Navigating your financial life can sometimes feel like you’re traversing rocky terrain. How much of my paycheck should I put toward my savings? What’s a 401(k) and how much should I be contributing to it?
Do I need an IRA, too? Should I save for retirement or my child’s college education? The questions are endless. But figuring out how you’re going to save for the future and still enjoy your life is important to ensure your security and happiness—both now and in the years ahead.
The internet offers a wealth of information on how to plan out your finances and deal with common money issues, but sometimes all that information can be too much. Trying to follow the rules of money and the vast amount of financial advice can be mind-boggling.
Part of what makes navigating personal finance so difficult is that it’s just that—personal. What applies to one person might not apply to you. Here we’ve compiled a list of five money rules you don’t necessarily need to follow to meet your financial goals.
1. Save Every Penny of Your Money
There’s no question—saving is an integral part of creating a successful financial plan. But setting strict or unrealistic spending limits in the hopes of saving more could potentially be a detriment to your long-term financial plan.
If you eliminate all frivolous spending you’re more likely to slip up and veer off course from your savings goals. If you set a realistic budget, including room for discretionary spending, you’re more likely to follow it.
Life, especially when it comes to your finances, can’t always be about restriction—it’s should be about moderation. So when you review your finances, set a realistic budget that you’ll be able to follow. That way you can save for retirement, pay your bills, and still live your life.
Having a place where you can save and track your spending could be the first step to getting your finances on track and saving goals in order. SoFi Money is a cash management account that let’s you save, spend, and earn all in one place.
With SoFi Money, you’ll have instant access to your funds. Plus, there are no account fees. Our goal is to eliminate as many fees as possible. That being said, our fee structure is subject to change at any time. With clear visibility, you can keep your savings on track while also indulging in life’s little pleasures.
2. Check Your Investment Accounts Every Day
Investing can be an important part of your financial goals. But, should you be checking your investments every day? Probably not! The goal of investing is to grow your money over time. And while regular rebalancing is an important part of ensuring your investing goals, there’s really no need to check in on the markets and your investments every single day.
Reviewing stock prices too often can cause an emotional response to sell or buy, instead of a more mediated approach, which can pay off in the long run. While there is some inherent risk and no guarantees when it comes to investing in the stock market, historically, it’s been proven to have some of the best returns—approximately 10% annually .
There are plenty of investment options that take the guesswork out of investing for you. Consider SoFi Invest®, which combines cutting-edge auto investing technology with advice from human financial advisors.
When you open a SoFi Invest account, we’ll work with you to determine your goals and risk tolerance. Your account will be automatically rebalanced to maintain your desired level of risk as the markets fluctuate.
3. Expensive Education Means a Better Job
Paying for an expensive private college or university doesn’t always lead to a better education. And while the prestige of attending an Ivy League school may earn you a higher salary post-graduation, that may not always be the case. So, as you or your children are picking a college consider weighing all the factors before committing to a school.
You might look to see if the schools you are interested in publish employment rates for recent graduates. If their rates are high, you can expect that you will likely be able to find a job after graduation.
Another factor to consider is the alumni networks at the school you want to attend. As you think about starting your career, having a built-in network of professionals you can tap into after graduation is a huge asset.
It can be helpful to compare and contrast the different schools you are considering. You can weigh the cost benefits of each school based on your personal finances and your educational and career goals. Certain college majors may have more lucrative income potential than others, so be sure to factor that in as you weigh the cost of the school and how much money you plan to take out in student loans.
An additional consideration—do you plan on attending grad school? If so, be sure to factor the cost of that degree into your financial plan. You may find it worthwhile to save a little money on your undergraduate education so you have more wiggle room to invest in your graduate degree.
4. Work Hard to Give Your Kids Financial Support
As a parent, you want to give your kids the world. But giving them endless financial support may not be necessary. It’s important to teach your kids how to handle money, and part of that process will require them to support themselves financially.
Today, we are surrounded by instant gratification, but it could be good to teach our children that getting what they want may require some patience, saving, and perseverance.
Explaining concepts like saving and spending to your kids at an early age will pay off in the long run. Studies suggest that most kids’ spending habits are formed by the time they turn seven.
One proven way to instill the value of a dollar is to experience scarcity. Legendary American investor Jack Bogle, who grew up during the Great Depression, attributes much of his success to having to work for what he got.
One easy way to teach your kids the value of a dollar is an allowance. While allowances are a personal choice for each family, having your children earn money for the chores they perform around the house can help them develop important money-management skills.
And don’t feel like you can’t help your kids at all—the goal is to support them while also allowing them to earn their financial independence.
5. Paying Rent Is Throwing Money Away
So many young people compare renting to just tossing money away. Well, sometimes that just isn’t the case. Renting can give you freedom and flexibility.
Buying a house is a long-term commitment, while renting offers you mobility. if you plan on living somewhere for less than five years , renting is often a good idea. Due to the large upfront costs of buying a home, it usually takes more than five years to see any return.
Plus as a renter, you’re not responsible for any upkeep, maintenance, or landscaping. If the sink springs a leak, the ceiling fan no longer works, or the air conditioning is on the fritz, you can simply call the landlord.
When you own your home, you are responsible for all costs associated with maintaining the property—and those can add up quickly. Renting gives you the opportunity to save or invest what would be a down payment in a diversified portfolio until you plan to stay put for a while.
Save for Your Financial Goals Using SoFi Money
Whether your next financial goal is taking a luxurious vacation, buying a house, renovating your basement, or buying a car, SoFi Money is here to help.
SoFi Money makes it easy to track your money by showing you your weekly spend in a dashboard in the app. With SoFi Money, you can access your money in seconds with mobile transfers, photo check deposits, and great customer service.
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