10 Essential Personal Finance Tips to Keep in Mind

Did you know that over one-third of adults who use social media say it makes them feel poorly about their personal finance as a result? It’s easy to compare yourself to others and then mope when you don’t match their success.

Or you can do something about it. If you’re ready to take control of your finances and thrive, this article is for you. Continue reading for the top ten finance tips to guide you in the right direction.

1. Start with Your Net Worth

Before you can effectively implement any of the tips below, you must determine your net worth. This is calculated by adding all your assets and holdings and subtracting your liabilities (debts). But if you’re not a math whiz, don’t fret.

There are many online tools that you can use where you input the data, and it does all the computing work.

2. Develop a Sustainable Budget

This is one of the finance tips that gets ignored most of the time. So many, when creating their budgets, go for a scorched earth policy of extreme limits. Unfortunately, much like with a diet, the stricter you are in the beginning, the more likely you are to fail later.

Instead, leave room for some things in life that bring you pleasure. Human nature dictates that we make new habits as painless as possible to make them stick. For example, if a latte is the only way you’ll start the morning, you won’t last very long bringing your home-brewed coffee to work every day.

3. LBYM: Live Below Your Means

If you find that after every pay grade increase, your bank account still looks the same, you may be engaging in what the experts call lifestyle creep, where the more you make, the more you spend. To avoid getting trapped in this cycle, you must live below your means by keeping your expenses the same as when you made less money.

4. Work Toward a Debt-Free Life

Your debt is costing you money, and the longer you hold on to it, the more it costs. The only way to eliminate these extra costs from your life is to pay down your debt. While there are many methods to accomplish this (you may have already heard about the snowball method, for example,) the key to all of them is this: pay more than the minimum required.

That’s it. How you go about doing that is up to you, but the more you pay when the bill is due, the cheaper and faster the process will be.

5. Develop Milestones Towards Your Goals

Your goal is a mountain, and to reach the peak, you must hike. However, as with any significant accomplishment, you will not get there in a day. There must be milestones you can reach (and rest at!) along the way.

Start from your goal and work backward to map out the stages to the start. Not only will this keep your goal in sight, but it also divides your elephantine mission into small bites.

6. Plan for the Future

If you’re young, your retirement might seem like an eternity away, but there’s no time like the present to start preparing for it. Unfortunately, most people underestimate how much money is needed during this time because they falsely assume they’ll spend less when they retire.

To avoid this pitfall, do the math to figure out what your actual spending will be. For example, ask yourself, will you have a mortgage or car payment? And, will your lifestyle change?

Then, to bridge the gap and increase your savings to what you’ll actually need, you should max out your contribution to your 401(k)- bonus points if your employer matches it. If you’re self-employed, then it’s essential you look into opening a Roth IRA, which is an individual retirement account, as opposed to an employer-sponsored one.

7. Devote Time to Your Financial Education

Learning about finance should be something you invest in throughout the journey toward your goal. Setting aside time daily or weekly to educate yourself will improve your financial literacy and help you stay abreast of any new opportunities on the horizon.

This can be as simple as reading a financial blog, like Classical Finance, or listening to a lecture on your way to work.

8. Pay Close Attention to Interest Rates

Interest rates affect everything, from your savings account to your mortgage. So, keeping a close eye on them is the best way to develop your financial strategy. Interest rates will guide you to which credit card to pay off first or which CD you put your rainy-day fund in.

9. Invest to Grow Wealth

If you ask a wealthy person for financial advice, the first thing they will probably tell you is that you lose money when you hold it all in a savings account. And, when you account for inflation, this is especially true. So, once you have robust emergency reserves and you have maxed out your retirement contributions, it’s time to start looking into investing.

But remember, the stock market is not the only way to invest. For example, you can invest your money in bonds, real estate, or other businesses.

10. Make More Money

Of all the personal finance tips, this one makes the greatest impact. There is only so much money you can save by not ordering takeout. This is not to say, keep ordering takeout.

Instead, improve your outlook by knowing your worth. For some, this means advocating for the raise they deserve. For others, it could mean taking on a side hustle or investing that hustle energy into a job search.

Get Started With These Finance Tips

Busy lives mean that it’s easy to put managing your finances on the back burner. But every day you don’t commit, the further away from your goals you become. To combat procrastination, start with the finance tips that will be the easiest to implement now, and then expand on them as you get more comfortable.

Thirsty for more knowledge? Then be sure to explore more in our Finance section.