by Kristy Como Armand
There’s no denying our finances play a critical role in the quality of our daily lives. Most of us don’t need to be rich to enjoy life, but when you’re strapped for cash, swallowed by debt, and wondering where your next dollar will come from, it shadows every decision you make—where to eat, what to buy, how to spend your down-time. When our wallet struggles, so do we.
We may become legal adults at age eighteen, but for many, life doesn’t start to settle down and become comfortable until we reach our 30s. If 40 is still on the distant horizon for you, use that as a marker to reach a set of definable financial goals.
Here are a few tips from Aaron LeBoeuf, Chief Lender with Lakeside Bank, to help you get you started.
Know how to live within a budget. It doesn’t matter how much money you make, you can benefit from a budget, LeBoeuf says. You might have $10 in your bank or $10 million; either way, you need to understand how to spend within your means. “Budgeting takes practice and discipline,” LeBoeuf says. “You have to take time to sit down and look at bank statements, review all the details of where you’re spending or overspending your money, and then create an action plan for the future. It may seem like a daunting, tedious and stressful task, but it does wonders for your personal finances in the long run. Many people are surprised to discover how much they spend on certain things.” According to LeBoeuf, once you start living within your budget, it becomes second nature.
Invest. The younger you invest, the better. Ideally, you’d already have an investment portfolio started by the time you hit 30. “The younger you are, the more risks you’re able to take,” LeBoeuf says. “Typically, investments with greater risk generate greater returns. But the pendulum can also swing the other way. When you’re young, you have more time to make up the loss. If you wait until later in life to invest, you’re not in a position to take as many chances.”
Have three months of living expenses in a savings account. It’s a good rule of thumb to have at least three months’ worth of expenses tucked away in savings. “This provides a cushion in the event of a major life change, like job loss,” LeBoeuf says. “It creates incredible peace of mind to know you have something to fall back on if needed. The key is to keep it off-limits. Live within your budget. Don’t overspend and then pull from savings to cover yourself.”
Know what you want. By the time you reach your 30s, you generally have a good idea what you want out of life. Are you motivated by material things? Do you want to travel? Would you like to become a homeowner? Do you need to set aside money for college for your children? “Each of these goals paves different financial paths,” LeBoeuf says. “Determine what you want in the future and understand what role your finances will play in that vision. You may need to save more, invest more, focus on increasing your credit score. It’s easier to create a map when you know where you’re going.”
Feed your retirement. It may seem like a lifetime away, but you don’t want to reach retirement age and discover you don’t have enough money saved. “You can’t depend on Social Security alone, especially if you want to enjoy the perks of retirement, like traveling, leisure, rest, and relaxation,” LeBoeuf says. “It’s important to have an understanding of whatever plan you have in place for retirement. So many people invest a percentage into their plan and then sit back and let the numbers work their magic. While you don’t want to obsess or over-analyze your reports, it helps to understand how your retirement works and what those numbers mean. That way you always know where you stand in relation to your retirement goals.” For help achieving your financial goals, talk to a Lakeside banker at the location nearest you or visit www.mylksb.bank.