There are some money rules you hear all the time: Invest in your 401K. Spend less money on coffee. Pay more than the minimum on your credit cards. But how exactly do you put all of this into practice when you barely have enough money left over to go out after paying your rent every month? Metro enlisted Jim Matera, the executive vice president of Apple Savings Bank, for his advice.
Tip 1: Understand your budget and start saving.
Even if you don't have a lot of discretionary income, you still need to make a budget and start saving for both the short term and the long term. A lot of employers make this easy with the option of directly depositing part of each paycheck into a separate account. They also make long-term saving simple with 401Ks, but independent retirement savings accounts are also available.
It's also important to create your own long-term savings account for something you want down the line, such as a new house or baby. Sit down and think about what you want to have five years down the road. Set up automatic deposits for part of your paycheck to go into this account; that way you save money without even thinking about it.
Short-term saving is for things like a vacation, holiday shopping or other sizable purchases in the near future. It's important to keep feeding this account in case an unexpected expense comes up.
Tip 2: Manage your debt.
For most people in their 20s and 30s, this means credit card debt. If you're in over your head, the most important thing you can do is pay more than the minimum each month, even if this means putting off growing your savings account. Once you get your feet back on the ground, you can start saving. Keeping a healthy bank balance may make you feel better, but it only takes simple math to see that you're losing money: You're only earning about half a percent a year on your money in the bank, meanwhile you're paying 10-plus percent interest on your credit card every month. Paying off your credit card instead of letting your money sit in the bank is the best investment you can make.
Tip 3: If you own a home, refinance your mortgage at the lowest rate possible.
This is another way to manage your debt. There are great rates out there today because interest is so low. Jump on opportunities that exist to refinance long-term debt at historically low rates.
Tip 4: Ask for advice.
Everybody's financial situation is different depending on your income, your living situation, debt and future goals. It can only help you to ask your banker, broker or a financially savvy family member to help you build a budget.
Jim Matera is the executive vice president of Apple Savings Bank, the second-largest chartered savings bank in New York.