4 Healthy Financial Habits You Should Develop Young
Debbie Bongard - Jul 26, 2017
Many young people don’t have a plan for their finances when they’re starting out on their own, but developing healthy financial habits early in life is important to make sure you keep yourself on track.
Many young people don’t have a plan for their finances when they’re starting out on their own, but developing healthy financial habits early in life is important to make sure you keep yourself on track. Here are four financial habits you should implement in your life:
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Knowing the difference between needs and wants (hint: it’s all about priorities)
Do you ever find yourself shopping and claiming that “you need” the expensive shirt that looks a lot like two other shirts you already own? If so, you’re not alone. But to ditch this mindset and build healthy financial habits, you have to work hard to distinguish what are truly your wants versus your needs.
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Setting up automatic savings – make it a habit
When payday rolls around it can be easy to blow through your paycheck. Automated savings makes it easy to store away your money before you get the chance to spend it. It’s hard to miss money you never knew you had, and if you automate your savings you won’t even notice your balance go down because it will go straight to your savings account.
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Participating in employer - sponsored retirement plan
If your employer offers to match, or at least partially match, your contributions to your retirement fund, it’s essentially free money that you should be capitalizing on. As well, making consistent contributions to your retirement plan is a vital financial habit to develop – remember: you’re investing in your future! If they offer, let’s say, to match your contribution up to 3%, then that’s essentially a 3% raise you’re missing out on.
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Start investing early – benefit from the power of compound interest
The earlier you start investing, the better. Time is an investor’s best friend, and the power of compound interest can make a considerable impact on your capital gains over time. If you start investing a little bit but early on, you can grow your investment portfolio overtime, rather than waiting until you have more money and investing it all at once. After all, it can take you a while to build your comfort with risk when you first start investing.
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