Building adequate savings early on allows you to get your money plan off on the right foot. Be fiscally responsible by paying some rent. If you’re earning at least $50,000 a year, that may equal almost $43,000 after taxes (15 percent tax bracket) depending on your responsibilities. Save half and you’ll accumulate nearly $22,000 in 12 months.
It’s difficult to start saving if you don’t know how much you’re spending. Track expenditures using the safe and secure program at mint.com or a good old notebook and pencil. You’ll be amazed to see where your money is really going.
A $20,000 five-year car loan with 10 percent interest equals $425 per month, plus the cost of insurance. If you can swing biweekly payments, you’ll dole out less cash in interest. Or buy a pre-owned with cash. Start by browsing sites like jeffcars.com, edmunds.com and autotrader.com.
The consensus among experts is to have nine to 12 months of your income saved. My take? Save $1,500 immediately, then keep saving until you have 12 months’ worth. Financial Peace University (daveramsey.com; $200 for a 13-week course) offers baby steps on how to get there.
Kathryn Finney, author of How to Be a Budget Fashionista: The Ultimate Guide to Looking Fabulous for Less (Ballantine Books), says you can get a great deal on anything by shopping on Wednesday or Thursday nights or hitting your favorite stores during the change of seasons: January/February for fall merchandise and August/September for spring/summer merchandise. For online steals, follow your fave e-tailers on Facebook and Twitter for the deal of the day.
Here’s how: (1) Pay bills on time; (2) pay down the amount owed to 30 percent of your available credit; (3) dispute errors on your credit report; (4) don’t apply for new credit; and (5) have one credit card (for example, Discover), one charge card (for example, American Express) and one loan (for example, student loans). Check out myfico.com for more advice.
For African-Americans, home ownership is a major source of wealth accumulation. According to the U.S. Department of Housing and Urban Development, you’ll need to save for earnest money (the initial deposit), the down payment (a percentage of the cost of the home) and closing costs (expenses associated with processing the paperwork at settlement). For help, go to hud.gov.
Begin by earmarking enough in your employer-sponsored retirement plan to receive the match. With at least 5 percent of your discretionary income, invest in an individual retirement account. Discuss your options with a certified financial adviser. Find one at cfp.net.
Don’t ever be dependent upon one source for your income. Get a part-time job (trysnagajob.com), become a subject-matter expert (think speaker, blogger, coach), or start a side hustle (go to score.org for ideas and tips).
Money should be saved, spent, invested and shared wisely. Offer what you can to worthy causes or give your time. It will come back to you tenfold.
