Personal finance tips are much like opinions; everybody’s got one. Like opinions, not all of them will resonate with your situation or even help you in any way.
However, if you have been following me, you know that I am quite serious about finding ways to not only get out of debt but also how to create a budget (and stick to it) as well as how to save money without necessarily depriving your family of the quality of life they deserve.
So, when it comes to financial planning or money management, I know what it takes to get from where most people are (paycheck to paycheck) to where many want to be (financial security).
Personal Finance Tips for Better Financial Health
If you are currently struggling financially, I’m here to tell you that your financial situation isn’t unique. Over 70% of Americans admit to feeling financially stressed. Of that 70%, more than half are women.
So you aren’t alone! I don’t say that to comfort you; I only say it to show you that more people than you think have issues managing or even understanding their personal finances.
Thankfully, you no longer have to be one of them. Here are some personal finance tips that should help get you out of that murk.
“Truthfully, probably 95% of Americans are financially illiterate.” − Suze Orman – Women & Money (and Everyone Smart Enough to Listen)
Financial literacy is probably the most important bit of education that can help get you from where you are to where you want to be financially. Unfortunately, most people don’t have it.
So, my advice to you would be this: start by educating yourself in matters of finance. I’m not talking about becoming a CPA or a Wall Street guru.
I’m talking about simple lessons that will change the way you relate to money. I had issues with my finances (I almost went bankrupt at some point) until I decided to educate myself. There are a million short courses online that can help you get started.
Get a Financial Advisor
A financial advisor will help you do three things:
- Get a hold of your expenditures
- Structure your savings
- Maximize your investments
These are all steps that, if practiced consistently, will help you grow your personal wealth in the long run.
Automate Your Contributions
This is something I have decided to do with my kids: as soon as anyone turns 18, I’m going to give them $500 as a start-up investment in their Roth IRA.
They already have savings accounts that they don’t know about. I send in $50 every month to each of their accounts.
The process is automated, so I don’t really feel the pinch that much. It’s like having the Netflix subscription deducted from your card—no pain.
Have Specific Financial Goals
Financial planning is the key to financial success. You need to have very specific financial goals; what do you need to achieve by which date? How much money do you want to send to your retirement account by the end of the year?
Pay Attention to Interest Rates
Did you know that 82% of all Americans have a credit card, and 61% of them have credit card debt? Again, you’re not alone with this problem. Credit cards can be a lifesaver, especially when you need a small personal loan.
The trick is to pay close attention to the interest rates. Here’s what I do:
- Pay off the credit card with the highest interest rate first
- Consolidate all that credit card debt into one low-interest-rate card
These two moves helped me save a lot of money on debt repayment.
What Is Your Current Net Worth?
Tracking your net worth is simple. Just calculate the difference between your assets (things that bring you money or positive financial value) and liabilities (things that take money out of your pocket).
Things like your savings account, your retirement fund, your house, investments accounts, real estate…these are all assets.
Things like your car, your rent, loan interest, and so on are your liabilities. Knowing this difference will show you where you stand financially.
Create a Spending Mantra
There’s no escaping expenses; we need to buy things and spend money to live. One way to limit how much we spend is to create a spending mantra.
One of my dreams is to visit the Philippines, Thailand, and Bali. Every time I want to buy something, I simply ask myself, is this (whatever it is I want to buy) better than going to Thailand next year?”
Have Money Buddies
Teamwork almost always makes the dream work. Tag team with a few friends who have the same financial goals as you, whether it’s a budgeting or a savings goal, and keep each other accountable.
Have Separate Bank Accounts
This should go without saying, but I will say it anyway: You need separate bank accounts.
- A savings account (both long-term and emergency funds)
- A retirement account
- An investment account
- A current account (for day-to-day expenditure, holiday spending, and such)
- A loan payment account for things like student loans and credit cards
These will help you track where your money is going.
Find Extra Money
We all have a unique talent or skill that we can monetize. Find yours and use it to make extra cash. When you do earn a little bit more, avoid falling into the age-old trap of increasing your expenditure.
Increase your savings and investments instead. It will help you achieve your financial goals faster. I can’t say that I have it all figured out; none of us does.
However, every little step you take in a positive financial direction, such as these personal finance tips shared here, will eventually add up in the long run. Think of it as compound interest in your good financial behavior.
Also see: Clever Ways to Save Money: A Mom’s Guide