I think we can all agree that money management can tend to be overwhelming, and the learning curve can seem steep at times.
In this post, ill be sharing 38 personal finance tips that I learned to help me master my money, and that can help you master yours as well!
Personal Finance Tips to Help You Master Your Money
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Create a Budget
When it comes to personal finance tips, creating a monthly budget is pretty much one of the first steps you take. I believe it’s something that people put off because it seems either overwhelming or unnecessary, but it’s neither!
Make a list of your monthly income and outgoings and create a budget for yourself based on the financial goals you want to achieve. But be realistic with your budget and be sure to update throughout the month to make sure you stay on track!
Creating a monthly budget is essential, even to those who aren’t specifically struggling financially. I remember when I created my first budget in my early twenties, I thought I was doing well.
Next Steps: How to Create a Monthly Budget (Even if You Hate Budgeting)
Use the 50/20/30 Budget Method
Many people struggle with making a monthly budget because they don’t know what portion of their income, they should devote each part of their budget to.
The 50/20/30 budget helps to take some of the guesswork out of budgeting by creating these basic guidelines. which look like this:
50% of your budget should go toward non-discretionary such as housing, utilities, transportation, and food.
20% of your budget should go towards your savings
30% of your budget should go toward your discretionary spendings such as entertainment, shopping, and vacations.
Depending on the salary you’re making and where you live (since this affects your housing costs), this budget may or may not work well for you. But at the very least it gives a general structure for how to break down your budget.
Set Financial Goals
It’s important for you to have financial goals for yourself! Setting financial goals will help you to determine where you should be prioritizing your money each month.
Some financial goals include paying off debt, saving for a vacation, or putting away money for a down payment on a house.
Even if you aren’t saving for any reason right now, your financial goal can be getting to a certain amount with your emergency fund – 3-6 months’ worth of expenses are recommended!
Once you have your goals planned out, you can create a line item in your budget for those accounts to be sure you’re consistently putting money away.
Know Your Net Worth
Most people only pay attention to what they can see: the money they see coming into their bank every month, and the money going out. But that’s a short-sighted way to view your finances.
While those things are important to pay attention to, you should also know about your net worth!
Your net worth looks like this:
Net Worth = Assets (what you own) – Liabilities (what you owe)
Assets can include:
- Investments
- Money
- Vehicles
- Property’s
- Anything else of value that you own
Liabilities would include:
- Credit card debt
- Auto loans
- Student loan debt
- Mortgage
- Any other money you owe
Unfortunately, thanks to student loans, most adults leave college or university with a negative net worth. Start keeping an on this issue as early as possible and always be working to increase your net worth.
Check Your Finances Regularly
I’ve made it a habit to check my finances regularly. I will open my budget app or my online banking at least once every single day. So, I’m always aware of where my money is going.
Sure, there are still months where you can go over budget. But it’s always a conscious decision you’ve mad and we’ve planned to make up for it.
Start Reading Personal Finance Books
If you are ready to get serious about turning your financial situation around, throwing yourself into reading a lot of personal finance books. The books I’ve read cover a variety of personal finance advice, from money mindset to budgeting to getting started with investing.
Some of my favourites included You Are a Badass at Making Money by Jen Sincero and I will teach you to be rich by Ramit Sethi.
There are many amazing personal finance blogs out there and so if you aren’t following them, you’re missing out!
In fact, reading about other people’s financial journeys and progress is part of what helped to inspire me so much on my own financial journey.
The best part is that there are different blogs out for no matter what your financial goals is and where in your life you are. E.g.
If you’re ready to sell all your stuff and travel the world, there are financial blogs for you.
Check Your Credit Report
Your credit score is important to your long-term financial success. Your credit score represents your creditworthiness, meaning it help lenders choose whether you’re a good candidate to borrow money for large investments in the future.
Your credit score can make a huge difference in the interest rate you can be offered when taking out a loan for a purchase like a car or a house. A good credit score could save you thousands of dollars over the life of a loan!
Be sure to check your credit regularly. There’s no need to pay to check your credit– apps like ClearScore allow you to check your credit report for free at any time.
This will allow you to make sure you’re maintaining a healthy credit score, as well as ensure there isn’t any errors or fraudulent activities on your credit report that might be hurting your score.
Use Online Budgeting Tools
Since most of our lives exist online these days, it makes sense to that you take your budgeting online also. you can connect your bank and credit accounts to a third-party app that tracks your finances for you. You Need a Budget, and Personal Capital.
These budgeting tools can be super easy to stay on top of your finances because they track everything for you. You can set certain spending goals for yourself, and the tools can let you know if you’re going over your budget.
If an online budgeting tool isn’t for you, you can put together a budget spreadsheet and track your finances.
I’ve found that budget tools may not be for those that have a hands-on approach like You who need a Budget or a budget spreadsheet.
Tools like Mint can be helpful, but they don’t force you to stay on top of your budget in the same way that other tools do.
Build an Emergency Fund
You’ve probably read the statistic that fewer than 50% of most households in the us don’t have enough savings to cover a $400 emergency. It’s a frightening statistic!
It can be tempting to put all your savings toward more exciting financial goals such as saving for a house or a vacation but having an emergency fund is even more important.
While you may feel financially secure right now, you just never know what could happen in the future, whether it be a medical emergency or being fire from a job.
The recommended emergency fund should have at least 3-6 months’ worth of expenses. However, Dave Ramsey recommends you should create an emergency fund of $1,000 and then turn your attention to debt repayment.
Pay Yourself First
There are a lot of people who wait to see how much money they’ll have in their bank account at the end of the month, and then decide if they can put away a little money in their savings.
The problem is that there might be a lot of months where you aren’t putting money into your savings at all.
Instead of just saving what you left over at the end of the month, start budgeting the money you’ve saved.
Reduce Variable Expenses
Your monthly spending can be broken up into two categories: fixed expenses and variable expenses. Your fixed expenses are those that are the same every month, such as rent or mortgage, loan payments, insurance, and more. Your variable expenses are those that change month to month. Those expenses include food, shopping, and entertainment.
Variable expenses are easier to reduce. Look at how much you’re spending now on those expenses, and see where you might be able to make cuts. I remember being taken aback when I realized just how much I was spending on eating out, and it was an easy category to cut back on!
Choose Your Priorities
My theory is that everyone should pick one or two spending categories that are a big priority for you and you’re willing to splurge on, and then decrease spending everywhere else.
For example, my significant other and I love to go out for food and drinks, and we love to go see live music. And often the two go hand in hand. Because of that, those are the areas where we spend the most money.
However, I buy all of my makeup from the drugstore, and I only buy new makeup when I’m out. Similarly, we only buy new clothing when something needs to be replaced.
Overall, we hardly ever shop. And because of that, we’re comfortable increasing our budgets a bit for the areas where we do like to spend a little more money.
This is going to look very different for everyone.
For example, I know some people who really love fashion. They’re budgeting money for new clothes every single month because that is what is most important to them.
And where we spend quite a bit of money eating and drinking out, I know people who might only eat out once per month. And they’re perfectly happy with that because eating out isn’t a big deal for them.
Create a Vision Board
You might not see a connection between your finances and a vision board. But I promise there is one!
My significant other and I have some big financial goals over the next few years, and I was having a hard time staying motivated to cut spending.
It turned out that a vision board was exactly when I needed. When I can literally look at our goals, it’s a lot easy to push myself to keep working toward them!
Use a Meal Plan
Food is one of the biggest monthly expenses for many families. Meal planning can help you save a lot of money on groceries, as well as cut down on wasting food. Meal planning can help you avoid those nights where you aren’t sure what to make for dinner, so you resort to eating out.
If you’re new to meal planning or are struggling to stick with it, you need to check out $5 Meal Plan. $5 Meal Plan is a meal planning service that sends you a meal plan and grocery list every single month. The meals are affordable and easy to make!
Eliminate Unnecessary Expenses
How many monthly payments are you making that could be lowered, or cut altogether?
Start by considering which expenses you can completely cut. This might include cutting cable in favor of a cheaper alternative or cutting monthly subscriptions or gym memberships you aren’t really using.
Once you’ve cut where you can, look at which expenses you can reduce. Can you find a cheaper phone plan? Are you over insuring any of your vehicles and could lower your payment by reducing your coverage a bit?
Making quite a few small changes can go a long way in your monthly budget!
Use Coupons
Make it a habit to use coupons when you shop, whether you’re shopping in the store or online.
Services like Ebates and Honey can help you to get good deals when shopping online. And coupon apps like Ibotta can help you get cash back on the purchases you make in stores.
Diversify Your Income
These days, whether you’re working on paying off debt or are saving for future expenses, it seems like everyone needs a side hustle! If you’re in a full-time where you can’t increase your income right now, picking up a side hustle is a great way to bring in some extra money and diversify your income!
My favorite ways to diversify my income have been my starting my blog and my Etsy shop, but I’ve also diversified even more by picking up freelance writing gigs.
Next Steps:
How to Start a Blog: A Step by Step Guide
35+ Legit Ways to Make Extra Money
Ask For a Raise
Instead of increasing your income by starting a side hustle, you could also increase your income by asking for a raise. However, when you approach your boss about this, don’t make it about you wanting more money!
Make sure to demonstrate to your boss the value that you have brought to the company, and will continue to bring to the company.
Change Careers
This might seem like drastic advice, but it’s really not when you think about. Staying in a low-paying career for your entire working life will cost you an incredible amount of money over the course of your life.
For example, I currently work in a government job. Yes, it’s sometimes personally fulfilling and the benefits are great. But government jobs aren’t exactly notorious for their great pay, and I’m very conscious of that as I create my career goals for the next five years.
Make Money While You Watch TV
Most of us spend a LOT of time watching TV. And let’s be honest, that isn’t the most productive use of time. I tend to get a bit bored and antsy when I watch TV, so years ago I discovered a great way to have something else to keep me busy while I watch TV that also allows me to make some extra money: online surveys!
There are lots of companies out there who will pay you to take market research surveys online. They’re free and easy to join and use. You aren’t going to get rich this way, but you can definitely make $100+ per month! My favorite survey company is Survey Junkie!
Learn to Say No
When someone invites you to join them in a fun activity or going out to dinner, it can be tough to say no, whether it be because of FOMO or just because you feel bad saying no.
This can lead to a lot of unnecessary spending though!
I’ve created a rule for myself that I only spend money to spend time with people who I really enjoy spending time with. Sure, I’ll spend money to grab lunch with a good friend or have a night out with my best friend.
But I’m not going to spend money to grab lunch with a coworker or acquaintance I’m not interested in spending more time with just because I feel bad saying no.
Focus on Getting Out of Debt
Most of us are carrying some sort of debt, whether it be student loans, credit cards, car loans, or other personal debt.
Not only does debt cost you a lot of money in the long run because of interest payments, but it also takes a pretty significant emotional toll. Finances are a huge source of stress for most people, and one of the leading causes of divorce!
If you’re carrying debt, paying that off should be your #1 financial goal right now. Figure out how you can cut expenses elsewhere, and put as much money as you can every month toward paying off debt.
You can use Dave Ramsey’s snowball method, in which you pay off your debts smallest to largest, snowballing your monthly payments until you’re putting all of that money toward your largest debt.
You can also use the debt avalanche method, where you put extra money toward the debt with the highest interest rate to get that one paid off first.
The debt avalanche method probably saves you a bit more money in the long-run, but the snowball method gives you small wins along the way as you get your smaller debts paid off.
Avoid Credit Card Interest
There are plenty of people, including financial expert Dave Ramsey, who advise that you should never use a credit card.
And while I certainly don’t agree with such a broad generalization, it’s definitely important to proceed with caution when it comes to credit cards.
There are some credit cards that have some really great rewards programs. If you travel regularly and use travel rewards, you know how amazing those credit card rewards can be!
However, credit card rewards are only beneficial if you’re paying your credit card off monthly and avoiding paying interest. Credit card interest is a huge waste of money!
While some people are able to have a credit card and consistently only spend what they have in their bank account every month, other people tend to overspend and eventually aren’t able to pay off the balance every month. It’s really about knowing your financial habits.
Start Saving for Retirement
It might seem silly to be talking about retirement when it feels SO far away. And if you’re a millennial, it might feel as if you’ll never be able to retire anyway. But it IS possible, and NOW is really the time to start.
If you have an employer-sponsored 401k plan, that’s a great place to start. Bonus points if your employer will match any of your contributions! Even that probably isn’t enough, though. There are plenty of ways to diversify your retirement savings whether it be a 401k, IRA, or long-term investments.
Unfortunately, our generation may not have social security to rely on, so it’s important to take things into our own hands.
Maximize Your Employment Benefits:
If your employer offers benefits like a 401(k) plan and is willing to match your contribution up to a certain amount, make sure to max out that benefit. Otherwise, you’re just leaving money on the table.
Not only does this benefit you in the long run, but it also benefits you in the short term by reducing your tax burden for the year, as the money for your 401(k) comes out pre-tax.
Avoid Impulse Spending:
I used to be the worst when it comes to impulse purchases. Like, terrible.
Now I keep a minimalist wardrobe, so I’m almost never tempted to buy clothing!
However, I have had other spending temptations to deal with.
Recently, however, I’ve made a rule for myself that I don’t buy on impulse. If there’s something I want to buy, I add it to my Amazon shopping list. And then, if I find myself continuing to think about it and decide that I really need to have it, I can always go back and purchase it later.
If you’re someone who struggles with impulsive spending, set rules for yourself where you must think about each purchase you make within the next 24 hours before pulling the trigger!
Use Windfalls Wisely
Yes, it’s tempting to find something exciting to do with those windfalls like tax returns or work bonuses. But they are much better being spent on paying off debts or building your emergency fund.
And once your debt is paid off and you’ve saved a solid emergency fund, you can put them towards your financial goals like a house or retirement fund.
Unsubscribe from Sales Emails
You wouldn’t think this would make any difference, but it does! If you unsubscribe from sales emails, you won’t be tempted the next time your favourite clothing store is having a sale.
Save for the Holidays All Year Long
Most people spend quite a bit of money during the holidays but don’t prepare for it ahead of time. Ive seen a lot of people put all their holiday expenses on a credit card, and then pay interest on it for the next six months while they try to pay it off.
What if instead you put a little money every month, and then by the time the holidays arrived, you will have enough money in the bank to cover most of your costs?
Sell Unwanted Items
You most likely have a lot of items sitting in your house that you don’t use. Well, you could make money by selling those items! Just because you don’t want them anymore doesn’t mean they wouldn’t be valuable to someone else.
Ask For an Increase in Your Credit Limit
Your credit utilization, or the amount of credit you’re using compared to your credit limit, is a big part when determining your credit score.
By asking for an increase on your credit, you can decrease your credit utilization and increase your credit score.
Most people only think to ask for an increase in their credit limit when they need that extra bit of credit to buy something, but that’s the wrong time to make the decision!
Don’t Close Old Credit Cards
Like your credit utilization score, the length of your credit history also determines your credit score. The longer your good credit history, the higher your credit score.
This means that even if you aren’t using those credit cards any longer, you don’t want to close the accounts. By closing those accounts, you’re erasing years of credit history!
The only exception to this rule would be credit cards you aren’t using anymore that have a high annual fee.
Get the Right Insurance Coverage
Insurance requires an up-front cost before you can see any return on your investment. Because of that, it might be tempting to cut corners in this area. But don’t do it!
Figure out what insurance coverages are best for you to have in place and get them in place. Insurance coverage might include home insurance, medical insurance, dental insurance, and life insurance.
Avoid Bad Debt
First, let me just say that in a perfect world, debt wouldn’t be a thing most people go through at all. But let’s be real, most of us have taken out loans for college, and most of us aren’t paying for our house in cash!
Since debt are a part of our society, at the very least we can work on avoiding bad debt.
BAD DEBT
Bad debt is any debt that does not have a return on the investment.
An example of bad debt would be car loans. Many people take out loans to buy a vehicle, mostly because we want to buy something that is going to last a lengthy period. But remember that cars lose a good amount of their value as soon as you drive them off the lot. So, if you decide to borrow a ton of money so you can get a fancy car, you aren’t getting that money back.
Another example of bad debt can be personal loans. There are some situations where a personal loan can be your best option, but I also see a lot of people taking out personal loans for horrible reasons, like to pay for, vacations, and other unnecessary purchases.
GOOD DEBT
Good debt is the kind where you get a return on your investment.
For example, a business loan might be good debt. Let’s say you need a little help to get your business started, but you know you’re going to make that money back and then some.
Student loans are also seen as good debt since you’ll be using your degree to (potentially) get a good-paying job. Even though a lot of people are finding out that their college investment may not exactly pay off all the time.
Finally, real estate is a good debt. Unlike cars, real estate continues to increase it’s value, meaning you’ll get your money back and then some when you decide to sell.
Don’t Increase Your Lifestyle Costs if Your Salary Increases
If you get a raise, that’s astounding! But don’t increase your monthly costs to make up for it.
Many people will start upgrading everything their car, house even to their wardrobe when they get a raise.
However, just imagine how well you will be prepared for the future if you kept your lifestyle the same each time you got a raise?
Ask for a Lower Interest Rate
It seems simple, and it really works sometimes! Sometimes your lender might be willing to lower your interest rate for a variety of reasons.
Such an easy change to make and can make it easy to save money over the life of my student loans!
The worst that can happen is that they say no, so it never hurts to ask!
Final Thoughts
Dealing with money and budgeting can seem overwhelming to some. I know I felt that way for a while it was a huge learning curve when I decided to get serious about my finances.
By tackling the basics, you’re setting yourself up for success and can move onto the advanced personal finances when you’re ready. As with most things, it’s important to go at your own pace.
