Many of us have the same financial goals, with more than enough people looking for ways to become debt-free, save more money and increase their overall wealth. It is a matter of common sense that we want to get to that point as fast as possible.
Practical personal finance tips are what you need to get on the right track. When a practical way to make more money pops up, it’s a breath of fresh air and can be very effective in accelerating the momentum of your financial goals.
But which set of strategies will help you get where you want? The answer is simple. Strategies that you can take action on!
1. Make a budget.
When it comes to personal finance, a budget is a must. It’s the best way to ensure that your money is working hard for you – and not the other way around.
For a budget to work for you, however, it must be personalized and realistic.
Here’s how:
- Make an actual list of your expenses (including groceries, gas, and even daily coffee). Then prioritize each item by putting those most essential at the top of your list.
- Next, decide on an amount of money you’ll allow yourself per week/month/year without guilt or remorse (this may take some trial-and-error). Then multiply this amount by 52 (to get an annual total) or 12 (for monthly) and divide by 30 – the number of days in each month – to determine how much should go into each category every month. Keep track of what goes in and out to see if there’s room for improvement.
- Be realistic about what’s going on financially with others who share household expenses with you.
- Seek help from a financial advisor if necessary.
2. Track your expenses.
It won’t be easy to manage your money if you don’t know what you spend. This might seem like an overwhelming task at first, but once you get the hang of it, it becomes second nature.
At the onset, you can use a spreadsheet to keep track of every transaction.
After a while, you can switch to using budgeting tools like Mint, a free online budgeting tool that keeps track of income and expenses. All you need to do is log in each month and check the numbers!
It also allows you to set budgets for different categories like food or entertainment, making tracking even easier because all transactions are categorized by default according to their type (e.g., restaurant versus grocery store).
3. Automate your finances.
If you want to save money, automate your finances.
- Set up a direct deposit account so your paycheck is deposited directly into your checking account.
- Create automatic bill payments for bills such as utilities and credit cards.
- Automatically invest small amounts of money each month in retirement accounts like 401(k)s or IRAs through automatic investment plans (or auto-invest).
You can also automate savings accounts that are linked to these retirement programs so that you can start building wealth now!
4. Make more money.
There’s no magic wand that will make you rich overnight, but there are some things you can do to increase your income.
Try these tips to make more money:
- Get a raise at work: Talk with your boss about pay increases, or look into other jobs where you can get one.
- Get a second job (or third): Working more hours isn’t always easy or possible, but if it is – even once in a while – you’ll be surprised at how fast those extra dollars add up!
- Find another source of income by starting an online business: If the idea of juggling two full-time jobs is overwhelming, consider starting an online business on the side instead! It takes work but pays off later when all those “side hustles” start accumulating actual profits.
5. Use credit cards wisely.
Credit cards can be great tools, but they are only helpful if you use them wisely. And here is the definition of “wise” in this context:
- Use credit cards for convenience: Some things can only be purchased with a credit card, such as online purchases and large ticket items like cars or furniture. These items take time to pay off and often carry high interest rates if not paid off immediately, so using your card instead of cash is an easy way to avoid late payments and hefty penalties via accrued interest.
- Use credit cards for rewards: Credit cards offer more than just convenience; they also come with perks that add up over time – you get points (or other forms of currency), rebates on certain purchases, discounts on travel bookings, and hotel stays through programs like Wyndham Rewards!
The trick is knowing which card gives you the most value per dollar spent so it doesn’t take long before all those added benefits outweigh any extra money lost by carrying a balance each month after paying it off early (and thus missing out on those rewards).
Final Thoughts
Personal finance is not just about saving money. It’s also about making educated spending decisions. This includes determining what purchases align with your values and will genuinely provide you with value in the long-term rather than just today.
After all, personal finance is not just about how much money you make – it’s also about how well you spend your hard-earned money.
If you enjoyed this piece, you can connect with Dickson on LinkedIn.