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Managing your money can seem overwhelming. However, maintaining a good relationship with money can be broken down into several steps.
In her new book, “Get Good With Money,” financial expert, podcaster, and author Tiffany “The Budgetnista” Aliche outlines nine steps that she says are essentials for anyone who wants to grow their money and make it last. And luckily, they’re actionable steps you can take in an afternoon or two.
1. Make a budget you’ll actually use
Budgeting is for everyone at every income level, and being clear on where your money comes from and goes is essential.
If you’re new to budgeting, Aliche recommends starting by outlining what money is coming in, what money goes out each month, and then looking at your spending. From there, you can break things down into essential and non-essential expenses.
Then, you can decide how much you want to save and invest, and how much you want to spend. From there, budgeting can take many different forms. Whether you choose to use a budgeting app that measures what you spend, a zero-based budget, or the old-school envelope method, keeping track of what you spend is essential.
2. Set up an automatic deposit to your savings
Once you’ve tackled budgeting, saving is your next big to-do.
The most important part of saving is actually doing it, and automating your savings can make sure it happens every week or month. “This is usually a super simple step that just requires you to put in your checking account info … and your desired deposit amount. That’s it,” Aliche writes.
Aliche recommends using a high-yield savings account from an online bank to earn the highest possible interest rate.
3. If you have debt, make a call to your creditor, or look into refinancing
If you have high-interest debt — things like a personal loan or credit card debt — this step is critical. The amount this debt grows could outpace your investments or savings quickly.
Aliche recommends a quick call to the company you owe to ask for a lower interest rate on your debt. “It doesn’t hurt to make the call to your creditor’s customer service phone line,” Aliche writes.
Debt consolidation and refinancing can also help lower the total interest you owe. For credit cards and other types of consumer debt, transferring a balance from one card to a lower interest rate card can help. Private student loans can also be refinanced, though experts recommend waiting to refinance federal loans, as no payments are due until September 2021.
4. Check your credit score
If you haven’t checked your credit score recently, Aliche suggests doing so. “Think of your credit report as a kind of money transcript, similar to your high school transcript that shows what classes you took and the grades you got,” she writes. The higher your score, the more favorably you’re viewed by creditors, and even insurance companies.
5. Make sure you have (and are contributing to) a retirement account
With high-interest debt paid off, you can start to focus on investing for your long-term and short-term goals.
If you haven’t yet started to save for retirement, that’s the fist place to start. It’s critical to start early to allow yourself the freedom to stop working in the future. “It’s your younger self’s job to look after your older self,” Aliche writes.
Check with your workplace about a 401(k) plan and any available matches, and set up automatic deductions from your paycheck. If there isn’t a plan available through your job, consider opening an IRA to save.
6. Shop for a life insurance policy
Life insurance might not sound like a tool to build wealth, but it’s critical. It protects the wealth you’re building, and can even help you build a legacy to pass on.
There are a few options, including , which helps you protect your family while you have young children or obligations and eventually expires, and permanent life policies, which can help build wealth to pass on.
7. Calculate your net worth
“Checking your net worth is like using a thermometer to check your temperature,” Aliche writes. “If your temperature spikes up, you’d likely go to a doctor for testing.” Net worth might work in the inverse of a temperature — after all, you want it to go up — but it functions similarly by indicating larger issues.
Calculating your net worth is as simple as adding up all of your assets (things you own) and your liabilities (what you owe) and finding the difference between these two things. Knowing and calculating your net worth can also set you up to have great money conversations with a partner, and later on, a financial planner.
8. Find a financial planner
Having a good financial planner is like having a good doctor — it’s someone who knows your situation and how to help. Aliche says finding a financial planner is an important step for anyone who wants to grow and keep their money.
She suggests finding a fee-only financial planner, as these planners can’t sell products or earn commissions. She also suggests finding someone who you’ll be comfortable talking to and sharing personal information with.
9. Check the beneficiary forms on investment accounts
Estate planning is a complicated process that involves everything from writing a will to making a plan for long-term care. While some steps will require input from experts and attorneys, there’s an easy step you can do today.
Aliche suggests starting by checking the beneficiary forms on your investment and bank accounts. “Who you have listed as a beneficiary actually supersedes what you have written in your will,” she writes. It’s as simple as logging into your investment accounts, and seeing who’s listed. You can always update or change this person to reflect your life today, and it should only take a few minutes.