5 Personal Finance Tips and Tricks to Make You Rich
When you read a lot of finance books & blogs, you come across a ton of different personal finance tips and tricks. This can make personal finance seem like a massive, overwhelming, and complicated topic, but it’s really not.
It’s so simple that I’ve broken down the personal finance basics into just 12 quick points. If you live by these 12 pieces of financial advice, you’ll have more control over your money, and you’ll live a much better life financially.
Keep in mind:
This won’t be easy.
Although there are only 12 tips, if you’re not already doing these things it’s going to take time to build up these new habits. Simply reading these 12 personal finance tips and then closing this page is not going to help you. You need to put in some more effort than that.
If it helps, bookmark this post or pin it on Pinterest, and then re-visit it every day. Or, write these tips down and stick them somewhere you’ll see them.
1. Spend Less Than You Earn
Yeah, yeah, I know, it sounds obvious, right? Well, it must not be because according to CNBC, 78% of Americans working full-time are living paycheck to paycheck.
Here’s the thing:
It’s easy to KNOW that you should be spending less than you earn, it’s a lot harder to actually do it.
However, if you want to escape the paycheck-to-paycheck lifestyle that so many others live, you need to spend less than you earn. This is one of the most crucial but basic personal finance tips ever.
In order to do this, you need to track your spending. You can do this by either writing your purchases down or by using a free personal finance app.
Related: How to Stop Wasting Money
2. Learn to Budget
You might hear the word “budget” and cringe a little, but you shouldn’t. Budgeting is not hard, and it doesn’t mean you have to stop doing things you enjoy.
Budgeting is simply creating a plan for your money so you have a better idea of where it’s going every month.
A popular and effective way to budget is with the 50/30/20 rule.
How it works is 50% of your income goes towards the necessities (bills, food, housing, etc.), 20% of your income goes towards savings and the remaining 30% you can use for whatever you please.
This is a nice and easy way to break down your paycheck, but you might need to adjust it a bit to fit your lifestyle.
Related: How to Start a Budget in 6-Steps
3. Break Down Your Income & Expenses
Credit for this one goes to user GeekLimit on Reddit – one of my favorite personal finance tips!
This is an odd little trick that can change the perspective you have about your money, and help you budget better.
It’s all about breaking your income and expenses down into daily values, like this:
You make $2,500/month = ~$83/day.
You pay $800/month for rent = ~$27/day.
You pay $200/month for car insurance = ~$7/day
Everything else (food, phone, gas, etc.) comes to $750/month = ~$25/day
That means you’re left with $24/day in spending money.
Want to save $1,000 for a nice vacation? You’ll have to save about 42 days worth of your spending money. That means 42 days of not spending a dime.
Want to buy a new $10,000 car? That’s about 416 days worth of your spending money.
This will help you see how far purchases are going to set you back and affect your spending ability.
4. Pay Yourself First
This personal finance tip is another common one that can have a huge impact on your finances. When you pay yourself first, you’re investing in your financial future; you’re investing in future you, and future you will thank present you for doing so.
So, why not just pay yourself at the end of the month? That’s a lot easier, right?
Well, the reason why paying yourself first works so well is that once that money is sent to a savings account, you’re a lot less likely to spend it. If you wait until the end of the month to pay yourself, you might not have any money left!
Future you will be very sad with no money. Make future you happy by investing in yourself!
PS. The best way to pay yourself first is to do it automatically. Set up an auto-deposit with WealthSimple and you’ll never have to think about saving money again – it will just happen.
5. Have Financial Goals
If you want to accomplish financial goals, you need to figure out what goals are important to you first. Having a clear goal can keep you motivated and help you come up with a plan to reach that goal even faster.
Now, don’t think that you need to set outrageous goals. If this is your first time thinking about personal financial goals, start off small and work your way up from there.
I’d suggest coming up with a few different goals in each of these categories:
What you want to achieve in the next 3-months
In the next year
In the next five years
This way you’ll have some short-term goals to look forward too, and some long-term goals to work towards as well. Your short-term goals may even be small stepping stones towards your bigger goals.
Here are some examples of good financial goals:
Buy a house
So, remember to set long-term and short-term goals, and keep track of them too! Write them down somewhere and set a day each month to track your progress.