing) online, often with a minimal amount of money.
You may also be able to schedule automatic withdrawals from your bank account to your investment account each month.
It’s important to keep in mind, however, that all investments have some level of risk because the market moves up and down over time.
The Takeaway
College can provide a great opportunity to develop the money skills you’ll need after you graduate. By learning some basic money management techniques now, you can feel confident about your ability to handle your finances well after graduation.
In 10 years, you will likely thank yourself for putting in the effort to learn how to set and stick to a monthly budget, use credit cards wisely, save money, and build your credit score.
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Inside: Are you struggling to manage your money? Feeling overwhelmed with debt? If so, it’s time to take action and build better habits. This guide will teach you how to create a budget and start your savings. You need these financial tips for young adults.
The importance of sound financial advice for young adults cannot be overstated.
Often, a lacuna exists in our educational system where personal finance is concerned, leaving many young adults ill-equipped for the financial decisions that await them in their adult life.
Yet, you will encounter situations that require a sound understanding of budgeting, credit usage, investment, and an array of other financial tools without any formal education in these areas.
Financial advice can act as a compass, guiding you on a path to financial health and stability.
This early orientation can help you avoid the pitfalls of needless debt accumulation, poor money management, and inefficient financial choices like I made.
That is why it is of utmost importance to start imparting knowledge and financial habits to young adults as early as possible.
Why Financial Advice is Crucial for Young Adults
Money matters! Especially when you’re young and there’s a world of financial responsibilities unveiled before you.
Understanding financial basics early on is key to smart monetary decisions in the future. Here’s why you should consider this vital:
Knowledge Burst: Understanding finance terms, the implications, and their impacts arm you with knowledge for future decisions.
Saving for Later: Early investment in savings accounts or retirement funds can maximize your funds later in life.
Debts Control: Ensuring debts are paid off faster helps avoid excessive interest in the long run.
Investment: Stock or mutual fund investment can multiply your savings in the right condition.
Remember, your financial health requires deliberate action, start early!
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What is the best saving advice for young adults?
The best saving advice for young adults is to start early and save regularly.
This will help you build up a nest egg that you can use in the future.
Personally, this is my own regret as such it took me way too long to become financially sound.
Also, you want to be mindful of your spending and live within your means.
Best Financial Advice for Young Adults
When you’re in your 20s, the world feels like your oyster, ripe with opportunities and potential.
But among this plethora of choices, the most important decisions you make may very well relate to your finances.
While the excitement of earning and spending your hard-earned money can be exhilarating, it is crucial to remember that wise financial decisions made early on can set the stage for long-term financial success.
We have curated some of the best financial advice to help you make informed decisions and set the foundation for a secure financial future.
1. Create a Budget
Creating a budget can seem like a daunting task. However, once correctly accomplished, it can undeniably make your life a lot easier.
Below are some reasons to start budgeting from the start:
Money management: Knowing the ins and outs of your financial transactions helps manage your money efficiently. A budget gives you a clear snapshot of your income and expenses, allowing you to make strategic decisions about spending and saving. This level of control can be incredibly liberating and reassuring.
Financial discipline: Creating a budget encourages discipline when it comes to financial decisions. It can show you areas where you’re spending more than necessary, such as an underutilized gym membership, frequent dining out, or an unused streaming subscription. By addressing these expenses, you could easily save an additional $100 per month.
Alignment with goals: A budget can provide clarity and align your financial actions with your long-term goals. If you are side-tracked and lose sight of these ambitions, the budget serves as a potent reminder to guide you back to the right path.
Effective savings: A budget constitutes a robust tool that allows you to maximize your income and inculcate a savings habit. Essentially, it’s a roadmap that shows you, in real time, where you can minimize and direct those funds into savings. Those savings can then be invested toward achieving significant life goals more efficiently.
Stress reduction: Tracking income and expenditure can culminate in a stress-free financial life. For example, it helps manage unexpected emergencies or allows you to enjoy after-office drinks without any worries about overspending.
To simplify the job, various user-friendly budgeting apps are available.
These digital budgeting tools or apps offer handy features that can streamline tracking expenses and income. These tools can automatically categorize transactions, display visual charts of spending, and send alerts when you’re nearing the limit of a budget category.
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
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So, no more wondering where your money went.
With a budget in place, you get to tell your money exactly where to go, and this is an empowering shift from feeling out of control to feeling in control of your finances.
By making budgeting a consistent part of your financial routine, you adopt a proactive approach to your money, making your life easier, and your future brighter.
2. Manage Your Debt
As a young adult, managing your debt is incredibly crucial. Not only does it set the foundation for your financial future, but it also helps to keep your credit score healthy.
Here are some top-notch expert tips on how to effectively manage your debts:
Avoid credit cards whenever possible. Although credit card rewards may seem appealing, they can often lead to unwanted debts. Instead, try using cash, debit cards, or cash app cards.
Don’t finance purchases that depreciate in value over time. Rather than taking a loan for things like cars or other depreciable assets, save up and pay in full.
Minimize education-related costs. This can be achieved by going to in-state schools, considering trade school or community college, living off-campus, and exploring scholarships or work/study programs. Learn how to pay for college without loans.
Pay off your debts methodically. Consider strategies like the debt snowball or avalanche methods to strategically pay off your debts. Use a debt payoff app to find your debt free date.
Remember, being in debt can delay your financial goals.
So, learning to manage your debts early on in your life can have a significant impact on your future finances.
3. Invest Wisely
Investing wisely is a cornerstone of solid financial advice for young adults. It sets the foundation for a financially secure future.
Most people are terrified of the concept of investing and stay away from it, which is the worst decision possible.
Investing is about putting your money to work for you, expecting growth or income over time.
Consistently adding money to your investment portfolio can be more beneficial than staying away or trying to time the market.
Investing is ideally a long-term endeavor. Patience is key – you can’t expect to make big gains or reach your financial goals overnight. It’s a process of steady growth.
Simplicity is key for beginner investors. Buying and holding index funds is a good example of a simple and passive investment strategy. Or you can learn how to invest in stocks for beginners.
4. Educate Yourself about Savings and Investment Accounts
Understanding savings is a fundamental aspect of personal finance, yet many young adults ignore this.
Beginning an emergency fund, no matter how small is one of the oft-repeated mantras of personal finance experts.
Consistently making savings a non-negotiable monthly “expense” not only provides a safety net for emergencies but also contributes to various future goals such as retirement, vacation, or a down payment on a home.
A foundational aspect of mastering your finances involves learning self-control, reducing the tendency to make every purchase on credit, and understanding the importance of saving money before making a purchase.
Taking the initiative to read personal finance books and gain knowledge about managing money can greatly aid in controlling your financial future and making informed decisions about savings.
Starting saving for retirement early is essential to secure financial stability in the future.
Learn how much money should I have saved by 25.
5. Limit Your Expenses
Understanding how to limit expenses can be a game changer for your finances.
Track your daily expenses carefully, even the small ones like your morning coffee, as they can add up and provide crucial insights into your spending habits.
Keep your monthly costs, such as rent, as low as feasibly possible, as this will save you substantial amounts over time and accelerate your ability to invest in assets like a home. Learn the ideal household budget percentages.
This one makes the biggest different to spend less money…Categorize your expenses and set specific spending limits for each group, reviewing and adjusting these as needed to curb any overspending.
Regularly review your finances, specifically your bank and credit card statements, every two to three months to identify and eliminate any unnecessary expenditures.
6. Build Passive Income Streams
Okay, this one is my top financial tip!
Navigating the financial world requires strategy, and for young adults, generating passion income streams is a game-changer. With the decline of traditional 9-5 jobs, it’s crucial to adopt flexible financial strategies.
Start identifying your passions that can be monetized. Think about your hobbies, skills, or areas in which you’re an expert. It could be anything from blogging to tutoring or even food delivery services.
Find ways to make passive income. Remember, every bit of extra income counts, and data suggests diversifying income streams can secure your financial future.
Continuous learning is your power tool here. Aim to broaden your financial literacy, understand investing, explore various earning methods, and strengthen your entrepreneurial spirit.
While cutting expenses helps, growing your income using your passions gives you control over your financial destiny.
So, don’t hesitate in doubling up your day job with your passion-driven side hustles.
Expert tip: One of the best ways to make money online for beginners is a key place to start.
7. Create a Cash Reserve
Understand that surprise expenses can unsettle your financial plan, like a sudden car repair costing $700. Having a cash reserve will keep you financially stable through these unexpected turns.
Start an emergency fund: Alongside your regular savings, begin an emergency fund. Aim to save around three to six months’ worth of income.
Prioritize savings: Consider your savings as a non-negotiable expense. You’ll soon realize you’ve saved enough for significant objectives like a down payment on a home.
Build a rainy day fund: This larger $10k-50k rainy day account will help in those long-term expenses or job loss.
Combat inflation: Choose a money market account to preserve the value of your savings, while ensuring quick accessibility in emergencies.
Automation is key: If you’re forgetful, set up an automatic transfer that channels funds to your savings account immediately upon salary credit.
Building up cash reverses will help you to improve your liquid net worth and have less stress around money.
8. Learn About Taxes
Taxes seem complicated, huh? Well, not grasping tax basics can give you a run for your cash. So, get started young and you might save up a fortune in the long run
Start by understanding your salary. The chunk that you take home (net pay) isn’t the whole amount (gross pay) that your employer agreed on. Learn more about gross pay vs net pay.
If you’re self-employed, remember, you’ve got to handle income taxes, and also the full FICA bundle.
Do your bit of math now and avoid an unexpected cringer next April.
9. Consider a Term Life Insurance Policy
Getting a term life insurance policy while still relatively young is a smart financial move that any savvy young adult should consider early in their career.
This safety net serves multiple purposes, especially in ensuring the protection of your future family if for any reason you’re unable to provide for them.
Term life insurance policies are typically far more affordable for young adults. The research notably reveals that the younger an individual is, the more affordable the life insurance policy tends to be. Therefore, beginning this investment in your early years enables you to lock in a lower premium rate, thereby saving significant amounts in the long run.
A life insurance policy is an important piece of your financial planning puzzle. Remember, cost increases with age so act fast!
10. Take Action and Stay With It
Taking action and sticking with it is crucial in managing finances well.
First, you’ve got to get clear about your financial goals. Want to set up a passive income stream or travel? Make them specific, feasible, and measurable.
Once you’ve set your goals, break them down into bite-size pieces. For instance, calculate the costs and set quarterly goals. Make sure to these vision board supplies to keep your goals front and center.
Ultimately, this proactive approach coupled with persistence can help you efficiently manage your funds and stay financially healthy.
FAQ
Honestly, this is completely up to you.
The better bet would be to learn about financial management topics yourself.
Finding a fee-based financial advisor will be difficult when you have no significant assets. And then, when you do, a financial advisor can put a drag on your investing portfolio.
If you decide to work with a financial advisor, find a fee-only financial planner who provides unbiased advice – since they aren’t driven by commission.
Financial planning while young—especially in your 20s—is key to future success and financial security. Here are some steps to establish strong fiscal habits:
Firstly, map out your financial goals. Do you anticipate student loans, a mortgage, or potential investments?
Secondly, budget diligently to save more money early in your career.
Next, consider eliminating outstanding debt quicker by applying saved money from part-time or full-time employment.
Lastly, explore investments such as mutual funds and stocks for optimal use of leftover money after bills are paid.
Remember, according to a study of 30,000 college graduates, 70% never took a personal finance course—making self-education critical.
Use These Personal Financial Tips for Young Adults
In conclusion, managing personal finances is a vital skill that unfortunately is not emphasized enough in our educational institutions.
It’s critical for young adults – you – to learn this skill to establish a strong financial foundation for their future. Especially if you are determined to become financially independent.
This begins by developing a sense of self-control and understanding the importance of delayed gratification.
Regularly monitoring your income and expenses, and adjusting your lifestyle to live within your means, is a crucial habit.
Additionally, the importance of starting an emergency fund and saving for retirement cannot be overstated.
By incorporating these financial tips into their lives, young adults can steer clear of unnecessary financial stress and ensure a secure and financially healthy future.
Take this Advice about Money
It is crucial to understand not just the mechanics of money, but also, the long-term implications of your financial decisions.
Take control of your financial future today, and you are sure to reap the rewards in the years to come.
Discerning financial advice from trusted sources, instead of relying on potentially misleading external influences, is also key. Remember, the sooner you start, the better off you’ll be in the long run.
Remember the data-driven fact: small changes in your everyday expenses can have as big of an impact on your finances as getting a raise.
Know someone else that needs this, too? Then, please share!!
Many people harbor hopes and dreams for how they will live, achieve professional success, start a family, travel, and more. Whether that means launching a nonprofit by age 30, having three kids, sailing around the world, or all of the above, reaching those goals takes planning and focus.
The same is true of your finances. Money helps fund your aspirations, and it needs care and tending. Solid financial planning can help you realize those dreams, from having your child graduate college debt-free to being able to retire early.
So here’s your guide to setting smart money goals and achieving them, step by simple step.
What Are Financial Goals?
Financial goals are the aspirations you have for how you will bring in income, spend it, and save it. These can be short-term dreams, like financing a vacation to Tulum next winter, or longer-term ones, such as retiring by age 50.
Identifying these goals and then creating a roadmap to achieve them is what smart financial management typically boils down to.
Short-Term Financial Goals
Short-term goals are usually defined as things you want to achieve with your personal finances within anywhere from a few months to a couple of years.
Examples of short-term financial goals could be anything from starting an emergency fund to finding a budget that works for you to saving up for a new mobile phone.
Long-Term Financial Goals
When you pull back and think big-picture about money management, you have likely entered the realm of long-term financial goal setting. These are goals that can take several years or even decades to achieve.
Examples of long-term goals would be saving enough money to buy a house, put your kids through college, or retire comfortably.
What Are S.M.A.R.T. Goals?
When you are thinking about your financial goals and doing some research, you may come upon the acronym S.M.A.R.T. Think of this as a guideline to help you set and achieve your money aspirations. Here’s what it stands for:
• S for Specific: Instead of your goal being “to be financially comfortable,” try to be more precise. Perhaps your goal would be to have no debt except your mortgage and a certain amount in your retirement fund.
• M for Measurable: It can be wise to assign real numbers to your goals. For instance, to save $200K in your kids’ college funds is a measurable aspiration. Just saying, “to pay for college” can be too vague to work toward.
• A for Achievable: Setting unrealistic expectations can lead to frustration and disappointment. Think about your lifestyle, income potential, cost of living, and other key factors, and set reasonable goals.
• R for Realistic: Similarly, plan steps to achieve your goals realistically. Don’t expect to cut your expenses to the rock bottom or ignore the impact of inflation over time.
• T for Time-based: Give yourself specific goals and due dates, such as “Save $500 a month until I have $5,000 in my emergency fund 10 months from now.”
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How to Set Financial Goals
Next, consider the specific steps of setting financial goals. Break it down as follows:
1. Assessing Your Finances
Figuring out exactly what your current finances look like is a vital step. Sure, you probably know when you get paid, but have you checked how much is going toward your retirement savings every pay period or — gulp — exactly how much you’re spending on food delivery? Keeping a close eye on your finances might help you set smarter money goals.
It might seem easy to ignore the finer details of our finances in favor of blissful ignorance, but failing to know where you and your money stand might harm your financial health down the line.
So if you haven’t looked at where your money is going in a while, taking a look at how much money you’re bringing in, how much you’re spending, and how much you’re saving might help you set more meaningful money goals.
• Check out your bank statements, credit card statements, and even online banking records can help you determine where your money is going every month.
• Write down big numbers like credit card, personal loan, or student loan debt. This can help you plan for payoff.
• Consider using tech tools to help you wrangle your finances. There are plenty of apps you can download, and online banking might be able to help you too. Typically, banks offer apps where users can easily access details about their spending and balances. Your credit card bill or app can also often provide a graphic representation of where your dollars fly off to each month.
2. Figuring Out What Is Most Important to You
Once you have a snapshot of your overall financial situation, it can be worthwhile to spend some time reflecting on your money goals: what is really important to you.
While there are many things a person ideally should be saving for, like a down payment on a house or retirement fund, your financial goals might not be the same as your sibling’s or your coworker’s.
Just like your parents always told you: You’re unique. And so is the process of setting financial goals. What might they look like?
• You might want to pay off student debt as fast as possible in order to free up more cash every month.
• You might be working toward public service loan forgiveness and not be as focused on quickly paying off student loans.
• Perhaps your financial goal is to save up an emergency fund or take a vacation in six months.
• You might want to retire and move to another country by the time you’re 55.
It’s likely that your goals will be a mix of short-term and long-term aspirations, as described above.
3. Establishing a Fun Budget
Okay, but what if you just want to go clothes shopping once a month without feeling guilty or take that Budapest vacation you’ve been dreaming about?
Make it work! Setting a financial goal is all about having your money serve you. Here are some pointers:
• Planning out your discretionary spending might not only help keep your finances on track but can also help you inject an extra fun quotient into your life. That’s a win-win.
• When a budget is too harsh and punitive, you might well wind up making impulse buys or otherwise overspending. If you know you have some cash stashed for mood-lifting purposes, you can hopefully avoid that scenario.
But whether you’re focused on saving up for a down payment on a house or a trip to Disneyland, you won’t get there without a plan. Making a budget will get you focused and help you take control of your finances.
4. Staying On Track
Once you’ve decided on a money goal or two, it’s time to put a plan into action. Your plan will vary depending on whether you’re tackling a long-haul climb out of credit card debt or saving an emergency fund. A bit of advice:
• Managing your money isn’t a “set it and forget it” proposition. Life happens. You may get a raise one month, and then have a (surprise!) major dental bill the next. It’s important to check in with your money regularly.
• Adapt your budget when things shift. Everything from getting a nice bonus to having a baby can be a good reason to check in with your money goals and recalibrate.
• Whatever your financial goals, there are tools that can help you along on your financial journey. Having the right banking partner can play a crucial role. Look for a bank that can help you set up automatic deductions from your checking account on payday to savings toward your financial goals. And find a bank that doesn’t charge you all kinds of fees; after all, they’re enjoying the privilege of using the money you’ve deposited!
💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no fees and avoid monthly charges (and likely earn a higher rate, too).
Types of Financial Goals to Consider
If you’re looking for help brainstorming how to manage your money aims, here are some popular financial goal examples to consider:
Build an Emergency Fund
Whether you’re easily covering your monthly expenses or grabbing change from the bottom of your bag to buy a coffee, many people are living paycheck to paycheck. But what if that paycheck disappeared or if you had a large, unexpected expense? Enter the emergency fund.
Recent history has taught us a lot about how emergencies can arise. Stashing away an emergency fund might help you comfortably weather a pandemic, a “company-wide restructuring” that eliminates your position, or an unexpected illness that cuts into your freelance earnings.
Consider a long-term financial goal of setting aside about three to six months’ worth of expenses to help you weather any rough financial waters that may lie ahead.
Track Your Spending
As mentioned above, keeping track your expenses is important. Sometimes, spending that starts as an occasional thing (that TGIF latte) becomes a regular expense that drags down your budget.
Or you might find that you are dealing with lifestyle creep, which occurs when you earn more but your spending rises too, keeping you at the same level of wealth.
If you track your expenses, you can see how your money is tracking. You might decide to cut back on streaming services or realize that now that you’ve paid off your credit card debt, you could put more toward retirement.
Pay Down Credit Card Debt
High-interest credit card debt can feel like a treadmill: You keep putting in more and more effort, seemingly without getting closer to the finish line. Many of us struggle with it. The average balance that consumers carry as of the start of 2023 was over $7,000, and the average interest rate as of mid-2023 topped an eye-watering 24%.
With numbers like that, it can take a very, very long time to pay off what one owes, especially if you only make the minimum payment. What’s more, if your balance is more than 30% of your card’s credit limit, your credit-utilization ratio may not look too attractive to the credit reporting agencies (Equifax, Experian, TransUnion), and your credit score may skid south. In fact, some say that it’s financially healthiest to use only 10% or less of the credit your card extends to you.
It’s no wonder that for many of us, setting a financial goal involves the words “pay off my credit card.” Indeed, making a plan to pay down debt instead of focusing on those minimum monthly payments could help you dramatically improve your finances. Your credit card statement will tell you how much to pay to get rid of debt in three years; that can be a helpful guideline. If you need other options, consider:
• A balance-transfer credit card deals, which offer low or no interest for a period of time (typically 6 to 18 months), may also be useful.
• A personal loan, which may offer a lower interest rate. You can use that to pay off the credit card debt and then have a lower amount due to pay off the loan.
• You might also consider a debt management plan or meeting with a nonprofit debt counseling agency if you feel you need additional help.
When you get out from under the burden of this kind of debt, other doors (like to a home you own) may open. It can give your budget just the kind of breathing room you crave.
Pay Off Student Loans
Paying off student loans is another move that can help you reach your financial goals. Doing so frees up funds in your budget for other uses. Some ideas:
• Make extra payments toward the principal when possible. That might mean a little more every month or applying a windfall like a tax refund.
• Refinance a student loan. This could potentially lower your rate and help you pay off your debt sooner.
• Pay biweekly instead of monthly. This means you make an extra payment each year, again helping shorten the timeline to becoming free of student loan debt.
• Enroll in autopay. Federal student loan servicers and many private lenders will lower your interest rate a bit if you opt into automatic payments. While it won’t make a huge dent in what you owe, every little bit can help.
Contribute to Your Retirement Fund
Most of us know we should be saving for retirement, but that financial goal can be easier said than done when there are so many competing places to put our money.
The good news is that when you set up a retirement fund and start saving, even small amounts can grow over time, which makes saving for your golden years a great financial goal. Contributing regularly — whether through your employer’s plan or an IRA — is worthwhile, especially in times like these when inflation is high.
Many experts say that a smart financial goal is to be saving 10% to 15% of your pre-tax paycheck for your retirement. One smart move: If your employer offers a company match of dollars put toward retirement, put in at least the minimum required to snag it. So if your company says you must contribute 6% of your salary to get a 50% match, that means if you put in 6%, they will add 3% to your savings. Don’t leave that money on the table!
Save More Money
Another way to hit your financial goals, big and small, is to save more money. Here are a few techniques:
• Automate your savings. Set up seamless recurring deductions from checking to savings for just after payday. Doing so means you don’t have to remember to allocate the funds. And you won’t see the money sitting in checking, tempting you to go shopping with it.
• Challenge yourself each month to give up an expense. For instance, don’t buy any pricey coffees for one month and put aside the savings. Next month, no movies. The following, no takeout lunches. You can do it!
• See about bundling insurance premiums or paying annually vs. monthly to save money.
• Negotiate bills. See if your credit card provider will lower your rate, for starters.
How to Adjust Your Financial Goals if Your Circumstances Change
Sometimes, life throws you curveballs. You don’t get the raise you were hoping for. A family member has a medical issue that requires more money to manage than you expected. Or you move to a new town with a higher cost of living.
In these situations, you may need to ramp down some of your financial goals. Perhaps you can’t have that emergency fund fully saved by the end of this year. You could lower how much you put away and reconcile yourself to the fact that you won’t meet your goal as soon as you would have liked.
This is just another reason why checking in with your money and adjusting your budget often is important.
And don’t forget the bright side: If you get a major salary bump or a windfall, you can use that to crush your goals that much sooner. Staying flexible can be vital, regardless of which way your finances are trending.
The Takeaway
Setting smart financial goals is an important step in managing your money and achieving your life goals.
By taking such steps as evaluating your financial situation, creating a budget, and setting smart benchmarks, you can be on track to check off your aspirations. Whether that means saving for summer vacations, eliminating credit card debt, or retiring early, taking control of your money can be a very good feeling. And finding the right banking partner can help make the process even easier.
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FAQ
What is a good financial goal?
Financial goals need to reflect what’s important to you, but for most people, they are a mix of short-term aspirations (like having an emergency fund and minimizing credit-card debt) and long-term plans, like retirement savings.
How do you stick to a financial goal?
Sticking to a financial goal can be easier if you set up automatic deductions that transfer money from checking (where you might be tempted to spend it) to savings. Also, getting familiar with your finances, developing a plan, and regularly checking your progress are good moves.
What are some money management tips?
It’s a good idea to assess your finances and make short- and long-term goals. Then, allocate a percent of your earnings and set up automatic deductions to your savings; pay down high-interest debt (like credit cards); establish an emergency fund; and start saving for retirement. Even if it’s just a small amount, it will grow!
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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