Struggling with your current financial situation to save even a penny? And the worst part is you don’t even know where the money goes at the end of the month. So, it’s high time you change your habits and follow some personal financial management tips. When you search the internet, you would get a million options to choose from and this becomes a challenge! To make it easy for you, we have made this guide which states the 3-important personal financial management tips.
We share with you 3 personal financial management tips starting from the basics of financial management to the boosting up your income and finally get started with saving money.
Here are the top 3 Personal financial management tips for you:
Let’s start with some basics in personal financial management
Personal financial management is all about being organized with your finances. You should have the details of your expenses, income, taxes, bills etc. The basics of personal financial management tips include:
Organise your dates with a financial calendar
A financial calendar is a useful tool when it comes to tracking appointments, deadlines for taxes or bills etc. There are lots of apps as well which makes it even easier to track the dates.
Know your net-worth
To know where you financially stand at this moment, you need to know the difference between your assets and debts, or in short, your net-worth. This figure will comprehend if you’re financially progressing or lagging.
Track the interest rates for the debts, savings account etc.
It’s important to keep a check on the interest rates is it for choosing the savings account or to clear off debts. You must start with the debts with higher interest rates to be clear first. On the other hand, look at the banks that offer better interest rates before you decide on the savings account.
Make your savings worth and how you can boost it
Lets workout on the numbers:
20% – Allocate 20% of your income towards your financial priorities (savings or emergency fund)
30% – About 30% goes on your lifestyle spending (anything except the essentials)
50% – This accounts for the utilities, bills, rentals and the other mandates.
Set financial goals with a timeline
You must be thinking why I need goals when I can just put my money into a savings account and simply save. Financial goals give you a clear picture of how much you need to save and what for. You can divide your financial goals into short-term and long-term goals. For instance, saving for retirement can be your long-term goal and save for a car repair can be a short-term goal.
Know how budgeting can kick-off your financial goals
A budget is an essential step to chase your financial goals. Fix an amount for each financial goal and try contributing towards each based on the priorities. Switch to cash-week and fix an amount to spend for the week, see how it works for you. This will put an end to over-spending temptation.
Look for alternate career options
Turn your hobbies into money by simply sharing your knowledge, selling art etc. It’s a way to boost your savings.
Clear off your old debts
If you wish to financially secure in the future, then the first step is to get rid of your debts asap.
Spend on your needs than on your wants
Understand your needs and wants, and spend wisely on the needs.
Start saving for retirement asap
Never wait for the right time to save for your retirement. Start soon if you want to have a relaxed retirement phase.
Know your retirement saving options
Understand how 401(k), IRA accounts work and enjoy the benefits.
How right moves can change your financial future
Use your credit card wisely
Your credit score plays an important role in fetching your loans. One secret is to keep your credit use less than 30% of your total credit limit available. Pay off your credit card bills on time to have a good credit score.
Look for proper insurance coverage on top of your company’s policy
Most of the policies offered by your company will not have enough coverage so it’s better to be prepared for the worst and go for additional insurance.
Add savings as a category to your monthly budget
Once you cultivate the habit of contributing towards your savings every month, you will not have the temptation to over-spend. You can even switch to automatic saving from your checking account to savings account.
Learning from the basics is good, but unless you try it you will never see how it works for you. Once you have read the 3personal financial management tips, it’s essential to start following it. If you feel it’s too hard to start all at a time, then start with a few and see the difference.
James Paul is a financial blogger who writes about financial wellness topics and the integration of money matters into life. His personal finance blog helps people optimize their finances and tackle money management.