10 Personal Finance Tips for Financial Achievement
Financial freedom is a common goal shared by the ambitious. This is dreaming of a wealth status before or during your retirement age. I say it’s a dream, because nothing really happens without execution. Since wealth is not about money alone, Personal finance tips you gather along the way will give you a 360 degree prosperous life. Your family, friends, and pets are even included in the goal for total independence.
Below I’ve listed 10 personal finance tips, ideas and strong points that you can take action upon. This will get you closer and closer to the finish line once you adapt it has a regular habit. The bane of the achievement lies in the cultivation of each.
1. Budgeting
Budgeting is key for organizing and managing your after-tax income each month. A simple but yet powerful budgeting tool is the 50-30-20 budget rule that simplifies the process with only a focus on the 3 main parts of money management. Namely, Your Needs (50%), Your Wants (30%), and Your Savings (20%). These allocations will keep things in check. It’s one of the many personal finance tips that are indispensable to your financial achievement.
2. Buying and Owning Assets
Buying and owning an asset will set you up to receive cash flows periodically. One of many personal finance tips that will help you build your investment nest egg. As there are different asset classes with each having its own risk factor attached. You can invest in real estate, stocks, bonds, treasury bills, and metals. These metals may include gold and silver as commodities or Exchange Traded Funds (ETFs.)
But if you want yields that are higher, such as individual stocks, you must be ready to take on more risk. But lower risk investments like certificates of deposits (CDs) will give you lower yields. Risks in owning high yield investments can be curtailed by using diversification. Also, the practice of due diligence will help you weed out the bad nuts.
3. Marrying Right
Marrying the right spouse counts. One of the more controversial personal finance tips out there I suppose. If we are not marrying for money, then why should this factor be important? When considering personal financial achievement, we leave no stone unturned.
In the best case scenario, you’ll have a life partner who would be supportive in your goals and ambitions. Their financial habits will complement yours. This will help you grow an investment nest egg. It doesn’t even matter if you have an arrangement to do joint investment accounts. Each spouse could run their own show. Perhaps having a joint emergency fund can prove useful with combined contributions.
You wouldn’t want your spouse to pull down what you’re trying to build up. Or worse still, take a lion’s share in a divorce settlement someday. However, two money mindsets that think alike are better. Each having their own investments is okay. Then using a general joint bank account for household expenses and insurance premiums is the way to go.
4. Paying Off Debt
Paying off debt will put the operation of compound interest in your favor. If you are living with credit card debt, car loans, and student loans; you will give the bank more advantage over your money. As you budget accordingly at the end of each pay check, allocate funds for debt servicing.
Should you repay outstanding debts according to the size of the debt, or interest rate? Many personal finance tips out there will suggest the debt snowball method. But what really counts is the momentum of elimination not the style. Secondly, cultivate repentance. This will ensure you don’t return to the debt trap ever again to fund your consumption.
5. Investing In Yourself
Investing in you is the smartest way to attain financial independence. This may entail, upgrading your education up another notch. It can be done through the formal path, online courses, or self paced routes. You can get personal finance tips by watching YouTube videos, and reading books.
The key is to acquire skills you can immediately take action on. The end result should be a larger earning capacity to help you build your investments faster. The second phase of your personal finance literacy is to learn how to manage money and investments.
6. Avoiding Lifestyle Creep
The best way to avoid lifestyle creep is to avoid crossing path with the Joneses. Be aware that bad company corrupts great financial habits. Live by the eternal mantra “live below your means”. Even if this means living on rice and beans.
When you income goes up a notch, increase your savings rate by another notch. Invest more money at the end of each month to avoid cash glut. The idea of disposable income is term attached to consumerism. Why take excess income to upgrade a smart phone that is working ok? You could instead own a slice of equity in that phone company.
Seriously, you can adjust your spending, and still live a meaningful life. Saving 10% to 20% of your income can help you arrive at the gates of financial freedom. Among all the personal finance tips you will hear, this is by far the most important.
7. Cutting Unnecessary Expenses
Cutting unnecessary expenses will had another mile to your financial momentum. The little cash adds up if you do the arithmetic. You may not see it today, but years of saving on cable, eating out, and other entertainment expenses will save you 5 to 6 figures. Frugality also fosters the discipline of sticking to your shopping list.
These funds should be used for investing in the long-term to grow your investments. But don’t cut expenses in one area and then splurge in the other. Be a generalist in your cost cutting measures. Think about your goals. Set the game straight and fight the demon of instant gratification.
8. Investing 20% of Your Income
Invest a small portion of your income. That’s all you need to set the ball of wealth rolling. A 10% allocation is fair but 20% is even better. This accelerates the process faster. You put the law of compound interest on steroids when you go big.
Try throwing 50% to 100% of financial windfalls in investments when they arrive. Early retirement would become a reality with much consistency in your investing. These are personal finance tips that support the law of compound interest.
You will achieve financial freedom quicker if you increase your savings rate. You should also up your investing rate. The factor of rate of growth is then left in the hands of the financial system. You will succeed if you do your part.
9. Hang Out with People with Money Mindsets
If you want to attain the fortunes and affluence of millionaires, roll with right crew. Connect with people who have already arrived, or are headed in the same direction at you. This is true because your money mindsets will rub off each other.
You will generally have conversations that promote wealth generation more often than. This is a law that is as powerful today as it was written in the book, Think and Grow Rich – by Napoleon Hill. Your Mastermind group will frequently share personal finance tips that work.
10. Creating Multiple Streams of Income
Create multiple streams of income for yourself and your family. This practice ensures that, you will have more money to fund all the different areas of your budget, more especially the investing component. When you have several income streams, you will have a financial cushion. You will survived temporal economic downturns, as well as the loss of one or more of your current income streams.
You can have a side hustle that is low-key. Building an extra stream of income could lead to a big discovery of your latent talents. Starting a blog, flipping domains, drop-shipping, freelance – and a whole bunch of income making ideas are available to start today for next to nothing.
A Few Parting Words
The best way to achieve money mastery is by discovering personal finance tips and ideas. These are a set of actionable values you can live by every day. Its takes a daily habit forming regiment to keep the process alive. Don’t worry if some of these financial freedom tips are forgotten along the way. Life requires only a mastery of the few.
Pass your comments below and add to my list. I’ll consider adding them to this post in my next update.
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