11 Tips to Begin a Financial Foundation

By Andrew Rosen via Iris.xyz

Unfortunately, I’ve noticed a disturbing trend:  the lack of financial literacy amongst adults.  High schools, or colleges and universities, should make some kind of financial planning 101 course.  Heck, make it mandatory to graduate!  People need some financial foundations in place to help them avoid costly mistakes, especially as they enter their working years.  Currently, this curriculum doesn’t exist.  In the meantime; however, here are 11 tips to help begin that financial foundation – for someone in their 20’s (or even later).

Tip 1 – Enroll in your company retirement plan.

If you do nothing else, make sure you sign up for your company sponsored retirement plan as soon as possible.  If they don’t have one, open up a Traditional (or Roth) IRA and contribute monthly.  Aim for 10% of your salary if you can.  But at very least do as much as your company will match.  Try to increase that percentage every year until you hit the IRS maximum.  The impact of paying yourself first while young will be enormous to your financial health in later years.

Tip 2 – Automate everything (and I mean everything).

Pay your investments, credit card payments, and bills automatically.  By doing this, you’ll never miss a bill.  You’ll feel good knowing the essentials are paid for and you can spend the rest as you wish.  This helps appropriately prioritize your finances in your younger years. Then as you get older, managing your increasingly complex finances become substantially easier.

Tip 3 – Establish credit.

Credit is an important part of everyday finances.  It helps in the purchase of a house, a car, and a business amongst other things.   As a way to start establishing credit, I recommend getting one credit card.  Use it each month for several expenses, but you must pay it off each month.  This starts to build a credit profile with the three major credit bureaus.  Having a good credit score, and accessibility to someone else’s cash if needed, is a crucial tool to proper financial planning.

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