2020 was not so kind financially and sent a lot of businesses and personal finances into unforeseen depths. In this new year, everyone is looking forward to recovering from the financial slump, and as such, you will need a solid strategy.
This may mean changing your entire approach to making money, saving, and investing.
For many people of all ages, money management can be a constant curse.
In an age when wages are relatively low and the cost of living is high across the Western world, there are countless examples of people who find ensuring that their own personal cash flow is run efficiently (and without resource to personal debt) somewhat difficult.
However, the good news is that tools of money management and the right personal finance tips are available at the disposal of such people.
Here are some legit personal finance tips that can make a huge difference in your finances.
10 Legic Personal Finance Tips
1. Keep an eye
Knowledge, as they say, is power – and if you don’t know what you’re spending your money on or you lose track of it easily, then you’re unlikely to be able to take positive changes to avoid going into the red – let alone avoid managing it to enhance your wealth.
As a result, using online banking or similar apps to work out how much you’re spending and where you’re spending it is a great way to keep on top of things. And to avoid falling into the trap of losing track and finding yourself without the appropriate information to make good financial choices.
2. Ask for help
There are plenty of people out there who are able to help – especially if your goal is to maximize wealth as well as ensuring that you can pay your bills!
Firms including the one run by Alex Friedman can help in this regard. Friends and family members, on the other hand, may be able to share the names of everything from apps that track spending to advisors and personal finance tips that have helped them.
To be financially secure, you must continuously set goals to push you. Like most of us, your financial goals were most likely thrown off-kilter.
Your plans may have changed a lot from the last 12 months. So set new realistic goals depending on your current economic situation.
These new goals must reflect your top priorities, which may have changed over the last couple of months. Such as diversifying your investment portfolio by trying new things like the Swyftx Exchange.
Remember to evaluate and adjust these financial goals continually. Changing your financial goals will ensure that you do not stifle yourself.
4. Create a budget
A budget is something every financially disciplined person should have.
Budgets allow you to forecast and track your expenses. More often than not, people cannot stick to the budget and hence, overspend.
However, you can divide your budget into fixed costs and variable expenses, and this will help you limit your expenses on the variables which are not necessary. Stick to your budget religiously, and your finances will improve.
5. Don’t rely on gifts
A word of warning, however: while asking for help is a great idea in many ways, it can in some scenarios lead to unhealthy behaviors – especially if that help involves handouts rather than just advice.
While it may seem great that someone is giving or loaning you cash, it can quickly become dangerous as you may find yourself relying on it. It’s much better to ask someone to help you get on your own two feet rather than keep you in the status quo position.
6. Reduce your debt and save for emergencies
The best thing to do is to reduce your debt as much as you can to improve your finances.
Having debt is not a good look on your credit score. Besides, the less debt you have, the more money you can put away for investment and savings.
The first place to start is with your credit card debt. Pay it off as soon as you can. The next thing you do after reducing your debt is to save for emergencies.
Saving 5% to 10% of your income towards emergencies is a great way to start. From expert advice, it is suggested that you should have at least three to six months’ worth of your income stashed away for emergencies at any point in time.
7. Some debt is okay
While the goal of many money management tools and personal finance tips is to prevent you from falling into debt, it’s important to remember that only some debts are bad.
Others are actually beneficial to you and your financial situation. Take the example of a credit card with high cashback offers.
If you make the decision to spend everything that you would have otherwise spent on a debit card on such a credit card, you can then cash in by claiming the offer.
All you have to do is ensure that you pay off the balance in full each month, and this can, therefore, become a profitable situation for you.
This sort of practice requires financial discipline, but it’s certainly possible to do it if you are organized and focused.
8. Protect your finances
Staying on track with your financial goals can be challenging when things change and are not so favorable. The past year showed us how bad it could get.
This time around, consider protecting your finances to ensure that all your good work does not unravel. Make sound financial decisions that will secure your finances and give you peace of mind.
9. Reduce your tax bill
Your taxes have a significant impact on your finances. Seek out advice from a qualified financial advisor and determine which ways you can reduce your tax bill.
Putting more money towards retirement is just one way of reducing your tax bill and can be very beneficial for your future.
10. The ultimate personal finance tip: cut spending
Ultimately, however, all of the personal finance tips above – while useful in their own specific contexts – cannot negate the fundamental issue: high spending is a killer for those who are looking to manage their cash more efficiently.
If you’ve tried all of the tips above and found that you have got nowhere, then your next step will usually have to be to accept that now is the time to cut back on your spending.
You can do this in one of many ways.
You might, for example, choose to head to cheaper supermarkets. This could mean giving up Trader Joe’s in favor of Walmart. But if it helps you to get back on track with your spending, then it will be more than worth it in the long run.
Preparing your own lunch rather than eating out is also wise, while ensuring that you avoid falling victim to ads about the latest smartphones or cars can help you get maximum value for money out of the possessions you already have.
Money management is pretty much essential in the modern age, especially given that the cost of living is so high for many people – and that the time to monitor transactions is scarcer than ever.
If you don’t effectively manage your money and follow legit personal finance tips, then it’s likely that you’ll end up in a situation where you can’t cover the cost of your bills. And that could lead to everything from a difficult few months to, in the worst-case scenario, financial ruin.
Preventing this by taking action now is vital, and while it may be painful in the short term, it will be very useful in the long term.