Personal finance is a journey that everyone struggles with. No one is an island when it comes to money and personal finance. So, I ask; What are you currently working on in your money and personal finance journey? Knowing the personal finance tips belowwill help you in various categories of finances like budgeting, saving, investing, and much more.
There are many books and blogs that talk about personal finance tips that make it overwhelming, but personal finance is not that difficult.
Each one of us dreams of making the perfect financial decisions to make optimal use of our money. Yet we never get the time, or there are too many factors we don’t understand.
I will be outlining some important personal finance tips and tricks that can help you get ready to master your finances:
1. Keep Your Expenditure Lower Than Your Earnings
Many of us worry about how much we earn, but the real struggle we face is juggling our expenses. Most people live paycheck to paycheck without having any savings. When you spend less than you earn, you are at liberty and on your way to financial freedom. Keeping your expenditure lower than your earnings is one of the best personal finance tips that you practice.
Furthermore, our expenses are either our rent or mortgage, groceries, monthly subscriptions, and the list goes on. Small purchases add up without you realizing it, so try to spend on only the necessities, and you’ll manage to save up.
You need to track your spending by either writing your purchases down or by using a money saving app.
2. Learn to Budget
Budgeting is simply creating a plan for your money, so you know how much to spend and how to spend it every month.
Use the popular and effective way to start budgeting; 50% of your income goes towards necessities, 20% towards savings, and the remaining 30% towards luxuries.
This breakdown is how to use your paycheck, but you can make adjustments based on any pressing need you have.
3. Establish a Breakdown of Your Earnings and Expenses
You need to know the breakdown of your earnings and expenses and split it into daily values.
If you earn $3000 per month ($100 per day), then if you pay $2500 towards expenses, you only have about $16 to spend daily. This can make it easier to control your spending as you have the exact threshold calculated.
4. Invest in Yourself
Another personal finance tip you need is investing in yourself. Investing in yourself is one of the best gifts can give yourself.
5. Set Financial Goals
Setting financial goals can change your life forever. Your goals will give you a target, and when you sick to it, there will be an improvement in your finances. If you plan to buy a house, buy a car, or pay off debt, set a goal and work towards that goal. You will accomplish that goal someday.
6. Credit Card Is Not Free Money
Only use a credit card if you can pay it back, otherwise, the interest will eat you up. Credit cards are not free money but something that you need to pay back every month. If used effectively, you can boost your credit score and potentially get discounted interest rates for long-term investing.
You should regularly monitor your credit score & credit report with a free tool like Credit repair if you need to use it; that way, you know when to stop using it.
You can also use Trim to remind you when payment is due.
7. Stay Out of Debt
Some debt may be beneficial (student loans or mortgages), but usually, you’d never want to owe anyone money. It’s best to stand on your own feet and avoid unnecessary anxiety about paying someone back. Yes, it may help in the short run, but it cannot be good in the long run.
8. Save for a Rainy Day: Have an Emergency Fund
Emergencies can knock on your door anytime, and you need to have an emergency fund saved up to answer that call. You can lose your job or pay for a medical bill, so always save up for unforeseen events.
You can't predict an emergency, but you can prepare for one. How much you have in your emergency fund depends on your income streams and family size.
Here are some common financial emergencies:
- Job loss
- Natural disaster
- Medical issues
- Car problems
- House repairs
9. Know Your Net Worth
Knowing your net worth gives you a useful snapshot of where you’re at financially.
Add up all your assets and liabilities; if your assets are worth more than the liabilities, you’re on the right track. If the liabilities outweigh the assets, you need to start paying off your loans to assure future financial stability.
Here's what the net worth equation looks like:
Net worth = Assets (what you own) – Liabilities (what you owe).
You can use a tool like Personal Capital track your net worth.
10. Begin Investing
Investing can be tricky at first, but it’s one of the best ways to earn consistently. Money in a savings account has not much value, and no better earning can be made.
Suppose you’re able to learn how stocks and bonds work. They usually pay periodically as coupon payments or dividends, and in the long term, you’ll benefit from stock price rising or full bond payment. Real estate and exchange-traded funds are an option too.
Here are some options:
- Real estate
- Peer-to-peer lending
- Exchange-traded funds (ETFs)
- Stocks and bonds
11. Communication Builds Confidence
Talk about your finances with someone you trust, such as your significant other, as teamwork makes the dream work. If you’re both up to date on how much you can spend, it will be easier to plan events. Not only does this build financial confidence, but it boosts the relationship and trust as well.
12. Start a Side Hustle
We all want more money in life, and there’s no need to shy away from it. It’s best to accept that and work towards making more money.
Whenever you’re free, work on a side hustle as there’s no limit to how much you can earn as it’s all about the effort you input. Soon you’ll be addicted to the new lifestyle.
Common side hustle includes:
- Start a blog
- Take surveys
- Test websites
- Drive Uber / Lyft
13. Diversify Your Income
Diversity is a key personal finance tip; having a diverse income stream is essential to living a comfortable life. You could lose your job, but you’ll still have other income, such as your side hustle or prior investments providing some support.
14. Readers Are Leaders
Read books about personal finance and money-making. Yes, it may seem counter-intuitive to spend money on a book about spending smartly, yet you open yourself to new ideas and learn from how people have been pooling their pockets in ways you’ll never imagine.
15. Focus On Quality Over The Quantity
Less is more. Buy things that will last and add value in the long term. In this case, you could even spend a bit more if you believe it will benefit you for years to come rather than buying a limitless number of disposables.
16. Save for Your Retirement
Start saving for retirement as soon as possible. If you set up your retirement fund, that may only boost the longevity of your enjoyment when the time comes to indulge in what you’ve been saving for. Money in your retirement will grow through the power of compound interest.
17. Avoid Dipping Into Your Retirement Fund
This is a huge red flag. Everything you’ve worked on will not only use up now, and your money won’t be invested. Finally, you’ll get hit with a tax bill for the money you withdraw. All these factors make cashing out early a very last resort. Unless it’s a real emergency, forget that fund event exists.
18. Set up an Employer Retirement Account
Signing a few documents to open a 401k is much easier than deciding which savings account to open with a third party. Most employers offer a match, so don’t leave any money on the table. Take up the opportunity and save money.
19. Invest in Some Form of IRA
Either a Tradition or Roth IRA plan will boost your retirement funds with possibly a boost to your tax savings.
20. Take a Personal Finance Course
In other to know more personal finance tips, you need to take a personal finance course. Learning a few financial skills through Coursera, Udemy, or even YouTube would add an extra hump to your financial knowledge. This is one finance tip that you should use always.
21. Know How To Negotiate
Never settle for the first amount you’re given and ask for more. Chances are the employer will pay you lower than you’re worth just because they know you’ll never ask for the appropriate amount.
This can be uneasy, but everything of worth comes with some work and overall experience. Always negotiate when the need arises so that you are not underpaid.
22. Switch up Your Stock’s Portfolio
Our financial markets change every day, and a recession can hit the market at any moment. So, keep updating your portfolio to match which companies are doing well and which you need to stay away from.
23. Research Before You Spend
You have no idea how many times you’ll find a better deal or discount after you’ve already bought something. This is especially true for big purchases such as a house or a car. Practicing this will make you more mindful of how much your money is worth. These personal finance tips will help you in your spending.
24. Wait a Few Days Before Spending
Set up a certain threshold based on your income, which you think is a high amount, and wait around 10 days before spending an amount greater than that amount.
This will tone down any impulsive spending. If you don’t think you want it after 10 days, then it was never worth it, to begin with.
25. Avoid Paying Full Price
Wait for sales to buy what you’ve been waiting for. Not only will this build your patience and reduce any unnecessary spending, but you’ll save so much as there are sales throughout the year.
This will allow you to get more of what you truly want as you’ll have both the time and funds to decide what you truly want.
26. Apply Coupons When You Shop Online
There are sites such as Honey that look over the internet to find free coupons you can use. It may not be much, but when you save even $1 off 10 items each, it really builds up.
27. Bulk Buying Is Your Buddy
This is especially true for groceries. Set up a plan for what you need for the month, and you can buy bigger packs, which are usually cheaper than individual items.
Do note that buying something on sale just because it’s cheaper doesn’t mean you’re saving. You may just be spending more than normal to get something cheaper that you don’t need.
28. Donating Help
If you’re donating, you’ll not only feel good about it but lower your tax charge. Not only will give make you value your own money more, but it will be a bigger lesson on how much money, itself, is worth it.
The same $5 you waste away can be a luxury for someone else.
29. Use Pinterest to DIY Your Life
Pinterest and other do-it-yourself or life-hacks online help us create items from ordinary home appliances, which can be a fun way to save.
Pinterest is a fantastic way to learn to Do It Yourself (DIY) and help you stay on budget. There are tips and tricks on decorating, personal finance, parenting cleaning, and all things home.
If you’re not using Pinterest, you are missing out on a huge platform, as it a search engine that can spark your creativity and save you money.
30. Create a Financial Calendar
One of the biggest personal finance tips is missing out on payments and filing taxes. If you can't remember all the dates and timing, create a financial calendar. Set up appointment reminders to help you pay your taxes and bills.
31. Pay Yourself First
This is one of the best personal finance tips, and it will have a great impact on your financial journey. Paying yourself first simply means practicing saving money instead of spending first. When you pay yourself first, you're investing in your financial future and have something to show in the future.
In the future, you will be very sad and lonely without money. Make your future happy by investing in yourself!
Practice these personal finance tips and they will help you make and save money.
Act now and start working on improving your finances today, not tomorrow.
Get a side hustle if you don’t have one, and start investing if you haven’t started. Get things started right away by applying these personal finance tips in your life.
Always remember to create your own financial future by making your own decision.