Personal financing is necessary for everyone.
It does not matter how much money is being brought in or how much you are spending on a monthly basis. Without a good understanding of your finances, a wrong decision could become costly and lead to severe consequences.
Many people continue to do the bare minimum when it comes to their personal finances, and that is not sufficient.
So, what should be looked at for those who are in this boat? Let’s take a look at the five top personal finance tips to consider in this day and age.
1) Keep An Eye On Net Worth
You want to keep an eye towards your net worth. What is this amount all about? Your net worth is the difference between your assets and your debt. You want to keep this figure in mind as you are making decisions. Your net worth is important and will matter a lot.
Too many people think terms such as these are reserved for those who are millionaires, but that is untrue.
It is a term that everyone should be incorporating into their personal finances because it does matter. You have to look into these things as you move forward.
2) Set Money-Based Goals
Do you have goals in mind? It is not about goals away from your money, but what you are going to be adding up towards. Do you want to get a new house? Do you want to get a new car? Do you want to pay off student loans? You want to have goals and then set a specific percentage that is pushed towards this.
It is the best way to keep yourself focused.
Too many people think they will save, but then realize they are not doing anything at all. You want to have these goals to keep you on the right path as you move forward.
3) 20% Of All Income (Post-Tax) Should Go To Debt And Savings
When it comes to the five top personal finance tips, this is an important one according to experts. The goal is to take 20% of what you are bringing home and put it towards debt. This should immediately be pushed aside without even thinking about spending it.
What if you don’t need all 20% to pay off your bills?
The rest of the amount that you have should be pushed towards your emergency fund. Leave this aside and forget it is there.
4) Pay Loans Based On Interest Rate
The interest rate is going to matter when it comes to your debt. Which bill has the highest interest rate? Let’s say you are dealing with a credit card that is set at 29% and mortgage that is set at 2.4%. You will want to pay the mortgage, but look to put a huge dent in the credit card expense.
The reason is a 29% interest rate is going to pile up and add a lot on top of your balance. You want to eat into this as soon as you can.
Do not continue to evenly divide what you are paying for each bill as some people do. You also don’t want to get stuck in the “minimum payment” cycle for too long. Start getting into that balance.
5) Set Budget And Stick To It
This is the simplest and most important tip of them all. You are not going to see success if you are regularly doing as you wish. A budget has to be structured around your life to make sure the right decisions are being made. You might not be a fan of those decisions at times, but they have to be made.
You need some form of control, or reckless spending can quickly become an issue.
These are the five top personal finance tips for those who are looking to save money and make proper decisions in this day and age. It doesn’t matter what you are bringing home at the end of the week because as long as you are budgeting, you will be okay.
A good understanding of your finances is a must because it will keep you safe and ensure you don’t get stuck in a pickle as so many people tend to do.
Google Finance – https://www.google.com/finance
The Financial Times – https://www.ft.com/