7 Tips to Make the Most of Your Money
Getting a job and earning money is a rite of passage for most young adults, but knowing how to manage hard-earned money may not be a skill everyone has been taught. According to a report from the National Financial Educators, almost 40% of individuals of all ages said their lack of financial literacy cost them at least $500 last year and 15% said it set them back by $10,000 or more.
What is Financial Literacy?
Financial literacy includes general knowledge about money including the basics of borrowing, budgeting, saving and investing. Staying financially literate involves continuing to educate yourself throughout your life on the best strategies for building wealth and managing money.
To recognize Financial Literacy Month this April, we spoke with members of Cengage Group's finance team to get their top tips for financial success. Sonya E., Evelyne L., Joe S. and Tracey A. share their top personal finance tips to help you make the most of your money:
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1. Create a Budget and Stick to It |
“Having a budget will help you gain control and awareness over your spending habits,” says Tracey, Senior Manager of Payroll Services. “Just like Finance at a company like Cengage Group, each individual has their own personal Balance Sheet and Income Statement,” adds Joe, Finance Manager. “A budget is just like an income statement. It will help you determine if you were profitable in a given period and provides a baseline for what you will spend in the future. A budget sets expectations on your income and expenses and gives you a financial goal to work towards.” Evelyne, Vice President, Finance, adds, “Whether you have just started earning or have been earning for a long time, every day is a chance to reflect upon what you are saving and spending to continually improve your finances.”
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2. Plan Ahead |
Once you have your budget in place, keep an eye on it. Evelyne says it’s important to “understand what’s coming up on your calendar like your credit card or tax bill and always have a contingency plan in place if earnings and/or expenses come in higher or lower than planned.” Joe adds, “One of the most important parts of being financially literate is the ability to successfully plan for your future self. Being financially literate allows you to see a financial 'scoreboard' and assess your own performance to achieve your financial goals. It’s a lot easier to win the game when you know the score.”
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3. Only Borrow What You Really Need |
Sonya, Senior Vice President of Financial Planning & Analytics, advises to “only take out debt for what you NEED, not necessarily what you qualify for. You can often qualify for a lot more debt than what you can comfortably afford, so know what your payments and costs will be before you take out a loan or use your credit card.”
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4. Contribute to Your 401(k) |
Sonya says, “Always contribute to your 401(k), especially if you have a company match, because you can save on your taxes now while getting an automatic return on your money through a company match.” The money you allocate to your 401(k) plan - or 403(b) for schools, churches and other non-profits - will come directly from your paycheck, so you’re less tempted to spend it elsewhere. Also, that money is deducted from your paycheck before taxes are taken out, so you’ll be paying taxes on a smaller amount of your earnings and your overall tax rate might even be lower.
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5. Save for Retirement |
“Retiring is something we all look forward to doing, so when the time comes you want to make sure they money is there,” says Tracey. “Don’t procrastinate! Start contributing to your retirement savings today.” The standard employee retirement plan, a 401(k), is great, especially if your employer matches some of your contributions, but it’s not your only option. You can also consider other types of retirement savings plans like a traditional or Roth IRA. And this year, the IRS has raised the limits on contributions allowed for 401(k)s and IRAs.
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6. Invest Your Cash |
“We can’t forget about the assets on our balance sheet. Investing your cash allows your assets to grow in a passive way,” says Joe. “Finding Stocks/ETFs/Bonds that work for you is much easier than it sounds, and it allows your money to earn interest. Even a simple savings or money market account will take your extra cash much further than allowing it to bear no interest in a checking account. Consult a financial advisor and do your own research on what’s best for your unique situation.”
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7. Keep It Simple |
“There are a lot of ideas on how to increase profitability, but I’d advise you to stay focused on what is working and take steps from there, otherwise it can be overwhelming,” says Evelyne. “It is important to step away from the detail to see the bigger picture.”
Why is it Important to Increase Financial Literacy?
“Money management is part of everyday life,” says Tracey. “Having the financial knowledge helps make life less stressful. It also gives you the skills to be self-sufficient in managing and protecting your money today and in the future.”
Sonya adds, “It’s important to be financially literate so that you can take control of your life and your money rather than your money controlling you. Finances are important to everyone and can be used as a tool to achieve goals and transform lives.”
Cengage Group can help you improve your financial literacy with online courses from ed2go. From Keys to Successful Money Management to Personal Finance, ed2go offers classes to help you answer the question, “Where Does All My Money Go?” Learn how to make conscious decisions about spending and saving, so you can take full control of your financial future.
Learn More
If you’re interested in learning more about what it’s like to work at Cengage Group, read more Employee Experiences and visit our Careers page to view open positions.
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