6 Best Personal Finance Tips for Beginners and Beyond
“You’re only poor if you give up. The most important thing is that you did something. Most people only talk and dream of getting rich. You’ve done something.”
― Robert T. Kiyosaki, Rich Dad, Poor Dad
Who else knows better about finances other than Robert T. Kiyosaki?
Not every financial expert gives you the best advices, but those who do are the real gems.
Now, don’t think that I am bragging about it, but yes, after dealing with a lot of troubles, I now have learned to pay attention to personal finances.
Personal finance refers to the principles used to manage your money and financial affairs. It is about meeting your financial needs and goals in the shape of saving for your kid’s education, planning for retirement, or managing other short-term financial needs.
There is a plethora of finance wisdom available on the web, but the field can be quite confusing for beginners who are still learning the basics of personal finance.
It has proven to be a sore spot for many beginners, especially in times when they want to finalize their strategies.
Statistics related to financial issues continue to be alarming, with less than 40 percent of employees feeling in control of their finances.
Research also reveals that 19 percent of US citizens do not have any savings for unexpected emergencies.
In order to make the most of your savings, it is vital to become financially literate so that you can make savvy decisions.
I have learned the hard way, but I don’t want you to.
In this blog, we will discuss the best financial tips and practices that will set you on the road to financial success.
It will also help beginners avoid the common mistakes that keep many of us confused and frustrated. Let’s get started.
1.Make a Budget
Almost all the finance experts will advise you to create a basic budget.
Budgeting helps you:
- Create a spending plan
- It ensures that you always have money for your basic necessities.
- It provides a clear vision of your financial position and puts you in control of your money.
Although it requires some time and effort initially, the advantages always outdo the efforts.
When devising a budget, take a look at your income, your essential and non-essential expenses and make adjustments in them to achieve your financial goals.
Whether you use an expensive accounting software or a simple Excel spreadsheet for budgeting, make sure that you use it only as a map for your spending.
2.Keep an Eye on the Expenses
An essential step in balancing your budget is to keep track of where your money is going. You may be surprised to know the amount of extra money going into trivial things that can be saved. The money outflow is not always obvious, but a few simple steps can help you reduce the extra costs.
- List all your monthly utility bills
- Note down the money you spend on fuel, groceries, meals, entertainment, etc. in a small notebook
- Review special expenses like education, travel, home improvement, and furniture, etc. to plan better for emergencies in the future
- Develop the habit of envelope system wherein you stuff various envelopes with cash and dedicate each to a particular category
- Review the electronic records of your payment cards each week and input the records in a notebook or spreadsheet
Tracking your expenses can be a hassle, but logging all your transactions will help you become more conscious about your spending patterns and habits.
3.Don’t Be Afraid to Take Risks
When you are young, you can afford to take bigger risks.
Even if things do not work out initially as planned, you have the time and energy to amend them or return them into the desired status.
Bigger risks may cost you some hard-earned money, but it is always better to take risks than doing nothing.
However, before you take the plunge, it is crucial to educate yourself and secure your future.
his is the best way to make smart decisions and translate the risks into higher returns.
There is also the learning factor involved as you make mistakes along the way.
You not only increase your knowledge about the trends in the market but also discover your maximum potential.
4.Pay off Your Debts Every Month
There are always times in life when you can’t help but take a debt (including credit card debts) to meet your financial needs.
In such cases, it is necessary to make a debt plan and pay them off on time because the mounting interest rates will hamper your growth in the long run.
Most of the millennials and younger generation easily get these cards by merely submitting a Master or Visa credit card application because it makes transactions much more convenient. But it can also result in thoughtless spending.
With every whip of the card for a purchase, it is actual money that we are dealing with.
In the end, we pay much more than what we would have paid at the time of purchase.
5.Save for the Rainy Days
To gain financial freedom, it is absolutely necessary that you develop the habit of saving a portion of your money, albeit a small one.
Once you create the practice of saving money, you will have the embraced the pattern to save more substantial amounts once you start making more money.
It is pertinent to mention that even if you have saving account in place, make sure to check the interest rate on your account.
Some accounts have rates lower than 1 percent, which makes the growth hardly noticeable.
Accounts with a decent rate will earn you hundreds of thousands of dollars in a few years without you doing anything.
It is prudent to buy health and disability insurance when you are healthy and young because the premiums in this age are affordable.
So, if your circumstances change dramatically, you can take advantage of the insurance plan that you bought when you were young.
The insurance policies will not only protect you but also your dependents in case of an unfortunate event.
The Bottom Line on Personal Finance to Beginners:
Beginners often ignore asking for advice or expert opinion before they finalize their choices.
It’s wise to get in touch with the people you trust and search credible sources of information to avoid any hiccups.Expert advice together with the top 6 tips is a surefire way to your financial success.
Evie Harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter:@iamevieharrison
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