We have just started the new year. Perhaps one of your resolutions going into this season is to understand your finances better, be intentional with your money and build wealth. You want to achieve some financial goals and eventually gain financial freedom. If you are wondering how to do that, you need to expose yourself to personal finance knowledge. In personal finance, you will get to learn important financial concepts and learn how to manage your earnings, spendings, savings and investments. Personal finance is tailored to how you understand and manage your money.
Here are 15 personal finance tips that you should know to meet your 2023 new year resolutions:
In this article
1. Automate your savings
Saving money is a good personal finance tip you should practise for 2023. When it’s done with little or no direct human control, you can meet your saving goals faster. If you cannot commit to putting aside at least 10% of your income on savings, you can do it spontaneously through a third party. Ask the bank where you have your current or fixed deposits to automatically take out a percentage of your income earnings and put it aside as savings. Overtime, you will come to see that the amount of money you will have saved when this process is done without your intervention will be much higher than when you do it yourself.
2. Familiarise yourself with debts
Do you have any debts you need to be paying off? What debts do you have? Write down the name and the type of debt. How much interest rates do these debts charge? Are they good debts or bad debts? What are the tax implications you get from having these debts? Knowing your debts is a personal finance tip that should not be ignored. Don’t be afraid to put your nose in the ground and uncover these liabilities holding you back from making financial progress. When you familiarise yourself with debts, you can finally start making the right steps to get rid of them. This is an important factor for when you want to obtain financial freedom.
3. Create a financial calendar
A financial calendar is a chart that shows the financial information for a particular day, month or year. A financial calendar is important because it will give you awareness on when you will get your money, how much you expect and how you want to spend this money going forward. To create your financial calendar, first choose the medium you wish to record this information; either digitally or on paper. Next, make a list of your paydays for the next 2-3 months and list your fixed and variable expenses. Put everything in your calendar. If your next salary comes in on the 3rd of the month and you’d want to do your grocery shopping on the 10th of that same month, you need to commit yourself to this routine. Having a financial calendar is a great personal finance tip for someone who wants to clear the fog and create a vivid path for them to follow in terms of their finances.
4. Read personal finance books
Before you can understand money and have a better relationship with your finances, you need to have financial literacy skills. Financial literacy is the ability to understand and effectively use various financial skills like saving, budgeting, investing and general personal financial management. Even as most of this is not covered in the traditional schooling system, there are numerous personal finance books that will teach you the skills you need to be good with money. For starters, “Psychology of Money,” “Rich Dad, Poor Dad,” and “ The Richest Man In Babylon,” are a good segue into understanding personal finance.
5. Reward yourself
To quote a famous saying, “After the battles, comes the reward.” It is okay to reward yourself. As human beings, we work on a reward system. It keeps you motivated and encouraged to keep doing what you do. When you get your paycheck, take a small percentage out and spend this money on something you love. This will make you anticipate for the next time you get your paycheck and will have you working harder for any bonus you can get so you can go bigger and better on your reward. Rewarding yourself takes some steam off your finances and reminds you that sometimes, it’s not always that serious. Remember, all work and no play makes Jack a dull boy.
6. Save for retirement
This is a great personal finance tip for anyone who wants to retire early. No one wants to spend the rest of their lives working. We all have to retire at some point. An ideal retirement for anyone in the workforce is one in which you have financial freedom and independence. If you want to enjoy your retirement, you must think about your future now. Prioritise your investments towards saving for retirement. Look for retirement plans that work for you and be consistent with your savings or investments. When you do this, you not only build your wealth, but are also guaranteed to retire a happy being.
7. Avoid lifestyle jump
The world today has many people trying to keep up with the Joneses. When you go on Instagram and see how people are splurging and showing a lavish lifestyle, it is hard not to be sucked into forcing an upgrade of your current life. Don’t get me wrong, this is good. However, if you are struggling financially and you cannot support yourself with the lifestyle you’ve chosen, you need to reevaluate your financial priorities. Living within your means is an excellent personal finance tip for when you want to build wealth and save for investments.
8. Change your money mindset
Money mindset is concerned with how you think around money. This also pertains to your personal finance education, personal development and perspective of life. A lot of people share the opinion that money is scarce. But it is important to develop an abundance mindset and use wealthy language if you want to take your finances to the next level. If you decide that you’ll be poor, you will be poor. If you decide you are going to be rich, you will be rich. When you change your money mindset, you can go from barely scraping by, to making 7 figures in a couple of years. One tip to use when changing your money mindset is to read books and listen to great minds and learn how they think about money.
9. Build an emergency fund
An emergency fund is money that you set aside to act as a cushion in an instance where you lose your current source of income. When you lose your job today and cannot get a living wage, this money will sustain you until you are able to bounce back from this unfortunate loss. An emergency fund is supposed to last you for a period of up to 6 months, depending on your level of income and lifestyle. Setting up an emergency fund is an important personal finance tip because it reduces the impact of loss when life throws its curveballs at you. And remember, this can happen anytime and without warning, so you must be utterly prepared.
10. Have a budget
Budgeting is an important personal finance tip that should not be ignored by anyone who wants to know where their money goes. When you budget, you are able to track your expenses. For starters, you have to put down a list of all your bills and their corresponding expenses. For example, rent expenses, electricity and water bills, tuition fees etc. Look for a budgeting technique that meets your needs and be consistent with it. There are many budgeting apps and templates available online that you can use to start budgeting.Some of the best budgeting apps you can try today include Goodbudget, Honeydue, YNAB and Mint.
11. Have financial goals
A financial goal is any plan that you have for your money. This can be saving your money for a vacation, for an investment or even to buy a new car or house. Do you have any financial goals? Write them down.Having financial goals is important because it jolts you to action. When you know where you want to be in terms of your finances, you can start looking into the possible steps you must make to get there. As you get your financial goals, remember to evaluate your current financial status and set money goals that are specific, measurable, achievable, realistic and time sensitive. This personal finance tip is a good idea for anyone who wants to keep track of their financial progress and bring their financial goals/ideas to life.
12. Treat your credit card as cash
A credit card is a digital plastic card issued by banks or financial companies and is used to pay for goods or services. Examples of credit cards include Visa and Mastercard. If you have been using a credit card, you must’ve noticed that it is quite easy to be frivolous with them and spend more than we intend to. This is mainly because you do not get to actually see money coming out of your “pockets.” This is very dangerous, especially if you don’t want to max out your credit card. Treating your credit card as cash is a good personal finance tip that will help you avoid making credit card mistakes that may eventually lead you to financial ruin.
13. Communicate with your partner about finances
If you are in a relationship, this personal finance tip is for you. Society still tends to shun conversations around money. It is important that we come to terms with out financial situations and even share bad financial decisions we’ve made with our partners. When you are more open about this, you can teach yourselves about money and mitigate any impending financial risks. If you have friends, have money talks with them. Through this, financial literacy is passed on.
14. Start a side hustle to make money
Have you always wanted to start something of your own aside from your normal job? If yes, this is a great step towards achieving financial independence and freedom. If you want to build wealth, you must look for different ways to get money both actively or passively. There are many business ideas available today and you can choose one that suits your style and preferences. Successful entrepreneurial ventures can serve you for the long term, especially when you want to retire. Side hustle can be anything from starting a brick and mortar business where you employ people to work for you or even having your own blog. This personal finance tip is highly recommended for anyone who is far sighted.
15. Get a financial coach
Learning from others is a great personal finance tip for anyone who wants to be financially successful. To quote a famous saying “You only see far by standing on the shoulders of giants,” getting a financial coach is the first step you are making in the right direction. When you seek advice from people who are more experienced and knowledgeable than you in the world of finance, you not only build your expertise through them, but also reduce losses arising from financial risk. A good financial coach will take you through everything you need to know about your personal finances. They propel you towards achieving your financial goals. Only make sure you find someone you can trust and are credible enough in this field.
Personal finance is important because it helps you gain control over your finances. This boosts your financial confidence, which is essential for when you want to work towards your financial goals. There is a lot of personal finance content and advice you can find from personal finance books and coaches. You just have to identify what area of personal finance you need to learn or improve your skills on. You will soon realise that with this knowledge, you become unstoppable when it comes to your financial habits and mindset. If you apply any of these tips today, you will look back in a couple of years and be glad you made the decision you made. If you do not know where to start, this article gives you the tips and tricks you need to know as you delve into the world of personal finance. Good luck!