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I think we can all agree that money management can be pretty overwhelming, and the learning curve seems pretty steep at times.
There was a time in my mid-twenties when I really felt like I had gotten my money shit together and my financial future didn’t seem all that scary.
And then I got divorced at 27. My ex-husband was the breadwinner in our marriage, so my lifestyle changed pretty drastically. And I was basically starting over financially.
And suddenly I no longer felt like I had my money shit together.
Determined not to let my situation keep me down, I threw myself into learning all the personal finance tips I could.
In this post, I’m sharing 16 personal finance tips I learned to help me master my money, and that can help you master yours as well!
PERSONAL FINANCE TIPS TO HELP YOU MASTER YOUR MONEY
1. Create a Budget
When it comes to personal finance tips, creating a monthly budget is pretty much Money 101. I think it’s something that way too many people put off because it seems either overwhelming or unnecessary, but it’s actually neither!
Make a list of your monthly income and expenses and create a budget for yourself based on your financial goals. Be realistic with your budget, and be sure to update throughout the month to make sure you’re staying on track!
2. Set Financial Goals
It’s important to have financial goals for yourself! Setting financial goals helps you to determine where you should be prioritizing your money every month.
Some financials goals might include paying off debt, saving for a vacation, or putting away money for a downpayment on a house.
Even if you aren’t saving for anything in particular right now, your financial goal can be getting to a certain amount in your emergency fund – 3-6 months worth of expenses is recommended!
Once you have your goals laid out, you can create a line item in your budget for those accounts to be sure you’re consistently putting away money.
3. Check Your Finances Regularly
Prior to my divorce and starting over financially, I rarely check in on my finances. I had never had a month where I didn’t enough to pay the bills, and I just assumed that would always be the case.
Then, once I was on my own financially and starting from scratch, I really wasn’t in the habit of checking my finances regularly and wasn’t really aware of what my own financial habits were.
It was definitely an eye-opening experience to realize how much money I was spending every month without realizing it!
Since then I’ve made it a habit to check my finances very regularly. I update my budget at least once per week, and check my accounts every other day or so just to make sure I always know where everything stands.
4. Start Reading Personal Finance Books
When I was ready to get serious about turning my financial situation around, I really threw myself into reading a lot of personal finance books. The books I read covered a variety of personal finance advice, from money mindset to budgeting to getting started with investing.
5. Check Your Credit Report
Your credit score is incredibly important to your long-term financial success. Your credit score represents your creditworthiness, meaning it will help lenders choose whether you’re a good candidate for borrowing money for large investments in the future.
Your credit score can make a huge difference in the interest rate you’re offered when taking out a loan for a purchase such as a home or a car. A good credit score might save you thousands of dollars over the life of a loan!
Be sure to check your credit report regularly. There’s no need to pay for a credit check – apps like Credit Karma allow you to check your credit report for free at any time.
This will allow you to make sure you’re maintaining a healthy credit score, as well as ensure there aren’t any errors or fraud on your credit report that might be hurting your score.
6. Use Online Budgeting Tools
Since most of our lives exist online these days, it makes sense to take your budgeting online as well. You can connect your bank and credit accounts to a third-party aggregator that tracks your finances for you. Some of the tools available include Mint, You Need a Budget, and Personal Capital.
These budgeting tools make it super easy to stay on top of your finances because they track everything for you. You can set spending goals for yourself, and the tools can let you know if you’re going over budget.
If an online budgeting tool isn’t for you, you can put together a budget spreadsheet to track your finances. I keep a budgeting spreadsheet in Google Drive, and that’s how I track my budget all month!
Next Steps: Online Budgeting Tools to Help You Save Money
7. Build an Emergency Fund
You’ve probably read the statistic that fewer than 50% of American households don’t have enough savings to cover a $400 emergency. It’s a pretty frightening statistic!
It might be tempting to put all of your savings toward more exciting financial goals such as saving for a home or a vacation, but the emergency fund is even more important.
While you may feel financially secure right now, you just never know what is going to happen in the future, whether it be a medical emergency or being laid off from a job.
The recommended emergency fund should have 3-6 months worth of expenses, but even just shooting for $1,000 right now will put you ahead of the curve.
8. Pay Yourself First
There are many people who wait to see how much money they have in the bank at the end of the month, and then decide if they are able to throw a little in savings.
The problem here is that there might be a lot of months where you aren’t putting any money in savings at all.
Instead of just saving what you have left at the end of the month, start budgeting the money you’ll save, and make that your first payment after you get paid. I have an automatic transfer from my checking account to my savings account the day after I get paid every single month, and I never have to stress about whether I’m putting money into savings – it’s automatic!
9. Reduce Variable Expenses
Your monthly spending can be broken up into two categories: fixed expenses and variable expenses. Your fixed expenses are those that are the same every month, such as rent or mortgage, loan payments, insurance, and more. Your variable expenses are those that change month to month. Those expenses include food, shopping, and entertainment.
Variable expenses are easier to reduce. Look at how much you’re spending now on those expenses, and see where you might be able to make cuts. I remember being taken aback when I realized just how much I was spending on eating out, and it was an easy category to cut back on!
10. Use a Meal Plan
Food is one of the biggest monthly expenses for many families. Meal planning can help you save a lot of money on groceries, as well as cut down on wasting food. Meal planning can help you avoid those nights where you aren’t sure what to make for dinner, so you resort to eating out.
If you’re new to meal planning or are struggling to stick with it, you need to check out $5 Meal Plan. $5 Meal Plan is a meal planning service that sends you a meal plan and grocery list every single month. The meals are affordable and easy to make!
11. Eliminate Unnecessary Expenses
How many monthly payments are you making that could be lowered, or cut altogether?
Start by considering which expenses you can completely cut. This might include cutting cable in favor of a cheaper alternative or cutting monthly subscriptions or gym memberships you aren’t really using.
Once you’ve cut where you can, look at which expenses you can reduce. Can you find a cheaper phone plan? Are you overinsuring any of your vehicles and could lower your payment by reducing your coverage a bit?
Making quite a few small changes can go a long way in your monthly budget!
12. Diversify Your Income
These days, whether you’re working on paying off debt or are saving for future expenses, it seems like everyone needs a side hustle! If you’re in a full-time where you can’t increase your income right now, picking up a side hustle is a great way to bring in some extra money and diversify your income!
My favorite ways to diversify my income have been my starting my blog and my Etsy shop, but I’ve also diversified even more by picking up freelance writing gigs.
- How to Start a Blog: A Step by Step Guide
- How to Start a Side Hustle and Make Money From Home
- 35+ Legit Ways to Make Extra Money
13. Make Money While You Watch TV
Most of us spend a LOT of time watching TV. And let’s be honest, that isn’t the most productive use of time. I tend to get a bit bored and antsy when I watch TV, so years ago I discovered a great way to have something else to keep me busy while I watch TV that also allows me to make some extra money: online surveys!
There are lots of companies out there who will pay you to take market research surveys online. They’re free and easy to join and use. You aren’t going to get rich this way, but you can definitely make $100+ per month! My favorite survey company is Survey Junkie!
14. Focus on Getting Out of Debt
Most of us are carrying some sort of debt, whether it be student loans, credit cards, car loans, or other personal debt.
Not only does debt cost you a lot of money in the long run because of interest payments, but it also takes a pretty significant emotional toll. Finances are a huge source of stress for most people, and one of the leading causes of divorce!
If you’re carrying debt, paying that off should be your #1 financial goal right now. Figure out how you can cut expenses elsewhere, and put as much money as you can every month toward paying off debt.
You can use Dave Ramsey’s snowball method, in which you pay off your debts smallest to largest, snowballing your monthly payments until you’re putting all of that money toward your largest debt.
15. Avoid Credit Card Interest
There are plenty of people, including financial expert Dave Ramsey, who advise that you should never use a credit card.
And while I certainly don’t agree with such a broad generalization, it’s definitely important to proceed with caution when it comes to credit cards.
There are some credit cards that have some really great rewards programs. If you travel regularly and use travel rewards, you know how amazing those credit card rewards can be!
However, credit card rewards are only beneficial if you’re paying your credit card off monthly and avoiding paying interest. Credit card interest is a huge waste of money!
While some people are able to have a credit card and consistently only spend what they have in their bank account every month, other people tend to overspend and eventually aren’t able to pay off the balance every month. It’s really about knowing your financial habits.
16. Start Saving for Retirement
It might seem silly to be talking about retirement when it feels SO far away. And if you’re a millennial, it might feel as if you’ll never be able to retire anyway. But it IS possible, and NOW is really the time to start.
If you have an employer-sponsored 401k plan, that’s a great place to start. Bonus points if your employer will match any of your contributions! Even that probably isn’t enough, though. There are plenty of ways to diversify your retirement savings whether it be a 401k, IRA, or long-term investments.
Unfortunately, our generation may not have social security to rely on, so it’s important to take things into our own hands.
Next Steps: 8 Habits of Financially Successful Women
BEFORE YOU GO
Dealing with money and budgeting can seem so overwhelming. I know I felt like there was a huge learning curve when I started getting serious about my finances.
By tackling the basics, you’re setting yourself up for success and can move onto more advanced personal finances when you feel ready. As with anything else, it’s important to go at your own pace.
These 16 personal finance tips are a great place to start if you’re ready to get your financial life in order!