Monday, August 27, 2018

How I Manage My Money | Finance 101

Financial freedom was a long and slow journey for me. I'm embarrassed to admit that I've only been financially independent for a year. I lived at home after I graduated college [undergrad]. While I worked full time,  I didn't have to pay any living costs. Fortunately this allowed me to save roughly $30,000 for grad school. I ended up going to a private university, New York University, which I would not have been able to afford. My parents kindly paid my tuition. I paid my own living expenses for the first eight months until I ran out of my savings. My parents supported me after that until I found my first post-grad job [I did work part time in grad school but it wasn't enough to pay for a life in New York City]. 

The past year has been rocky to say the least. My first post-grad job barely paid the bills even with our move to Jersey City. I even had to ask Joe for money a couple times to pay off my credit card. Luckily I never went into credit card debt! Each month I scrutinized over my checking account to make it through the month. During my last job, I listened to the first two seasons of Bad With Money - a phenomenal podcast for those just starting out. I remember one episode recommended saving a little bit each paycheck or week, even if it was just $1. The guest on the podcast suggested 1% of your paycheck. I calculated what that was and started saving that. As predicted in the podcast, I didn't even notice the money leaving my bank account. Once I started my current job, I spent a little time catching up financially then started saving more. 

Nowadays, I have automatic transfers set up on a weekly basis using Qapital [not sponsored but you get $5 if you use my link!]. I put a certain amount into my home fund, emergency fund, and my travel/Europe fund. Whenever I feel I can bump that amount up a little, I do. I am free to use the rest however I want - as long as I pay my rent and can pay off my credit cards each month. This strategy has worked really well for me so far. 

I'm also loosely following the Dave Ramsey steps for financial peace. 
1. Save $1,000 to start an emergency fund [check]
2. Pay off any debt - smallest to largest [check]
3. Save 3 to 6 months of expenses for emergencies [currently working on]
4. Invest 15% of household income into Roth IRAs and pre-taxed retirement funds 
5. Save for your children's college fund [really glad we don't have kids yet haha]
6. Pay off your house early
7. Build wealth and give

I'm still early on the stages but I'm much further along than I was a year ago!

This is pretty much it for now. As I continue on my personal finance journey, I'll share updates [especially when I figure out what an Roth IRA is!].

What are your best tips for managing personal finances?

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