There’s one question I hear as a personal finance writer more than any other. It’s not how to game the stock market, or become a billionaire—it’s simply how to make a budget work while still saving enough to retire comfortably.
And of course, it’s simple: Change your habits so you can put money aside for the things that matter to you. But that’s also really, really hard to do.
That’s because understanding personal finance is an uphill battle for many Americans. We’re not taught about the practicalities of money in school, because the truth is many industries profit from our ignorance. While wages have hardly budged in decades, shareholders and CEOs have never been richer. The cost of living in many major cities is prohibitive to just about anyone but the super privileged, or those willing to take on a lot of debt or make enormous sacrifices.
While the stock market soars, just 52% of U.S. adults actually owned stock in 2016, according to Gallup, and the wealthiest 1% of households owned 38% of all stock shares in 2013. The government is actively working against consumers to make it easier for financial institutions to prey on its citizens, and a single medical bill can send a person into debt for the rest of their lives.
All of that is true, and makes it easy to feel cynical and think you’ll never be able to get ahead. But it’s also true that you need money—you have to put dinner on the table tonight and fund your kid’s 529 and maybe take a vacation at some point. So what can the average person actually do? There’s no single formula that will turn everyone into a millionaire, but here are the basics I try to keep in mind:
Know that success isn’t going to happen overnight.
Humans are myopic, and it’s never easy to make any sort of real, lasting change in your habits. You’re going to have a few setbacks, and that’s ok.
Knowledge is power.
Don’t rush into any sort of decision-making, and always consult a second (or third or fourth) source. When it comes to money, people will do pretty much whatever they can to get as much as they can, no matter what that means for you.
Automate anything you can (assuming you have enough to cover the bills and aren’t pulling an overdraft fee).
Especially automate your retirement savings. The less we have to think about, the better (see: the work of Nobel Prize-winning behavioral economist Richard Thaler).
Unless you’re superhuman, you likely can’t forego every pleasure on earth to save as much as you possibly can. Nor should you—life is short, enjoy it.
By:Lifehacker / Alicia Adamczyk
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