Well, personal finance plays a very crucial role in the life of every individual. But, unfortunately it hasn’t yet been included in the high school or college course. So, obviously a lot of people are quite confused about managing their finances and often get overwhelmed with the excessive expenditure. So, the ultimate result that follows is a never ending stress and financial pressure. Well, there is nothing to worry about because this post is going to clear your mind and provide you with the best tips to manage the personal finance.
Wouldn’t it be magical if there was a simple formula that would solve all the problems at one go? But, unfortunately it is not going to be that easy. So, without a further ado let us dive into the world of some financial basic, alright?
Dive into basics
- Craft your very own personalised financial calendar:
Well, this would be quite easy and very similar to fixing medical appointments, right? All you have to do is set reminders for paying the instalments as well as taxes on time so that you do not miss any which would obviously save you from a lot of trouble in future.
- Track your net worth:
This is a very critical step and you have to focus while carrying it out. It’s very important that you exclude a certain amount of money which you might have to repay back or those debt taxes that you need to give to people.it is basically the difference between your debts and your assets. Keeping a track about your net worth will help you as a reminder when you are moving the positive way and it will also warn you in case you are backsliding into more debt!
- Learn self-control:
We all are greedy and there is nothing to do about it because after all we are all human-beings, right? But, a certain boundaries should be set-up that would limit you from going that extravagant mile. It is high time that you learn the fine art of delaying gratification, the sooner you’ll find it, the easier it will be to maintain and manage your personal finances. Well, it will be easier to control your expenditure once you get hold of budgets!
- Keep a check on your interest rate:
This is crucial for people who have to repay their debts. So, make a note of that loan which has the highest interest rate, your first goal would be to repay it back as soon as possible. Is that clear? Next you must open a savings account which offers the best interest rates. Avoid credit debts because they deal with compound interest which is simply going to mind-boggle you.
Now, let us move on to the next big step which is budgeting because this is one of the most important steps for managing your personal finance. Without a plan nothing is going to work ever.
BUDGETING like a pro!
You must remember that once you are done with your budget plan half your battle is already one. Well, monthly budgeting can be quite overwhelming but a step-by-step guide will help you to be more confident while managing your personal finances.
- Set a budget for you financial year because this is going to be your greatest tool to attain a financial stability successfully. It will allow you to create a spending plan that will allocate your money in such a way so that you can reach your financial goal.
Well, one can make a budget as elaborate or detailed as they prefer. But, they should remember that the main focus should be to help them to reach the ultimate goal. Are you wondering what the ultimate goal is? Remember this mantra to always spend less than what you earn, paying off any debts, securing your emergency fund, and most importantly saving for the future.
Another importance of crafting your budget is that it will also help you to decide how to spend your money over the coming months to achieve your short-term financial goals. Without the budget, you might end up spending your cash on things that seem important now, but don’t hold much value in terms of enhancing your future.
- Take a sixty-second money check daily:
Does it sound very tricky or complicated? Well, trust me it isn’t at all! Now, this idea comes from the CEO and founder of LearnVest, Alexa von Tobel, who swears by setting aside one minute each day to check on her financial transactions and never fails to do so. This daily minute check will not only help you to identify you financial mistakes immediately, but will also help you to keep a track of your goal progress in terms of savings and transactions.
- Understand your financial priorities and allocate 20% of your income to that. Do you understand priorities? Well, in terms of personal finance it would be paying off debts, securing a specific amount for emergency fund, and tiny-winy savings for making your retirement enjoyable.
Another important thing to keep you motivated is to celebrate small victories along the way. For example, congratulate yourself once you pay off your debt, or reward yourself when you are able to stick to your budget for four months at a stretch, or when you secure money for padding your emergency fund.
- Now, incorporate 30% of your income for lifestyle spending which will include movies, dining out at fine restaurants, happy hours and everything which is not included in the basic necessities. So if you follow this 30% rule then you will not only save but also will be able to splurge at the same time.
- It is time to consider your all-cash diet: This is crucial in case you want to put a stop on your extravagant buys and expenditure. Well, trust me it is going to change your lives once you switch to the all-cash method.
Take control of your financial future
A lot of us usually depend on brokers and financial experts for managing our personal finances. But, that shouldn’t be the case. Instead of relying on others for advice, it is time to take charge and you must start now. Invest on a few basic books on personal finance because that is what’s going to help.
So, sit down, relax and take a look at some information wherever you get hold of it. Moreover, once you’re armed with personal finance knowledge, nobody will be able to catch you off guard – whether it’s a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. It is going to simplify your life and give you a strong hold on managing your personal finances.
Build and track your credits
To track your credit it is crucial to have a credit report and review it from time to time. Do you have an idea about your credit use? It is your credit utilization rate, which you may calculate by dividing the total amount on all of your credit cards by your total available credit. Most importantly you must make a note that if you’re using more than 30% of your available credit, it needs to be cut down immediately or else you will get stuck in the debt cycle and your future might be in the shadows of stress.
Time for some money-saving motivation
Well, here are some amazing financial tips which will help you to manage your personal finances easily. These quick tips might just help you to get a head start while managing your personal finances:
- Adopt a spending mantra
- Draft a financial vision board
- Set your specific financial goals
- Go for short-term money goals because they are easy to achieve and reap quicker results which will boost up your confidence.
- Get your finances in shape by shaping up your body because studies have shown that a person who works out tends to be more responsible towards their finance management.
- Stop being greedy and adopt a more need-based shopping agenda
- Learn how to savour because appreciating what you have can put a stop to your extravagant shopping spree.
- Pay-off your debts and start by taking small debts which are easy to re-pay and do not miss out on instalments.
- You must opt for mortgage payments that contribute to less than 28% of your monthly income.
- Shop solo and control your expenditure.
- Always keep your savings account separate from you salary account.
- Try to do a direct deposit for your savings account, because that will be almost like magic and you want have to worry about missing out on that part.
- Try to rebalance your portfolio annually.
- Get insurance on top of your company’s policy. Moreover, you should also get renters insurance; that would really help to manage your personal finances.
- Most importantly, starting saving ASAP!
Manage your personal finance in a tech-savvy way
Well, this is the era of technology and out there is a plethora of apps for budgeting, saving as well as managing your personal finances. Here is a list of the best apps for managing your personal finances:
The best app for clearing your debts and making your financial calendar: “YOU NEED A BUDGET” is one of the most brilliant apps that I have ever come across and it will basically force to live within your income. According to the developer, it’s built around a fairly simple principle, “Every dollar has a “job” in your personal budget, be it for investment, for debt repayment or to cover living expenses.” You Need A Budget (YNAB) app are crafted in a way so that you can understand what you can do differently to balance your expenses and your savings!
Now, this is specifically for those people who are looking forward to manage their money at an amateur level. This is a free app developed by, the popular developers of Quick Box and TurboTax, Intuit Inc. as an all-in-one resource app for creating budgets, tracking your expenses as well as those stressful monthly bills. It will let you know when your bills are due, what you owe, and how much you can afford to spend. The best feature is that it will provide you with an all-credit score.
This totally free app is for those people who would love to manage their personal finances and keep them organised just as they do with their official expenses. So, all in all Wally is a clean, streamlined app that’s extremely convenient and easy to use. It’s a great choice if you’d like more insight into where your money is going. Moreover, the most attractive feature of this app is that you can upload your receipts so you don’t have to type anymore.
It is the best app for people who are looking for investments. The app has specific features and it basically makes money by upselling premium services like margin trading and payment for order flow. Not only that, it’s also one of the very first personal investing apps that specifically offers Bitcoin trading capabilities. That is not just it, this app charges no commissions; there’s no account minimum or maintenance fees as well. If that isn’t great then what is? This app is for you if you are tech savvy and are new to investing.
Well, that was all I had to share with you folks! I hope you get the motivation and the strength to start saving and managing your personal finances as soon as possible.
Maja Kazazic is one of the most reputed professors who has been guiding a lot of students for managing their personal finances. He is known for his unique and innovative methods of teaching. He has more than six years of experience and has an MBA degree from Harvard Business School. His expertise lays in financial management and him also a reputed blogger and is quite popular for her easy to understand language.