These Are the 5 Things a Personal Finance Trainer Wants You to Know
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That's what Shannon McLay—founder of the Financial Gym—wants you to do. And at our recent Wellness Collective event with Athleta, she shared the five specific things you need to know to make your financial goals just as much a reality as your daily cardio, starting with this bit of wisdom: "Shift your mindset to embrace smarter financial choices." (Get ready to screenshot.)
Keep reading for the five personal finance tips McLay says everyone needs to know.
1. Put 15 percent of your gross monthly salary into savings
First off, let's do the math. Take your annual salary and divide it by 12 to get your gross monthly salary. Once you have that number, multiply it by 15 percent (.15) and bam, that's your monthly savings.
This number might look scary, but by setting up an automatic draft for this set amount each month (as McClay strongly suggests you do), then you won't even notice it happening—until you see that fat stack of savings chilling in your account.
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2. Have six months of fixed expenses saved in an emergency savings account
To find this number, first jot down all of your fixed monthly expenses like rent, utilities, student loans, groceries, and any debt. Once you have that number, multiply it by six, and that's the amount you should project to save in an emergency account.
If you aren't there yet, this will be your first and most important goal to shoot for—and where automatic drafting is your new (personal finance) best friend.
3. 750 should be your minimum credit score
This is the number to aim for. Continue to keep track of your score by using sites like Credit Karma and Credit Sesame that won't alter your score when you take a peek.
4. Only put 35 percent of your credit card limit on your card
A way to increase your credit score and your personal finance situation is to limit the amount you're putting on your cards. Take your total credit limit (across all cards), find out the balance on all of them, and divide the second number by the first to find out the percentage of your card utilization so far.
If you're over the recommended percentage, your first step is to work towards paying down all the cards to help bump up your score. Once you're at a solid baseline, you can then start limiting the percentage on each one, and then watch your score crush it.
5. You should have at least two investment accounts
There are two types of investment accounts: non-taxable and taxable. Non-taxable investments are IRAs and 401k accounts (AKA your retirement funds). Taxable investment accounts are separate from your retirement funds, and are usually brokerage accounts like Fidelity, Vanguard, Betterment, etc., according to McLay.
If you're new to the investment world, don't freak out—doing some research or meeting with a financial coach can help. And congrats: You just found your new favorite thing to track.
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Top photo: BONNINSTUDIO/Stocksy
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