(BPT) - Your first grown-up job, first apartment, and the other trappings of adult life can be overwhelming. Add a global pandemic into the equation and things get even trickier. How are you supposed to pay down student debt, save for emergencies and fund your retirement?
The good news is it all comes down to a simple equation — spend less than you make. Be consistent about it. Then, time and math will be on your side. Dollar by dollar, you’ll eventually amass the funds to save for a rainy day, make a down payment on a house, and invest in retirement. Put these tips into practice and before long, you’ll start seeing those unspent dollars and cents add up!
First, pay yourself
One tricky thing about managing your paycheck is getting a good grasp on what’s available for spending from week to week. Payday comes, and you see that big, fat balance in your checking account. You think there’s plenty of cash for a splurge, only to realize later that you shorted yourself. Don’t feel bad, it happens to just about everyone. Planning is key to making the account balance work in your favor. First, keep a list of ongoing expenses so you can plan ahead, and check on it each week. Then, as soon as you get paid, set aside some money in savings. If you’re feeling pinched, start small and make incremental $5 increases so you can build up your saving muscle.
Get a checking account that pays you
If you’re ready to take this adulting thing to the next level, a cash back checking account is something well worth looking into. Here’s a high-interest program that’s competitive with many top credit card cash back programs. Provident Bank (Member FDIC - Headquarters: Iselin, New Jersey) recently increased its cash back checking feature from 0.25% to 1.5%. Over time, the money that comes back can make a noticeable impact on your surplus. For example, if you spend $500 each month on eligible debit card purchases, that’s $90 cash back per year. Put another way: It’s enough to fund your morning coffee for a month.
Protect your finances against setbacks
An important part of handling finances like a responsible adult is being prepared in case the worst happens. Once you establish a habit of spending less than you make, focus on building an emergency fund with enough to cover three to six months’ worth of expenses. Whether an unexpected expense comes up, or you suddenly lose your job, you can manage it without relying on credit. Another important form of protection is having insurance. In addition to signing up for your company’s health insurance benefit, short-term and long-term disability can help you pay your bills in the event that you get hurt and need to take time off work. Renter’s insurance can help you get back on your feet should, say, a fire destroy your apartment and your belongings. Fortunately, the premiums for these products are affordable and can accommodate most budgets.
Start saving now for retirement
That distant day when you call it a career does feel like an eternity from now. With youth on your side, you don’t want to waste this opportunity to start your retirement savings today, so you can see the power and momentum of compounding interest work to your advantage. Put simply — start now and continue to save and invest a portion in your savings, and by the time you’re in your 40s or 50s, you’ll be thanking yourself. If your employer doesn’t offer a retirement plan, check with your financial institution to get started.
Managing your finances in your 20s is no easy feat. But when you have a plan and stick to it, those dollars and cents will start adding up to something that makes you feel pretty good.
Sign up today for a Provident Bank Ca$h Back CheckingSM Account. Simply visit provident.bank/cash-back, and you can open an account in less than 10 minutes.