5 personal Finance Tips and Tricks to Make You Rich
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-tim0e 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.
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 50/30/20rule. 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.
3. 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!
4. 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:
- Save $1,000
- Buy a house
- Start investing
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.
5. A Credit Card is Not Free Money
A credit card is a useful tool in your finance toolkit, but it's not free money.
When you purchase something with your credit card, you are borrowing money from the bank. If you don't give that money back in time, the bank is going to start charging interest on your balance.
This debt can build up and become a monster if you don't pay off your balance every month.
However, if you use a credit card responsibly and pay off the balance every month, it's a good way to start building credit. Most credit cards also have other benefits such as rewards points, cash back, or travel points.
So, should you have a credit card? Well, it depends.
If you're capable of paying off the balance in full every month, then you should have no problem managing a credit card and staying out of debt.