You’ve always heard that it’s important to be smart with your money. There’s common advice that everyone hears – things like saving part of your income, living within your means and not racking up credit card debt. There’s never much of an emphasis on when to start, though, and that’s a problem. Smart financial management isn’t something that should be put off, and here are a few reasons why.
Interest Adds Up Quick
Interest on something like a credit card can seem trivial, but even a 10 percent APR on a credit card with a 2,000 dollar balance means a very large chunk of your income goes towards just interest. You get no material benefit from paying interest, so avoid it when you can. You can do this by setting up a budget now and making sure that you’re within your means. That way, you don’t have the issue of running out of money between pay cycles and using credit cards.
Negative Credit Snowballs
We’ve discussed how quickly interest can add up, but it has a lingering effect that only gets worse. If yo max out a credit card when you’re 20 and it takes you awhile to pay it off, that can lead to getting a worse rate on a car loan. With more money being spent on that car loan, it’s harder to pay off as well – and that can end up meaning a worse mortgage rate. Poor long-term planning might eventually have you seeing a Chapter 13 attorney Nashvillefollow, so start now and avoid that fate.
The Old Security Blankets Aren’t There
It used to be the case that workers were effectively guaranteed retirement. With social security programs as well as pensions offered by companies, retirement was an easy prospect to consider. That’s becoming less and less the case as pensions are reduced in a tight economy and social security’s longevity is in constant question. People entering the workforce today are projected to be responsible for the vast majority of their retirement costs, so starting today is the easiest way to prepare for this.
With all of these points in mind, the best way to avoid long-term frustration is to start being smart with your money immediately. Take basic steps such as setting a budget and finding out where your weaknesses are. It can be tough at first, but it will make your life much easier in the future.