If you search the Internet, you’ll find numerous personal finance tips available. So why is this post any different?
Well, for one this is a collection of the very best ones that beginners really need to know. I’ve seen posts with like 75+ tips and I’ve seen articles with just a handful of very general tips.
Certainly not knocking on those articles, but I wanted to write one more focused on the must-haves.
And secondly, all of these finance tips are things I started doing in late 2014 and really were key to how my financial life has changed.
How have these finance tips helped me? I self-manage my investments, have a 70%+ savings rate, improved my career worth and salary, and much more. If you are interested, you can dive into my about page here.
Ready to get started? These 29 personal finance tips below blend various categories of finances like budgeting, saving, investing, and more.
1. Create a Simple Budget
If you have not created a budget, even in a spreadsheet, DO IT. By no means am I a fan of obsessing over my budget calendar, but when you are first starting out you need to do this.
A budget gives you the big picture of how you are spending, what income you are bringing in, etc.
Visualizing and seeing these numbers can help you catch issues or make your eyes pop from some rough-looking numbers. But like I said, DON’T OBSESS OVER THIS.
To Understand Your Finances, You Have to Track Your Net Worth
Similar to a budget, it’s important you calculate your net worth, no matter how ugly it might be. The difference between this and budgeting? I actually look at my net worth monthly. It also can keep you on track and help you visualize where you are financially.
There are some cool apps and online tools to simplify this process like Mint and my favorite, Personal Capital.
2. Write Down All Your Debt
Now, your budget and net worth might give you some insight, but I like to write down all my current debt separately. Not only the total amounts, but interest rates, amount of the minimum payments, loan length, etc.
It helped me organize what should be paid first, if I should make extra payments, and beyond.
Nothing like seeing close to $50,000 in debt when you have $1,000 only in the bank, but that opened my eyes a bit more.
3. Slow Down Your Lifestyle: LBYM
LBYM, or “live below your means.”
Such a simple concept, yet most of us do not practice it well. If you have a limited salary and high debt, by no means should you be upgrading to a brand new car, getting an expensive apartment, going out to eat every day, etc.
With social media, trying to keep up with friends, and our consumer mentality, we fall into a trap of overspending on things we don’t really need to keep up appearances. It’s okay to live comfortably, but don’t live beyond your means.
4. Maximize Your Credit Score
Understanding your credit scores and credit report is another important personal finance tip for beginners. Credit Karma is free and doesn’t hurt your score to look at your reports.
But, monitoring your credit can help you catch mistakes, overdue bills, info about your loans, and just overall how your score is doing. And it can help you prevent identity theft too.
If your score is really low, start work on improving this number. It can affect you getting future car loans, mortgages, apartments, and affects what kind of interest rate you might get.
I’m not necessarily a fan of how credit report companies operate, but it’s still good to get your score above 700.
5. Create A Savings Plan (And Stick to It)
How original! I know, I know! But it needs to be said.
When just getting started with your personal finances, you need to create a savings plan and actually stick to it.
Many times you get a rhythm going, then you slowly get a little lazy. Don’t! This is how you fall back into old non-savings habits.
I used a spreadsheet that laid it all out with how much cash should be going towards savings and investments.
6. Start Paying Yourself First
This philosophy has been around for some time now, but I didn’t really come across it until reading the book Rich Dad, Poor Dad.
Sounds somewhat controversial, but having this mindset will keep you on your savings targets.
Too many times you pay everything else first (like bills), and then by end of the month, there is hardly anything for you to save.
If you reverse the roles, you are more money-conscious to pay your bills on time and reduce frivolous spending.
7. Separate Your Savings From Your Checking Account
You’d be surprised how many people do not do this. But a simple personal finance tip, move what you want to save to a separate account.
Whether that is a savings account at the same bank or a different bank where you don’t touch the money unless for emergencies.
I like the online savings builder account from CIT Bank, which can help you build an emergency fund.
8. Spend 1-3 Hours Per Week Reading About Finances
If you want to learn how to take control of your finances, you need to read.
It doesn’t matter if you choose to read books, blogs, or other well-known financial magazines. Just a few hours a week can change your financial life.
I got in this habit in late 2014 and continue this process today. You’ll be surprised at how much you learn in a short amount of time.
Related: Looking for budgeting, investing, and money tools or apps? I’ve listed some of the best ones that will help you succeed with your personal finances. Check out my recommended list here.
9. Your Financial Education is on YOU
This might be the harshest personal finance tip out of them all. But it also is the truth.
No one is generally going to hold your hand and show you how to succeed with your personal finances.
This is on you to take action and change your financial health. It will be up to you to start learning and spend time on how finances work. You can do it!
Related: Want to become more financially literate? Here are eight simple ways that you can.
10. You Need to Make More Money
We all hear about budgeting, cutting back, and be mindful of your spending. But at some point, you hit a wall. You need to increase your salary and make more money.
In your job, find ways to increase your skills, take on more, learn in your spare time. Ask for a raise, know your career worth, and hustle to get the salary you deserve. It won’t be easy, but it’s necessary.
11. Use Money and Budgeting Apps to Stay Organized
As a finance beginner and even expert, you should use some sort of money software or budgeting app. These can organize everything into one big picture for you.
Apps like Personal Capital, Mint, You Need A Budget, etc. can keep you focused on financial goals and monitor your spending
This is especially important if you need more accountability and don’t think you’ll stick to a spreadsheet.
12. Invest In Yourself Before Anything Else
Before you get crazy with investing any of your money, invest in yourself.
This can include investing in your financial education, taking classes, buying courses or books, starting a side hustle to make extra cash, etc.
The best asset you have is yourself.
13. Understand Key Investing Terms
Two important investing keywords you should live and breath is compound interest and dollar-cost averaging.
These are important to understanding how to put your money to work as well as investing for retirement.
If you are looking to understand these terms and more, then diving into these investing terms is for you.
14. Start A Side Hustle To Elevate Your Finances
Sometimes, increasing your job’s salary will be really hard or time-consuming. That’s okay, you can start a side hustle.
Many side hustles can also take time, but there are plenty that you can quickly start doing.
Think thrift store flipping, selling things on eBay, cutting grass, delivering groceries, etc. Whatever it is, this extra cash can help you save more and pay the debt down faster.
15. Invest in Assets, Not Liabilities
This is probably confusing to most people, but you must know the difference between assets and liabilities.
Generally, what we were taught or think are assets, actually can be liabilities in some cases. It’s important to understand these when it comes to investing. This short video from Robert Kiyosaki explains it:
16. Don’t Compare Yourself To Others Financially
We get too wrapped up in comparing our own financial status to those around us. Whether friends, family, or others in our age group.
We all have different situations and not everything you see is as glamorous below the surface. Don’t compare yourself to others. Stay focused on your progress and don’t worry about the Joneses.
17. Understand How Credit Cards Work
Building good credit and using credit cards is important. But it’s more important to understand how they work and ensure you don’t go into debt.
Quickly, you can find yourself in credit card debt with insane interest rates. It can happen much easier than you think. Learn more about using credit cards and debit cards here.
18. Avoid Complacency in Your Career, Know Your Worth
If you are in a career slump or feel like it’s going no where then take action. It’s easy to complain and be complacent with mediocrity.
I ran into this issue and felt that way for three years before I was laid off. You leave money, happiness, and professional growth on the table. Don’t wait to make changes.
19. Lose the, “Worry About It Later” Mentality
With investing and saving for retirement, you can miss years of compound interest, costing you thousands of dollars and years off your retirement.
The later you start, the more you have to save, and the more you hope you are prepared. This applies to anything money-related. Just start ASAP.
20. Re-Evaluate Your Personal Finance Goals
Out of all the personal finance tips here, one that should stick to your mind is to re-evaluate your goals.
Something you started doing in personal finances before, might be different from where you are a year later. It might also be the same still too.
Either way, it’s important to look at your financial goals, what you accomplished, or where life is taking you. Don’t get complacent or let your financial motivation slip through the cracks.
21. Learn Your Investing Options Outside of the Stock Market
When it comes to investing, most people look to the stock market for their retirement plan. While a 401k or IRA is a great place for your retirement to grow, you have more options to diversify and build wealth.
Once you have a good foundation look into other areas to diversify like real estate, art, businesses, peer-to-peer lending, etc.
Remember, always do your research before investing money. Here is a list of some alternative investments you might want to consider.
22. Don’t Immediately Purchase Something, Sleep On It
Cutting back on expenses is, of course, a great way to save money. But I think the challenge is when we see something we want, we buy it.
Even if we don’t necessarily need it, we just feel a desire to have it.
A simple way to solve this is always to sleep on that purchase or wait a few days. Most likely, the next day or after that waiting period, you’ll realize you don’t need it and it makes your pockets happy.
You can also try the 30-Day Rule for larger purchases, which forces you to wait a month to evaluate your decision.
23. Treat Yourself Wisely, Buy Experiences Over Materials
Spending some money on yourself is totally fine. I’ve never fully believed in extreme frugality and treating yourself can feel great.
But instead of buying material things that only provide temporary happiness, spend it on experiences instead. Like traveling and other adventures that will create lifetime memories.
24. Don’t Increase Your Lifestyle Too Much
Most people get small raises yearly, probably not enough to really impact your lifestyle.
But let’s say you got a nice raise or a new job with a significant increase in pay. Many start upgrading their cars, houses, or other expensive things.
It’s okay to upgrade a bit but use this opportunity to be wise and kick your debt to the curb, increase savings, or invest in retirement. Avoid lifestyle inflation.
25. Don’t Be Afraid to Discuss Finances with Your Significant Other or Kids
Money and finances are a tricky thing to discuss with your significant other or kids.
But the more open and honest you can be, the more you’ll learn to not be afraid of your finances. It’s a great way to learn, work together, and encourage open communication.
26. Pay Attention To Fees When Investing
Things like account maintenance fees, index funds or mutual funds management fees, rollover fees, etc.
All financial institutions have some fees on their funds and accounts, your job is to eliminate ones with the highest fees. Because over time, those kill your returns and investments.
I recommend checking out Blooom if you have a 401k account. You can get a free 401k or IRA portfolio analysis with recommendations, as well as uncover hidden fees you might be paying. Get started for free here.
27. Learn How to Be Frugal, Not Cheap
Why I’m not a huge frugal person, it’s good to understand what this means. It also carries a big difference from being cheap.
Being a cheap person is about spending less no matter what and focusing on how to always pinch pennies. Where being frugal is about prioritizing your spending, so you have more of the things that matter or what is most important.
28. Don’t Ignore Understanding Life Insurance
Ah, yes life insurance. Think it’s a waste of money? In some instances it can be if you don’t do your research, but it really is important for protecting your family if the unexpected would happen.
While not always commonly talked about in the personal finance community, life insurance is something you should learn about and understand early on.
Since we live in a digital age, new life insurance providers are removing the negative stigma about insurance while continuing to provide financial value. One I recommend checking out is Bestow.
The company provides a lot of helpful resources, while making it easy to understand the benefits and get an affordable plan. They have a convenient process that’s 100% online and provides a policy instantly, if approved. Grab your free quote here.
29. Take A Deep Breath, And Go At Your Own Pace
There are a lot of solid financial tips on this list. Don’t get overwhelmed, take a deep breath, and work at your own pace!
It may seem confusing, but the material is much easy when you set a pace. Don’t rush the process, your finances will thank you.
I hope these 29 personal finance tips will help you on your journey! And if you already learning more, I recommend reading these personal finance books.What do you think? Are there other important personal finances tips you’ve learned as well? Let me know in the comments below.