If you’re earning a decent salary and have some savings, then you might be wondering: How do I take my money to the next level? How do I really get ahead, so I have financial security, can support my family, and possibility even give back? I went in search of those answers in my book Generation Earn. Here are my favorite five tips that I discovered along the way.
Saving one in three dollars you earn might sound impossible, and sometimes, it is. But living below your means to such an extent that you can put away large portions of your salary for retirement, emergencies, and long-term goals is a hallmark of financially successful people. So even if it means finding a new source of income, driving a 15-year-old car, or waiting to upgrade your home, do what it takes to make this happen.
Whether it’s student loans or credit cards, loans with interest rates over 3 or 4 percent are pricey leaks in your bank account. Plug them. It’s pretty much impossible to earn a higher return on your savings right now, so if you have any extra cash, put it towards your expensive loans instead of saving it.
One caveat: Everyone needs some cushioning in their bank account for emergencies, so wait to pay off debt until you have at least one month’s salary saved up.
Even when budgets are tight, putting money into your career can pay off. Perhaps a career coach or development course could help you with a promotion or career transition, or a degree from a local college could enable you to command a higher salary. When you’re thinking about where your money should go, consider prioritizing anything that could help your career.
Don’t forget to think outside the box: Outsourcing domestic chores by hiring a cleaning service could mean more time for your freelance work.
It’s true, the current generation of young workers hasn’t had it easy. First the Internet bubble imploded, and then, more recently, the mortgage crisis and ensuing recession hit. But there’s still a lot we can be grateful for, including a (slowly) growing job market and the opportunity to buy into cheaper housing and stock markets.
A Pew survey found that 60 percent of respondents under the age of 40 say their standard of living is better than that of their parents at the same age, and just 15 percent said it was worse. Each generation has it’s unique challenges and good fortune, and we’re not any different.
Giving circles, where friends pool their money and then jointly contribute to a new cause, are the new book club. Since you have the power of numbers, charities that you’re interested in will often offer to visit your group and give a presentation, or invite you to check out their work firsthand. Group giving also makes it easier to do in-depth research on where you’re money is going, since you share that responsibility with others. And it also lets you be social while you’re being generous.
Kimberly Palmer is the author of Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, which was published by Ten Speed Press this week. The following post has been adapted from the book. For more details on Kimberly’s book, visit www.generationearn.com.