Personal Finance Tips

In today’s capitalist society, the temptation to succumb to consumerism is ever-present. Managing your finances can be one of the most difficult, yet most rewarding challenges in your life. Here are 3 personal finance tips to help get you on the right track to financial happiness and freedom.


1. Know where your money is going
It sounds cliché but this tip is probably one of the most underestimated one when it comes to proper personal finance management. It truly does not matter how much money you make; if you do not know how you spend it or what you spend it on, you will never be able to assess your financial situation.

Every household, whether you are single or have a family, should have a budget. How complex and detailed it is is up to you, but by establishing your net income and required expenditures (i.e. mortgage, car payment, insurance, electricity), you will have a better understanding of how much cash flow you have at the end of every month.


2. Limit and control your debt 
Living without debt is not an easy goal to reach. Whether it is student loans, a new car, a house, or that long-desired television, debt accumulates quickly and easily. One of the most dangerous ways people start accumulating insurmountable amounts of debt is by using credit cards. If you are the type of person who has multiple credit cards, limit usage to one or two.

Too many credit cards is seen as a negative factor in calculating your credit score, and it also makes it easy to spend without keeping track of expenses. If you have debt with multiple credit card companies, consolidate them on the card with the lowest interest rate and try to make more than the minimum payment required each month. In planning your budget, keep a certain amount of money to use on paying down other debt such as mortgage and student loans.

Most plans allow for extra payments – over what is required on a monthly basis – which allows you to reduce your debt further and pay it off faster. Use your money on the loan that has the highest interest rate first.

3. Seek the help of a financial planner
Whether you can barely make ends meet or have a comfortable income, getting assistance from a financial planner will allow you to plan for your short and long-term financial needs and goals. Retirement plans and education-savings funds, for example, are complex and it is sometimes difficult to understand which one is better for your situation.

A financial planner will guide you through the various plans and together, you will determine which one suits your needs. Personal finance management should be a priority. With finances often being a point of contention in many households, if yours are well managed and in order, you will have more time to spend energy on other things that matter.

Making sound financial decisions should be part of your lifestyle; while you may have to work hard to achieve your goals at first, establishing some basic ground rules and principles will help you reach financial stability.