Educating yourself on personal finance is important, but it can be difficult to determine which questions are most relevant, and how to save money without spending a fortune on tuition.

In order to keep your money where you want and need it most, Money Management Queen Manisha Thakor shares the simplest ways to set your finances straight.

1. Do Not Live Beyond Your Means

Thakor clarified that often, the images we’ve gotten from outside sources like the media or our peers may have given us an inaccurate idea of how we should spend our money in relation to what we can afford. Just because your friend can treat themselves to a luxurious item each month or your mom gets her nails done regularly every Sunday doesn’t mean you need to spend excessively as well. Though it may not be as much as any of the other markers you have surrounding you, it will be authentically you, she said.

Thakor recommended the “50, 30, 20 Model” for budgeting in a way that accommodates your spending limits. According to this model, 50 percent of income should go towards living needs, 30 percent toward living wants, and 20 percent toward savings. Thakor noted that if you live in an area with a higher cost of living, needs may take up 10 extra percentage points while wants would comprise less than 30 percent. If you’re unsure where to start when cutting your budget, she recommended tracking your spending for a week or month, then getting rid of anything that didn’t make you extremely happy. Don’t be afraid to spend differently than others—your life is unique!

2. Save and Invest Now

By setting money aside now, you’re taking the same small steps as if you were putting sunscreen on each day to prevent sun damage. This means that later on down the road, you won’t have to take any life-altering measures to try and save up $200,000 a year for retirement. 20% of your earnings each pay period should be set aside for future use. This can include retirement, a “rainy day” fund, and other necessary expenses. Of the 20%, 10% should go strictly to retirement while the last 5% is split between emergency funds and near-term needs.

The 77/11 effect, as Thakor called it, is a primary motivation for why women should save and invest more frequently. According to her research, on average women earn 77 cents per dollar earned by men. In addition, they spend an 11-year collective lifespan out of the workforce in order to care for their families This lack of earnings potential puts them at a significant disadvantage when compared to males,’ said Thakor.’

Thakor gave two essential pieces of advice on how to save and invest money properly. Firstly, if your workplace offers a 401k or 403b plan, make the most of it by contributing the maximum amount each week. However, if this isn’t an option for you career-wise, then open up your own IRA account. Secondly, learn about smart investing practices so that you can discern whether you want to manage your investments yourself or give somebody else the responsibility.

3. Be Cautious of Debt

Thakor offered a word of caution regarding student loan debt and credit, saying that when you have debt and only make minimum payments, it’s like paying 70 percent more for each purchase in the long run. No one likes shelling out extra money for their favorite pair of jeans, she noted — “the interest is stunning.”

Thakor stated that there are remarkably easy ways to handle debt responsibly that you might already have. Always notify your lender whenever you move residences, this way you won’t fall behind on payments simply because notices can’t reach you at a new address. Additionally, if you think you might miss a payment, always contact your lender instead of feeling too ashamed to reach out. It’s better to ask for permission than for forgiveness in this case.

Check out book and website suggestions for more personal finance education from Manisha herself by watching her Office Hours below:

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