Managing your money isn’t always a fun activity, especially when your friends are begging you to go out on the weekend or the latest tech gadget you’ve had your eyes on hits the market. Spending your money can be very tempting, and can lead to poor financial choices. However, there are plenty of ways you can manage your money wisely, while still enjoying life’s simple pleasures.
Below, we’ll break down our top personal finance tips into three categories: the basics, budgeting, and saving. You can read through to view our financial tips to help you get your finances in order, or use the links to jump to a category of your choosing.
No matter who you are, there are certain financial advice basics you should follow. Doing so can help ensure you keep your personal finances in good health. Once you have the basics down, managing your finances can become much easier. Then, you can move onto some of my more comprehensive money management tips.
1. Buy the Right Insurance
Insurance can be great in unfortunate events, whether a natural disaster tears off your roof or you get in a car accident. However, too many people are often roped into insurance plans that cost too much.
You should also consider insuring against financial disasters, not just annoyances. Buy renters or homeowner’s insurance, car insurance, disability insurance, and health insurance.
By the same token, you might want to steer clear of extended warranties, smartphone insurance, travel insurance, or payment protection plans, as these might not always be necessary and can cost you a lot of money.
2. Use Your Credit Card Wisely
Credit cards are useful but can be dangerous — kind of like power tools. Using them frequently can make it more likely that you’ll cut your thumb off, so to speak. A lot of sad stories begin, “I always paid off my credit card every month, until…”
How you can use your credit card wisely:
Preserving your credit score is important, as it’s used for a variety of financial matters, such as taking out a mortgage or applying for an auto loan.
Credit scores are simpler than you think. If you pay your bills on time, more than likely, you’ll have a good credit score. If you don’t, you won’t.
Taxes either come around once a year or quarterly, depending on your occupation. With that said, make sure you have a financial calendar that reminds you when to pay or file your taxes.
How can you save on your taxes?
One piece of financial advice for saving on taxes is to contribute to your 401(k) or other retirement plans. Clever tax-avoidance schemes are often illegal, so make sure you’re honest and make legal choices that can save you money.
If you always hire someone to do your taxes, try doing it yourself (or use tax software) once. If you always do it yourself, try hiring someone. Either way, you might save money or learn something.
4. Keep Track of Interest Rates
With almost any financial move you make, interest rates will follow. Credit cards, student loans, mortgages, savings accounts—these are just some of the types of loans, debts, and financial accounts you’ll have that come with an interest rate.
Why is it important to keep an eye on interest rates?
Knowing the interest rates on these various types of accounts is essential because you might be spending more or earning less on your various debts and savings commitments. It’s best to keep an eye out on your interest rates, so you know what accounts to focus on.
Student loans are awful.
What do you need to know about college debt?
Traditional four-year colleges are often unaffordable without taking on massive debt—and don’t necessarily provide a better education.
What can you do to prepare?
If you’re a middle-class family, it might be worth considering sending your kids to a community college, in-state public university, military academy, or elite private college. This way, they won’t take on as much in student loans that can take decades to pay off.
When should you start saving?
Retirement savings come before college savings. If you can’t afford to save for your kid’s college, don’t make it a priority quite yet. Even if you can’t afford to save now, open a 529 college savings plan for grandparents or other family members to contribute to.
6. Carefully Plan When Buying a House
Aggressively paying down a mortgage is another important personal finance tip worth considering.
The best measure of your readiness to buy a house is the size of your down payment. Be wary of making a down payment under 20%, even through a government loan program.
Stretching to buy more house than you can afford can often lead to painful and avoidable financial misery.
7. Take Advantage of Budgeting Resources
You don’t have to go at budgeting alone. Carefully tracking your finances without any help can be overwhelming and stressful. Fortunately, there are plenty of resources out there that can help you track your income and expenses and make smart financial moves.
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