Who wants to become wealthy at a young age? How can one accumulate wealth and be physically fit? I want to challenge you to engage in what I’m calling Health & Wealth in 2011. The goal of this mentality is to begin preserving wealth while actively maintaining your mental and physical health. As young adults entering the workforce, each day we are faced with a growing number of responsibilities. (Insert cringe here) I feel one of the best ways to manage these responsibilities (there’s that word again) is to add them to our daily, monthly, or yearly agendas (Health & Wealth).
I know you’re thinking what exactly is wealth. Wealth can be defined as having a plentiful supply of material goods and money. I want to focus on 3 topics in building wealth- retirement, creating an emergency fund, and daily money management. While there are a host of other personal finance topics I will only focus on these three.
1. Contribute to your company 401(K) or 403(b) (for those who work for non-profits) at least to the maximum the employer will match. If you are unable to participate in a 401 (K) plan, open a Roth IRA.
a. Roth IRA- an individual retirement account that allows for after tax income to be contributed up to a specified amount per year. Withdrawals after age 59.5 are tax-free, any before will be subject to early withdrawal penalty tax. Check out www.troweprice.com for the Roth IRA and sign up for the Automatic Asset Builder program to avoid the minimum investment.
b. 401 (k)/ 403(b)- a plan that allows employees of a firm to set aside tax deferred income for retirement. Some firms will match dollar for dollar up to a certain percentage.
2. Creating an emergency fund is the next step in Health & Wealth. An emergency fund should be used in the event you loose your job. (which isn’t rare now-a-days) There should be 6-8 months worth of monthly living expenses (e.g. rent/mortgage, loan payments, bills, etc.) To begin an emergency fund you should open a bank savings account. Money in this account should not be invested; the money in this account should be easily accessible in the event money needs to be withdrawn. My best suggestion is to open your emergency fund at a bank other than where you have your checking account. This will aid you in making unnecessary online transfers to your checking to cover unneeded expenses. “Out of sight out of mind.”
3. Lastly, daily money management is another important aspect of Health & Wealth. # 1 rule of daily money management is know where your money goes. For one month keep a list of where you spend your money. (With online banking this aspect should be easy for debit/credit purchases, for cash purchases keep your receipts) Once you know where you spend your money you then can begin to cut expenses. Once you have identified where to cut expenses that money can be put into savings. Begin making your monthly budget using CNN Money’s budget calculator.(http://cgi.money.cnn.com/tools/budget101/budget_101.jsp)
Everyone wants to live a full life, so why not try to limit as many health conditions as possible. While I am not a dietitian neither a doctor I believe we can incorporate small activities in our lives to live healthy. I will focus on 3 topics for the wealth section.
1. Visit your dentist and doctor regularly. Your local dentist and doctor will be your best sources for living a healthy life. Try to schedule regular appoints with each of these to stay abreast of your current health status. This will give you expert advice on how to effectively stay healthy for as long as possible.
2. Eat healthy. Instead of eating a burger and fries for lunch or dinner try switching it up with a salad, or something baked. Everyone gets hungry at work and needs a snack trying bringing water, carrots, apples, oranges, etc. instead of cookies, chips, or soda. Lastly, try cooking more often. Not only will it save you money, but also you’ll get a chance to learn how to make some great healthy recipes. Then you can bring the leftovers for lunch. Try googling healthy recipes and see if you find anything you like.
3. Exercise regularly. Set aside 2-3 days a week, for 30 minutes or one day for an extended session, to exercise. In keeping in the theme of Health & Wealth, a gym membership is not a necessity in order to exercise. Try these tips for exercising, all of which are free:
· You or your friend’s apartment complex gym
· Run outside in your neighborhood
· Exercise at home via free exercising videos (e.g. Youtube, Google-free exercise video)
Also exercise your mind. The library is sometimes the most abused privilege we as young adults have. It cost nothing to check out a book and they generally let you keep the book for a month or so. Take time out during the week or weekends to read for about 30 minutes to an hour or more.
Now that you have the tools needed you can begin on the road to Health & Wealth in 2011 and beyond. With these easy steps you can enjoy a life of financial empowerment and a great diet. Incorporating these aspects in your daily lives will give you the necessary framework to become financially stable and healthy.