Personal Finance Tips
Are you having a hard time handling your finances? Well, we have here money tips in starting your finances including the best ways to boost your earning potential to how to budget your money.
Why is Money Management Important?
Earning money is one way, but managing and spending it wisely is another. Regardless of how much you’re earning daily, your financial health and security will depend on how you allocate every dollar on your expenses and savings.
Money management is a must for everyone. Learning its basic principle will help you understand its importance. Whether you’re managing your money for your business or solely for yourself,having a solid money management system and control over your cash flow leads you closer in attaining your objectives. Here are some ways to follow to achieve this:
- Control your cash flow
- Manage investment portfolio risk
- Manage your taxes appropriately
- Establish short- and long-term financial goals
- Draw a clear line between spending and savings
- Prepare for retirement
Let’s dive in.
1. Have a Financial Calendar
There’s nothing more frustrating than forgetting the time to pay your taxes. The best way to counter this is to have a financial calendar. Use it to remind yourself to pay your quarterly taxes, setting an appointment and many more. It’s the same way as doing an annual visit to the doctor.
2. Check Your Interest Rate
When it comes to loans, savings accounts, and credit card debt, it is crucial to pay attention to the interest rate. It will help provide you with the information you need to know which of your savings or debt commitments you should first focus on.
3. Track Your Net Worth
What’s net worth? In a nutshell, it is the difference between your debt and assets. It’s what will tell you about your financial state. Make sure you keep an eye on it. It will provide you with essential information about whether or not you are near your financial goals or backsliding.
4. Set a Budget
Handle your finances right by setting a budget. It is the starting point of your financial goals. Make a checklist of what you should budget on.
A lot of people get lost on this fundamental principle of financial management. When setting a budget, you’ll need to make sure that you’re budgeting less money than how much you’re earning, so you’ll at least have some financial cushion for smaller emergencies.
Upon receiving your income, budget first for your payment deadlines such as car and home payments, utilities, subscriptions, and debts. Deferring payments, borrowing money to make ends meet, and receiving calls from collectors are just a few signs of impending bankruptcy. In case this happens, you may lose your collateral such as your home or car during bankruptcy. Therefore, to prevent this from happening you should start early on in properly handling your finances. Keep in mind that prevention is always better than cure.
5. Consider an All-Cash Diet
Check if you are one of those people who keep overspending. Sometimes when you only have your card with you, you tend to spend a lot. However, if you switch to an all-cash diet, it’s easier to see how much money you have.
6. Take Some Time in Your Day to Check Your Financial Transactions
Be it one minute or five minutes, take a few minutes a day to check your financial transactions. It helps keep track of your progress, your goals, identify problems, as well as set your spending tone.
7. Allocate a Part of Your Income for Financial Priorities
What do financial priorities mean? It’s paying off debt, building up emergency savings, and padding your retirement. So how much should you allocate for this? At least 20 percent.
8. Budget Some for Your Lifestyle Spending
Allocate around 30% of your income for spending for happy hours, restaurants, and movies.
9. Have a Vision Board for Your Finances
Adopt better money habits by motivating yourself. Create a vision board so you can stay on track when it comes to your financial goals.
10. Set Specific Goals
First off, don’t just say you have financial goals without specifying what they are. Use dates and numbers and not words to show how much you want to accomplish using your money. If you have a debt to pay off, when is your target date? How much do you want to save and when?
11. Love Yourself
Heard of this song before? Well, we’re talking about finances here so how does this relate? Value yourself by paying off your debt and taking control of your finances.
12. Have a Spending Mantra
Look for a positive quote online that will guide you on how much you should spend. It can be asking yourself whether or not that thing you want to buy is better than a trip to Bali. This is all up to you.
13. Make Bite-Sized Goals
It can seem impossible if you set a goal of one million dollars by the end of the year. By have a goal that seems far away, the less sure you will be if it will indeed happen. As such, you might even give up before you even started. If you want to buy a home, you can set short-term and smaller goals such as saving a set amount of money every week to take a trip somewhere fancy in six months.
14. Banish Toxic Thoughts
Don’t psych yourself out and set yourself to fail. Switch to positive thoughts and know that you can reach your goals without fail.
15. Get Your Finances in Shape
Did you know that one study shows that the more you exercise, the more you get to be productive especially after working up a sweat? As such, you have a higher chance of getting a promotion or a raise. Take the time to go running to help boost your financial game.
16. Learn How to Savor
Appreciate all the things you have now and avoid trying to be happy whenever you acquire more and more things.
17. Learn How to Fill Out a Check
When it comes to credit accounts, it is essential to learn how to fill out a check. This way, you can guard yourself against identity and financial theft. Plus, you should never write a check if you do not have any money in your account.
18. Have a Money Buddy
According to one study, people who have similar traits easily pick up good habits from one another. As such, it’s best to look for someone who has the same outlook on money as you and go for regular money lunches to discuss your financial goals and inspire each other.
19 .Negotiate Your Salary
When you are giving away your current pay, make sure you ask the employer first the figure so you can push higher. This way, you can avoid getting low-balled.
20. Negotiate More Than Just your Salary
Aside from your pay, negotiate with your future employer the paternity and maternity leave, official title, work hours, projects and vacation time but in a nice way. Don’t be too demanding.
21. Make Salary Discussions
Did you know that your employer will not care whether you want more money to build a bigger home? They only care about having a good employee. So when you are going to negotiate for your pay or ask for a raise, you have to emphasize the value you are bringing to the company.
22. Start with Small Debts
If you have a lot of debt, start by tackling the small ones first. It will give you the boost to take on the larger ones. Psych yourself up and conquer your debts so you can take control of your finances.
23. Don’t Cosign a Loan
As much as possible, make every excuse you know to avoid cosigning for a loan. Why? When the borrower misses his or her payments, it will affect your credit score. The lender can even come after you for the money which will eventually destroy the relationship that you have with the borrower.
Whenever the bank requires a cosigner, it means that the bank does not trust the borrower to complete the payment.
24. Always Choose Federal Student Loans and Avoid Private Loans
For flexible payment terms, federal student loans are your go-to option especially when your employment can’t cover the payment for your loans after college. Not only that but federal student loans have better interest rates. So always be smart when it comes to your loans and avoid private loans.
25. Shop Solo
Your friends will advise you have to have almost everything you try on. This pushes you to buy it even if you think it’s not to your taste. When it comes to socializing, stroll in the park with your friends instead of the mall. It will save you money in the long run.
26. Start Saving as Soon as Possible
When should you save? Tomorrow is already too late. If you want to save money, then the best time is to start today. Because the earlier you save money, the more time it will grow with the use of the power of compound growth.
27. Don’t Cash Out Your Retirement Account Early
Try to do everything in your power not to cash out your retirement account early. If you dip into your retirement funds soon, it will hurt you many times over. This will negate all of the hard work you have done to save money. Aside from that, you are preventing your hard earned cash in getting invested. Not only that, but for an early withdrawal, you will be penalized with pretty hefty penalties. Lastly, you will be given a tax bill for all of the money that you are going to withdraw. All of these are the reasons why cashing out should be your last resort.
28. Raise Your Retirement Savings When You Get a Raise
Have you ever told yourself that you are going to save more when you have more money? Then, the moment you get a raise or a promotion, it’s time to raise your retirement savings. Increase your automatic transfer to savings and retirement contributions.
29. Regularly Review Your Credit Report
Your credit score is significant. When you want to loan money, most lenders will check your credit report and credit score before agreeing to loan you money. Make sure you have a high credit score. It will benefit you much in the future.
30. Pay Attention to Fees
Before signing any document or agreement, read everything that’s written there. You might not know it, but there are hidden fees in there. Something as low as 1 percent fee will cost you a lot in the long run. These fees can eat your returns so be very careful.