Personal Finance top tips
There’s a good chance you’re reading this article because you’re worried about your finances. You might be thinking about how much money you’ll save by switching to a better credit card, or whether it makes sense to open another savings account. But if so, don’t worry — we’ve got answers! In fact, personal finance isn’t as scary as some people make it out to be. The key is knowing where your money goes and why — and then taking action on that knowledge for the long term benefit of your finances.
Make a budget, and stick to it
Making a budget is one of the most important things you can do to improve your financial situation. It helps you see where your money goes, and it allows you to prioritize certain expenses over others. You’ll also be able to better understand how much money each month is going toward debt repayment or savings goals. The best thing about this method? It’s easy: connect your bank account into an online tool like MoneyHub, Snoop or Plum. This will help to establish where your major outgoings are each month.
If a system is working, stick with it! If something changes in your life (like getting a raise or losing your job), you need to change the way you allocate money accordingly.
Keep an eye on your bank statements
- Keep an eye on your bank statements, either directly or through one of the Apps/websites recommended above.
- Look at where your money is going, and keep track of it. This will give you a better idea of what’s going on in your life and how much money is left over after bills are paid each month.
- Check out average credit scores (and how they differ), as well as interest rates on loans and mortgages; these numbers can help indicate whether or not something might be worth pursuing further down the road, such as getting into debt or buying something expensive!
Set a savings goal and do what you can to reach it
- Set a savings goal and do what you can to reach it.
- Make sure you’re saving enough money for retirement, as well as other important life goals. Better to save a little than nothing at all.
- Don’t just set aside money for later—save now! You might be able to pay off your mortgage early or buy a new car with the cash saved up in an emergency fund.
Don’t carry an expensive credit card balance
- If you carry a credit card balance, it’s important to pay off the balance each month. Credit card interest rates are high so keeping your balance low is essential for minimising the cost.
- If you’re looking for ways to reduce your overall spending and keep more money in your pocket, consider using cash back credit cards or low-interest credit cards with no annual fee or other fees that may apply.
If you have an emergency fund, prepare it to handle financial emergencies
- An emergency fund is a savings account that you can use to pay for unexpected expenses.
- An emergency fund should be enough money to cover three to six months of living expenses. Your goal should be set at least six months in advance, but it’s best if you start saving as soon as possible (and preferably before any major life changes).
- It’s also important not confuse “emergency” with “holiday” funds; while both are meant for unforeseen situations where money needs are high enough but short term in nature–they differ greatly since holidays often last longer than just one week whereas emergencies tend not too last more than two weeks.
- If you don’t have an emergency fund, create one — and start small.
- The goal is to have enough money in your bank account to cover 3-6 months of living expenses, with a little extra for emergencies. Save it in a savings account instead of a checking account, so that it’s accessible if and when you need it most.
- Automate! Set up your account to transfer money into a separate account the day after you get paid so that the first thing you do is to save rather than to spend
Create long-term goals
In order to achieve your long-term goals, you need to take a long-term view of your finances. Set yourself up for success by thinking about what you want out of life and how you’ll get there. You might want to retire early, go back to school or buy a home—these are all big lifestyle changes that can affect the way you manage your money for years down the road!
It’s important that these goals don’t overshadow other areas of life; make sure they’re realistic and achievable (for example: if buying a house is unrealistic because of student loans or credit card debt). This way, even if something unexpected happens along the way (you lose your job), it won’t derail your plans entirely.
Consider insurance coverage
Insurance is a good idea, especially if you’re planning on traveling or taking out a loan. Insurance can help protect you from financial loss in case of accidents or illness. However, not all insurance is created equal—and not all policies are worth buying.
Before choosing an insurance plan:
- Know what types of coverage are available and understand how much they cost. Don’t be afraid to ask questions!
- Do some research online about the different types of policies available so that when it comes time for purchasing one (or several), there’s no guesswork involved when trying to figure out which one will work best for your situation.
Learn how to invest your money wisely
Investing is more than just putting money in a bank. It’s the best way to grow your money and can be done through a broker or financial planner.
Investment options include stocks, bonds and unit trusts (which invest in other companies). Stock market investing allows you to buy shares in companies that make up the stock market – this includes large firms such as Apple Inc., Alphabet Inc., Microsoft Corporation, Facebook Inc., Twitter Inc., Amazon Web Services Inc., Netflix Inc., Tesla Motors Inc..
Consolidate debt to reduce interest charges — or seek alternatives to managing them.
You may want to consider consolidating your debt. While this can help reduce the interest charges on your credit cards and other loans, there are other options available that don’t involve paying off all of your debts at once. For example, you could refinance one or two of those debts so they take less time to pay off each month.
Reducing interest charges is only one way of managing debt; if you’re paying off a large amount in monthly payments but still aren’t able to keep up with what’s owed, then it might be time for some creative thinking about how much money is coming in each month and where it goes after being spent on necessities like food and water.
Personal finance is serious business, but there are things you can do that make a difference now — and in the future.
Personal finance is a lifelong process. It’s important to start early and have a plan for managing your money so that you’re not constantly scrambling in life’s financial storms. If you don’t have one yet, create one by using this template:
What do I want my future self to say about me?
What would my friends say?
Who am I trying to be as an adult (e.g., husband/wife/parent)?
Now that we’ve covered some of the basics, let’s get back to what you can do as an individual. There are many personal finance tips out there, and most people find their own way to take control of their finances. That said, it can be helpful to keep these things in mind as you go about your day-to-day activities: make a budget, keep an eye on your bank statements so they don’t get out of control (or stay current), set aside money for emergencies or unexpected purchases — or even just save up toward retirement. Lastly but perhaps most importantly: if at all possible avoid carrying any debt over longer than necessary by consolidating your existing balances with other creditors and paying them off in full each month. This will help keep interest rates low while also reducing the amount needed monthly income which means less pressure overall!