Read Brian Fung’s post last week on digital productivity, and check out all the “Life Skills” posts (an ongoing J-term series from previous MiddBlog editors).
by Brian Fung
You don’t have to be an economics major to know that achieving financial independence takes hard work and discipline, particularly if you find yourself living in a city with few support networks after graduation. In these situations, even a little advance prep can help. Here’s how to get on the road to financial security when you’re just starting out.
via flickr / alles-schlumpf
Get everything on the table
Before making any big decisions, it’s helpful to assemble the bits and pieces of your financial life into a single picture. Last week, I mentioned Mint.com — a free online tool that tastefully displays, among other things, how much you have in your checking and savings accounts, the balance on your credit card, and any other debts you hold. Once you sign up with Mint and populate the app with your financial information, new transactions get added and categorized automatically. Mint helps you track where your money is coming from, where it goes and, most importantly, how your spending patterns change over time — all with snazzy charts and graphs to help you understand.
If giving up your personal data makes you skittish, Mint is owned and operated by Intuit, the tax-prep company behind programs like Quicken. Mint can’t make transactions on your behalf, and only reads back to you what you’d find on your various bank websites if you were to log in there separately. Still, whether you should sign up depends on how highly you trust companies like these in the first place, and that’s something for you to decide.
Take willpower out of the equation
The biggest obstacle to saving is often our own selves. Putting cash under the mattress is a struggle — it’s inconvenient, there are bills to be paid now, there are things I want now, and so on. But saving doesn’t have to be an uphill battle.
Instead, consider automating your personal finances. That means setting up a system of rules with your bank(s) to manage your money — like a computer program for your income that you can set and forget. Not only does this system help you save cash by setting aside some of your paycheck before you have a chance to spend it all, but it also saves you valuable time and stress. If you’re feeling ambitious, you can even use this system to automatically pay your bills, which vendors appreciate and sometimes results in a little discount for you. And the best part? Automating your savings means you can spend whatever’s left with minimal guilt.
To see how such a system works, watch this explainer by Ramit Sethi, one of a growing number of smart personal finance bloggers.
Help! What’s a 401(k)/403(b)/IRA?
Retirement seems like a long way off when you’re in college. But people are living longer these days even as the future of Social Security grows less certain, which makes it important to plan ahead so that you have enough to live on after you stop drawing a salary. You probably don’t need to start saving until after you leave Middlebury, but the longer you wait, the steeper your climb will be. Someone who starts investing at age 25 will need to put away much less each month and will still end up having more in the long run than someone who didn’t start saving until 35 or 45. Continue reading