4 Tips to Improve Your Financial Habits 🚀

Lessons from a finance guru, how to save time and automate your system, the power of compounding, along with roles at Frankly, Flow, and more!

What's up, Next Gen Fam!

We all know the importance of personal finance. However, between Roth IRAs and APRs, this subject can get confusing.

So this week, we're covering tips from finance gurus to help you improve your money habits.

Let's dive in!


1. Give yourself spending guidelines.

Think about your next pay check. Where will that money go? Ramit Sethi, the best-selling author of I Will Teach You To Be Rich, recommends the following spending guidelines: 50-60% of your take-home pay should go to fixed costs, like rent and groceries. 10% of your pay should be invested, and another 10% goes in a savings account. Finally, the remaining 20-30% is left for "guilt-free spending"!

2. Set up automatic payments.

When you have multiple bank accounts, credit cards, or recurring bills, your finances can get complicated. Fortunately, you can make your life easier with automatic payments. Set up auto-payments for all your credit cards and bills, along with auto-deposits for your investment and savings accounts. This will save you plenty of time and energy!

3. Try this automatic payment schedule.

When it comes to the timing of your automatic payments, here's the schedule Ramit Sethi recommends: Let's say you receive your take-home pay on the 2nd of the month. On the 5th of the month, make auto-deposits into your investment and savings accounts. On the 7th of the month, pay off your credit card balance and monthly bills (i.e. utilities). Then, if you're compensated biweekly, repeat this schedule for the second half of the month.

4. Recognize the power of compounding.

Here are the gains from investing $50 a week in the stock market*: After 1 year, you'll have $2,705 ($100 in gains). After five years, you'll have $15,867 (almost $3000 in gains). After 10 years, you'll have $39,181 (over $13,000 in gains). In other words, investing $50 a week brings over $13,000 of free money a decade from now! Take advantage of compounding gains if you can.

*Note: For simplicity, this calculation does not adjust for taxes or inflation.


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