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When I say “personal finance,” what comes to mind? Saving pennies in a jar for a rainy day? Sorting through online article after online article in hopes of some simple advice?
Our negative perceptions of personal finance can paralyze us, keeping us from taking the financial steps we should take to make meaningful savings. Fortunately, the reality is much less scary than our irrational financial fears.
By making small tweaks in your life, you can easily change your financial habits and reach all of your goals. So let’s dig into these simple personal finance tips.
- 1 How to Budget
- 2 How to Create a Healthy Money Mindset
- 3 How to Earn More
- 4 How to Reduce Debt
- 5 How to Shop Cleverly
- 6 How to Save Up For Retirement
- 7 How to Improve Your Credit
- 8 How to Get Insured
- 9 How to Prepare For a Disaster
- 10 How to Invest In Tangible and Intangible Assets
A budget is a map of your finances. It tells you how to get from point A (your financial situation now) to point B (your financial goals).
Simply put, a budget is essential for reaching financial success.
The idea of budgeting can be very intimidating for some people. They imagine that if they are going to budget, they will have to write down all of their expenses, which is a daunting task.
If you are one of these people, remember: an over-simplified budget is so much better than no budget at all.
Budgeting is easier today than ever before. Why? Because today there are hundreds of apps to help you create and stick to your budget. Some of the most popular free budgeting apps are:
- Personal Capital
- YNAB (You Need a Budget)
If you are intimidated by budgeting apps, remember that you can always use an online spreadsheet template to create your budget. However, many of these are super easy to use if you are also intimidated by spreadsheets.
Creating a financial schedule is key to sticking to a budget. You should set reminders for paying rent and other monthly expenses, but you should also schedule other parts of your financial life. For example, create a schedule with reminders to help you pay off your debt in a timely manner.
An important part of budgeting is making time for budgeting every day. Many people choose to institute a “money minute” practice, where they spend one minute every day checking in on their budget and other financial measures.
You can also use this minute to research financial planning tools, pay bills, or do any financial jobs on your to-do list for the week.
People are much more likely to stick to a budget if they know what they are saving for. Think about the specific situations, people, or goals you want to save for.
If you can keep these goals in mind while you save, you are much more likely to stick to your budget. Some people even choose to write down their goal on their credit card so that they see it every time they are about to make a purchase.
It is much easier to stick to a budget if your budget is realistic. One of the most essential aspects of a realistic budget is keeping money set aside each month for miscellaneous expenses. This shouldn’t be a lot of money, and you shouldn’t plan to spend it every month. If you come in under budget, you can always put that money away into an emergency fund.
The easiest budgeting is budgeting you don’t have to think about. Ideally, you should create a budget that moves along without much work on your end. This means you should be setting up direct deposit to deposit your money into different accounts as you see fit.
You can automate your direct deposit so that a fraction of the money automatically goes into your savings account every month. You should also automate as many bills as possible so that you do not have to pay fees for overdue bills.
Many of the budgeting tips above are pretty common personal finance tips. Maybe you’ve even heard some of them before. However, I can guarantee that you haven’t thought much about these tips for money mindset before.
“Living below your means” is always a great financial tip, but it can be tough for some people to follow. This is just because a lot of us don’t really know what our means are.
Understanding our means simply requires looking at our earnings, looking at our savings goals, and then examining how much money is left over after we take out our monthly savings.
As I mentioned above, taking a minute every day to think about finances can be very healthy. It can also be great to take some time every week to educate yourself on best financial practices. If you are a book lover, here are a few great books about finances that can get you started:
- Rich Dad, Poor Dad – Robert Kiyosaki
- Why Didn’t They Teach Me This in School?- Carey Siegel
- The Total Money Makeover- Dave Ramsey
- Broke Millennial – Erin Lowry
There are also many great podcasts and YouTube channels that cover the topic if that is more of your speed.
Your first step when you reflect on your finances is to look inward. Think about what your own goals are first. Are you wanting to buy a house? Save up for retirement? Whatever your goals are, the road map to get you there will be slightly different.
It is so easy to get wrapped up in what your peers are doing and forget that your financial journey is a personal one. Don’t worry about where other people are in their lives, and definitely don’t use other people as a reason to make a dangerous financial decision. Just because all of your friends are buying houses doesn’t mean that is the right choice for you right now.
As part of your financial goal setting, you should reflect on your values and the way these values inform your financial goals. For example, if you are someone who values time with your family, you should align your financial goals with this value. Perhaps think about saving up to fly one of your far-away relatives home for a holiday or save up for that dream family vacation.
13. Face Your Fears
Often, we don’t start saving simply because we are afraid of failure. Sometimes, fear can also prevent us from keeping track of our finances. We worry about what we will see if we look at our bank statements, so we avoid looking at them.
You should face these fears before embarking on your financial journey so that you are not overwhelmed by fear. You will find by facing them regularly, and the fear shrinks away into nothing.
The journey to financial success is a long-term journey with many steps. You should take the time to reward yourself for goals that you reach.
Remember, though, it is important to focus on non-monetary rewards for yourself. We often think of finances as the best way to reward ourselves, but that is not in accordance with the financial awareness we want to build.
Sometimes, your job just isn’t paying you enough for you to take the financial steps you need to take.
So ask for a raise! Such a simple idea, but it really scares a lot of us. Remember, the worst outcome is that they say “no.”
When you start to negotiate for a raise, you want to get your company to name a price first. Why? If you go into a negotiation blindly and throw a figure first, then you will never know if you were lowballing or highballing them. Let the company name its starting point and work from there.
Perhaps, your goal isn’t actually making more, perhaps your goal is having more time to spend with your friends and family or having more time to invest in your side hustle.
Remember, you can negotiate more than just your salary. Consider negotiating your medical benefits, your hours, or any other part of your contract that is holding you back.
17. Grow Your Skills
If you want to earn more, invest in yourself. Get a certification that you know your company needs and use it as leverage for negotiation. Play the long game of skill acquisition, this way you are always ready to use it to negotiate a better position than the competition.
Many people are qualified for unemployment and never cash in. This generally happens during a period of recession when lots of people are unemployed. Understanding your rights when you lose your job is absolutely critical to making enough money to meet your financial goals.
19. Find A Side Hustle
If you like your current job but it just isn’t giving you any chances to increase your pay, think about some sort of side hustle. The best opportunities for side hustles are services like freelancing, cleaning or driving Uber that do not take as much mental energy as other services.
If your company will let you, try to get as many overtime hours as you can. Many companies pay time and a half for overtime or holidays, so if you can work during those unusual hours, it can pay off.
Personal finance tips should always include a section to reduce debt. Debt is one of the largest factors today standing in people’s way to achieving their financial goals.
Start reducing your debt by documenting it all in one place. Create a spreadsheet with all of your debt, and write down the interest rates, the amount, and the schedule for paying it off.
Then, you will want to organize it in some way. Many people suggest organizing your debt based on interest rates. You should start working away at your debts with a higher interest rate first.
Another strategy, when paying off debts, is to start small. Before you tackle the bigger ones, try paying off one little debt. This will motivate you to pay off the bigger ones.
Only start with this strategy if you are fearful of doing anything and are in danger of doing nothing. Otherwise, stick with paying off the highest interest rate first.
When you pay your debts off, paying off the minimum amount should always be your starting point. Pay the minimum on all of your debts, rather than focusing too much energy on one debt at the cost of accruing more debt from neglected debts.
This is an important personal finance tip for people who are concerned about keeping their head above water while they pay off debts. So if possible, pay the minimum on all the debt and then put the extra into the highest interest rate debt.
Did you know that you can ask for a better interest rate if you do a good job paying off your debts in time? It’s true. Even if you haven’t had a completely perfect record of paying off your debts, you should ask your lender whether they might be able to give you a better interest rate.
You can also ask your lender for personal finance advice about different ways you could get a better interest rate. It is likely that if you make a payment plan and stick to it, you can get a better rate.
Good shopping practices are some of the best personal finance tips around. Shopping smart stops debt at the source.
Did your mom ever tell you to sleep on a decision? It was good advice. When you are tempted to make a big financial decision on the fly, it’s best practice to give it 24 hours and see if you still want to pull the trigger.
When you think about your shopping habits, think about ways that you can invest in memories over objects. While that massage chair might be nice, wouldn’t it be nicer to save up for a trip?
I am frequently frugal when it comes to normal day-to-day life that doesn’t matter as much, and then I will be the opposite on a great experience, for instance, an African Safari.
For me, these types of experiences are what we remember, not the pizza place you ate at two years ago that you most likely do not remember.
Always evaluate items based on how often you will probably use them. Do not spend big on items you will only use once a year. This is great to think about when it comes to choosing between buying something cheap and something that will last for a long time.
If you are buying something that you will frequently use, like a pair of shoes, buying something that is a bit more expensive and durable might be a good investment.
Shopping is such a part of North American social culture. Break the cycle and find other activities to do with your friends rather than going to the mall. If you really like the feeling of shopping with your friends, try thrift shopping so that you don’t spend as much money.
If you and your friends are crafty, you can try “flipping” thrift shop type of finds. By adding value to cheap, thrifted products, you have had the joy of shopping with a friend, but you have also taken the time together to learn something new.
When you see something in a store that you really must have, think carefully about whether you must have that thing now. If the answer is no, you should wait until that product goes on sale and purchase it then.
If you are less interested in a specific product and more interested in something more general (such as buying a new swimsuit) then you should definitely look for a way to shop seasonally. It is easy to get great deals on winter clothes in the spring for example.
Now, this one is sometimes hard to execute, but you should shop in the correct store for the thing you are looking for. For example, snacks will always be cheaper at a grocery store than at a convenience store.
Although there are many big box stores that pride themselves in their low prices, sometimes their produce sections or medicine sections can be much more expensive than their competitors.
Retirement always seems so far away until it isn’t. You can not start thinking about your retirement plans too early. Starting early allows you to leverage the power of compound interest.
You can do almost everything in your life wrong except this and still be solid financially when it comes to retirement. ESPECIALLY if you start early! However, if you didn’t start early, that is ok too, the concepts are still super powerful.
Along with a budget, you should make a savings plan to help you reach your retirement savings goal. This should be created in the same format as your budget, so you can clearly see how your actions now will impact your retirement.
This simple trick makes it one step harder to draw down your retirement savings. Bonus financial tip: have your retirement savings in a different bank, so it is tougher to dip them.
When you do your monthly budgeting, pay yourself first. Don’t give your saving account the leftovers after you have taken out all of the money for fun activities for the month, pay yourself first.
Please, please don’t cash out early. Make a plan for retirement and stick to it. Suppose you are in a situation where you need to draw down your retirement to help you in an emergency situation, and you don’t see any other option. In that case, you should create a payment plan to help you build those savings back up in the future.
If you are behind on your retirement payments, you shouldn’t feel bad. You can still make up for missed payments with catch-up contributions to hit your retirement savings goals in time.
An IRA can be a great supplement to other retirement savings that you already have. However, it gives you more control and flexibility. There are so many platforms nowadays that are very powerful and easy to use.
There are just a few simple steps you can take to change your life through better credit. Improving your credit can help you reach your financial goals in surprising ways. Good credit can help you get jobs and apartments as well as loans.
Research your credit score and go beyond the number. What is boosting your credit? What is drawing it down? Whenever you have the chance for a free credit check, go for it. Don’t be afraid of knowing, even if you know that the answer will be bad.
Create a credit goal based on your personal goals. We suggest that you create a goal that is at least 700 to start with. However, if you have already reached that goal, set an even higher goal.
41. Research Credit Cards
Don’t just get the credit card that gave you the most fliers. Make a side-by-side comparison of a few cards. Here are a few things you should consider when it comes to credit cards.
- What limit do you want on your credit card?
- What is the best interest rate you can get on your credit card?
- Which credit cards have the lowest fees?
- Which credit cards have benefits that match my goals?
Don’t use more than 30% of your available credit. Using too much of your credit puts your credit score and your financial health at risk. Your score will begin to drop if you have over a 30% credit card utilization.
Even if you are in the process of disputing a bill, you shouldn’t skip on payments. If the dispute is eventually resolved in your favor, you will be reimbursed for the payments that you made.
Remember, you paying any bill improves your credit and makes you a more appealing candidate for loans in the future. In that way, by spending this money, you can save money in the future.
If you absolutely cannot make a payment, you should contact your lender before skipping outright. By taking this simple step, you can avoid some of the unpleasant financial consequences that can come from skipping a payment.
Sometimes, lenders will have programs to help their clients if making a payment presents a financial hardship. Also, they may be able to lower your interest rates, but they will not if you do not ask!
Life insurance has a bad reputation, but you should research it before you make your decision. There are also other insurance policy decisions that you should make as you decide whether you need life insurance, such as whether you need condo, homeowners or renters insurance.
Look at different life insurance policies and determine whether they are the right choice for you. There is no one size fits all financial advice when it comes to life insurance. You should choose your life insurance policy based on your job, your family structure, and your health.
If someone injures themselves at your house, you might be liable for their medical bills if you don’t have renters insurance. They can literally sue you, and if you do not have insurance, it would be a problem. This scenario has forced people into bankruptcy. It is so cheap to get, that it is just silly not to have.
Your job will not always give you enough life insurance for your family to survive on if you pass away. Make sure you think critically about your insurance from your job and top up or negotiate for more.
Bundling all of your insurance is a great way to simplify managing money. Tips on bundling your insurance are easy to get if you contact a few insurance companies. Also, an option would be to contact an insurance broker that has multiple relationships with insurance companies.
We would all like to create contingency plans to prepare us for any disaster that might befall us. However, this is neither possible nor something we should strive towards. We should only buy insurance for things that could happen and things that would be incredibly damaging if they happen.
What exactly do I mean? Well, there are some possible disasters that might be within your budget to pay off. These are not disasters that you should be insured for.
As you buy insurance, you should always ask: “what isn’t covered?” Once you have this answer, you can make a decision. You can decide whether that is something that you need covered. There are often freely available maps online that you can use to help you determine whether you are in danger of a certain disaster.
Fires, floods, and deaths in the family all happen, unfortunately. It’s all about making sure you are financially ready for the unexpected.
Be like a boy scout. Think about all of the possible disaster scenarios your family could experience, and think through them financially. If you are someone who likes to see things written out on paper, it can be nice to write out your plans for different scenarios.
You should also create a budget for those scenarios, so you know how much emergency savings you will need to help your family through each situation.
Your emergency savings should be separate from your retirement so that even if something happens, you are not dipping into your retirement fund. This might be one of the simplest and easiest money management tips in this list. Still, few people take the energy to do it because it seems so unlikely that you will need your emergency savings.
53. Make Sure Your Insurance Isn’t Too Specific
Think through how your insurance would help you in different scenarios. Suppose you are paying for an insurance plan that will only protect you in a few unlikely scenarios. In that case, you should think about finding ways to get a more comprehensive insurance plan.
One of the best general money management tips is using a credit union if you can. They are generally very flexible and compassionate in the case of a disaster. Credit unions are great for banking in general. They design their services to work with individuals and small businesses rather than big businesses. This means that they will be more familiar with the issues you will be dealing with.
The Covid-19 pandemic has reminded us that some disasters mean that we need to stay where we are and avoid contact with the outside world. Set up systems for online payment for as much of your life as possible so that you have access to your money even during a disaster.
You also want to be sure that you can access your money if you need to from wherever you go. This means that you should compile a series of important financial documents that you can bring with you if you ever need to leave your house.
These documents should include banking information for all of your accounts as well as any identity documents that your family will need.
How to Invest In Tangible and Intangible Assets
Investment is the last section of personal finance tips in this article, but don’t let that fool you! It is very important. In fact, this is probably the most important section once you have the basic personal finance stuff down.
When we talk about investing, we are looking to acquire assets vs. just saving paper money that is eaten away by inflation over time. We are also looking to develop VALUABLE skills that once you have them, no one can EVER take away.
That said, assets can be TANGIBLE or INTANGIBLE.
Pay close attention the most overlooked intangible asset, which is investing in yourself and developing your skill-sets. Intangible assets like this are the MOST valuable over time.
Essentially, they are something you can’t see, but over time they are valuable and compound.
Examples of tangible assets are as follows:
- Physical real estate (i.e. single-family, multi-family housing, retail and commercial)
- Physical gold
- Physical silver
- Physical land
Examples of intangible assets are as follows:
- Investing in yourself (skillset acquisition)
- Stocks and bonds
- Virtual art
- Virtual land
- Virtual real estate
You are your greatest asset. Think about ways that you can invest in your own projects and your own education. This isn’t just blanket advice to go back to school and get a Master’s degree no matter what.
Rather, it is a suggestion that you should look at where you are now in your field and see if there are ways you can invest in your education to make it easier for you to earn more. In this day and age, it is easier than ever to do this.
You can learn a lot for free, and there are courses that will help you to shorten your learning curve on almost any topic. I like courses as it allows me to reverse engineer whole business models, and you can do the same.
The things that I do not learn from courses, I can figure out on YouTube for free to fill in the gaps.
When you invest in something, invest in assets, not liabilities. An asset is something that puts money into your pocket, while a liability is something that takes money out of your pocket. Take real estate, for example.
Your primary residence (real estate) is a liability because even if you have paid it off, it isn’t putting more money into your pocket unless you are renting it out.
By renting it out, you are turning a liability into an asset. This is one of the main concepts of one of my favorite mentors Robert Kyosaki that wrote the infamous Rich Dad Poor Dad series.
Although the stock market is often the first thing we think of when it comes to investing, investing in other things for diversity is also a great play. Some of the things to look at are physical gold, silver, land, companies, and real estate.
Today there are so many opportunities in the digital space that have emerged. There are top tier cryptocurrencies, altcoins, digital real estate, and art.
Before delving into these with real money though, I would definitely research and spend lots of time learning how it all works. The other physical assets are a bit more straightforward.
The best personal financial advice is simply: pay attention. In all of the aspects of your finances, pay attention as much as possible. In investing, you should pay attention to investing fees to make sure you are not losing money on an investment.
Remember when I spoke about “compound interest” and it being powerful? Well, it works in a negative way as well with “compounding expenses”. In today’s era of access to information, you should not be paying for active management, where the person’s salary inflates the management fee.
When you start thinking about investment options, you should try to find options that fit within your time horizon. Your time horizon is the timeline in which you want your investments to pay off. Your time horizon will be different depending on whether you are investing for retirement or investing for your child to go to college.
When it comes to investment, you shouldn’t have too many balls in the air. It will be difficult for you to keep track of all of your different investment streams all at once. Instead, you should choose one strategy based on your own specific financial needs and goals and stick to that strategy.
While your financial journey is a life-long adventure, it is never too early to think ahead or too late to start. If you are in a financial position that doesn’t make you happy, you can always find ways to improve that situation through small, incremental changes.