Financial Advice for the Current Economy

What financial advice would you give in the current economy?  Would you tell people to save their money?  Would you tell people that today is a buyers market?  Maybe you’d tell people that they should do nothing and see what happens, otherwise known as the deer caught in headlights syndrome.  Would you give the same advice to a teenager or young adult?

I was recently asked this question, and you know what my response was?  My advice for the current economy is the same advice I’d give in a good economy – understanding the basic principles of financial management and implementing them is good no matter what is going on in the economy.  It doesn’t matter if the economy is doing well, it doesn’t matter if the economy is doing poor, it doesn’t matter if the economy is flat, what matters is that you understand how to track your spendings, how to set financial goals, how to meet them, and how to think about the future.

Are you stuck where to start?  Well, let me break it down for you.

1. If you don’t know how much money you make each week, month, or year, figure it out – you need to know how much money you make to make a budget
2. Know where your money goes – track your expenses, and see where you are spending your money.  Once you start tracking things, you’ll be amazed to see where your money is going – did you know a Starbucks a day costs you over $500 each year?
3. Understand this basic formula: Income – Expenses = Savings.  Whatever money you don’t spend throughout your daily life will be your savings, and these savings are what let you plan for the future.
4. Create financial goals – figure out what you want to buy in the short term (maybe it`s an xbox, a new TV, or some new clothes) and long term (do you want a new car, a condo, a house, a vacation around the world), because our next step is to figure out how to meet these goals.
5. Create a budget and stick with it – now that you know where your money is going, and you`ve figured out what your financial goals are, create a budget to meet these goals and stick to it.
6. Start thinking about the future – do you know at what age you want to retire? Do you know what the future holds? If you`re like me, chances are you don`t, but that doesn`t mean it`s too early to start thinking about the future.  If you start saving even $100 each month for your retirement, and you make use of compound interest, you`ll be amazed how much you can save by the time you want to retire, and who knows, maybe you`ll even be able to retire early.
7. Share your knowledge with others – financial management isn`t a topic that is often found at the dinner table, but that doesn`t mean it doesn`t belong there.  Start a conversation about managing your money with your parents, with your sisters, with your brothers, with your cousins or even with your friends.  Share what you know, and who knows, maybe your family and friends will share some new information with you!

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