On this episode of Getting Rich, go on a financial journey with Carmen Perez as she outlines the pro tips and tricks to own your bank account, from credit scores to crushing student loan debt.
Managing your finances doesn’t have to be stressful! Sometimes getting your finances in order is as easy as developing a few simple financial habits and strategies. On this episode of Getting Rich, financial expert Carmen Perez (@makerealcents) of Make Real Cents shares some of her favorite daily financial habits that can take the stress out of managing your money.
The first thing to do, according to Carmen, is create a budget for yourself. Budgeting can be daunting, but in the long run, it will make it easier to see how much you’re spending and saving! “Figuring out how much money you have to spend and where you spend it lets you know exactly where it’s all going,” Carmen explains. “By keeping a close watch on how much you have coming in and how much you need for necessities, you’ll never find yourself in financial straits again.”
Next, tally up your daily spending. If keeping track of all of your purchases sounds tedious, Carmen recommends downloading an app that will do it for you. “All you need to do is open the app at the end of each day to check how much you’re spending,” she explains. “The more you do this, the more you’ll start to see what you can live without.”
Once you have your budget in order, it’s time to start saving money! “Setting aside even a dollar a day can help you build an emergency fund,” says Carmen. “Because, let’s face it, life is full of surprises. No one plans for a baseball through the windshield or replacing a kitchen sink, but it happens, and you’ll have yourself to thank for setting that money aside.”
Budgeting doesn’t mean depriving yourself of fun, Carmen notes. If you’re doing it right, budgeting can help you save for the things you really want, whether it’s a new pair of shoes or a fun vacation. “Budgeting doesn’t mean you don’t get to have fun with your money. But you do need to think about what you want to spend that extra money on,” Carmen explains. “Getting food delivered is cool but is it as fun as that nice vacation? Figure out what you really want and save your extra money towards that.”
Next, Carmen sits down with 26-year-old Skye Lindberg. Skye recently moved to New York City and is struggling to figure out how to budget for life in the Big Apple. “I’m a performer, I also work in events, [and] I’m a yoga instructor,” Skye tells Carmen. “So lots of ways to make money, but somehow the city just sucks it all out of me.”
Carmen recommends that Skye start building a basic budget to figure out how much money she can afford to spend and how much she might want to save. “My best recommendation is to put a bare bones budget in place, and that can look like literally just the expenses that you absolutely must pay in order to keep the lights on every single month,” Carmen tells Skye. “And then anything outside of that, that’s when you start divvying that up to other things that fall lower on the totem pole when it comes to your bare bones budget.”
Carmen also tells Skye to think about purchases in terms of how much time she needs to work to make the money to pay for them. “One, I would say looking at the tradeoff. So, if you go to the bodega and grab your bagel and cream cheese with a coffee, how much is that going to cost?” Carmen asks. “And if you’re doing that daily, what that looks like over the long run. And understanding how many hours you actually have to work in order to pay for that bagel and coffee.”
After chatting with Skye, Carmen shares a handy acronym for building a successful budget. “Budgeting is much more effective when you have a financial plan. So, whether it’s buying a house or a year abroad, hold your financial goals up to a ‘SMART’ standard,” she explains. “Specific, measurable, achievable, relevant, and time-bound.”
And remember, the more specific and well-thought-out your goals are, the easier it will be to achieve them. As Carmen notes, “Smarter goals lead to smarter and more effective budgeting!”
Carmen is not a registered investment advisor. The above information is not investment advice and is intended for educational purposes only. Please consult with a financial professional to assess what investments are suitable for you based on your financial objectives, needs, and risk tolerance.
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