Starting Your Financial Wellness Journey: Mistakes to Avoid
For many young adults, financial planning begins when you get your first job, open your first bank account, or start planning for the future. As you set out on this financial wellness journey, it’s important to understand common short-term missteps
that can have long-term consequences.
Keeping All Your Money in a Checking Account. Opening a checking account is often the first step in your financial wellness journey. It’s an exciting milestone that can signal independence and possibility. With a checking account,
your paychecks can be directly deposited into your account and your funds are easily accessible.
But your checking account shouldn’t be the only place holding your money. Keep enough money in your checking account to cover your monthly expenses and a few extras. Anything beyond that can be better utilized – and grow – in savings
or investment accounts. Why? When there’s cash in your account, there’s also temptation to increase your spending– and your money isn’t working for you when it’s simply sitting in a checking account.
Denying Debt. Whether it is student loans, credit card debt, or an auto loan, understanding and addressing debt is a critical component of long-term financial wellness. It can impact your credit and purchasing power down the road. So be honest
about your debt and consider it as part of your full financial picture.
Skipping a Budget. No matter how much money you are earning (or not) each month, you are spending money to live. Skipping a budget can derail your long-term goals and short-term ability to pay your bills. Remember that a budget is a
tool to track how much money is coming in and going out of your account each month – not a punishment. Your budget can and should also include ways that you can enjoy your money, even if it’s just budgeting for your favorite coffee
or a night or two of going out to eat.
Ignoring Retirement. Retirement may seem a million miles away, but planning now is crucial, so your money has time to grow. If your company offers a 401K program, take advantage of it. Exploring other options like starting a retirement account like a Roth IRA may be a good idea as well. Starting to save early means the investment has plenty of time to grown.
Not Asking for Advice. Sometimes charting your own course can be overwhelming. Seeking out financial advice from an expert, such as a certified financial coach can help keep things on track and make the process less stressful.
For more concrete tips and to create a financial wellness plan of your own, consider making a free appointment with a Workers Credit Union coach.
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