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 38 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
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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!
Creating a monthly budget is essential, even for those who aren’t struggling financially. I remember when I created my first budget in my early twenties, I thought I was doing pretty well. We made a decent amount of money and never felt like we were running out.
And then we did our budget and realized we had been spending $1,000 every month eating out. $1,000 freaking dollars!
Had we not created a budget, we would have continued to waste an awful lot of money on an unnecessary expense.
Next Steps: How to Create a Monthly Budget (Even if You Hate Budgeting)
Use the 50/20/30 Budget Method
Many people struggle with creating a monthly budget because they just aren’t sure what portion of their income they should be devoted to each part of their budget.
The 50/20/30 budget helps to take some of the guesswork out of budgeting by creating a basic guideline. It looks like this:
- 50% of your budget should go toward non-discretionary spendings like housing, utilities, transportation, and food.
- 20% of your budget should go into savings
- 30% of your budget should go toward discretionary spendings such as entertainment, vacations, and shopping.
Depending on your salary and where you live (since this will affect your housing costs), this budget may or may not work for you. But at the very least it gives a general framework for how to break down your budget.
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 financial 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.
Know Your Net Worth
Most people pay attention to what they can see: the money coming into their bank every month, and the money going out. But that’s a really short-sighted way to look at your finances.
While those things are important to pay attention to, you should also know your net worth!
Your net worth looks like this:
Net Worth = Assets (what you own) – Liabilities (what you owe)
Assets would include:
- Real Estate
- Anything else of value that you own
Liabilities would include:
- Student loan debt
- Credit card debt
- Auto loans
- Any other money you owe
Unfortunately, thanks to student loans, most adults leave college with a negative net worth. Start keeping an eye on this as early as possible and always be working to increase your net worth.
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 open my budget app at least once every single day. I’m always aware of where my money is going.
Sure, there are still months where we go over budget. But it’s always a conscious decision and we’ve made a plan to make up for it.
Here are my favorite budget apps for checking in with your finances.
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.
Some of my favorites included You Are a Badass at Making Money by Jen Sincero and The Total Money Makeover by Dave Ramsey.
Next Steps: The 7 Best Personal Finance Books to Read in 2019
Read Personal Finance Blogs
There are so many amazing personal finance blogs out there and if you aren’t following them, you’re really missing out!
In fact, reading about other people’s financial journeys and progress is part of what helped to inspire me so much on my own financial journey.
The best part is there are different blogs out there no matter what your financial goals are and where in your life you are.
If you’re a single millennial woman trying to get ahead of the financial curve, there are financial blogs for you.
If you’re a mother trying to save for the future while paying for kiddos, there are financial blogs for you.
If you’re ready to sell all your stuff and travel the world, there are financial blogs for you.
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.
I also love that apps like Credit Karma will proactively alert you if there have been any changes to your credit report, both good and bad.
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. For several years, I just kept a budgeting spreadsheet in Google Drive, and that was how I tracked my budget all month!
I’ve found that my favorite budget tools are those that have a hands-on approach like You Need a Budget or a budget spreadsheet.
Tools like Mint can be helpful, but they really don’t force you to stay on top of your budget in the same way that other tools do.
Next Steps: The Best Budget Apps to Help You Manage Your Money
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. However, Dave Ramsey recommends creating an emergency fund of $1,000 and then turning your attention to debt repayment, before going after the 3-6 month emergency fund.
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!
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!
Choose Your Priorities
My theory is that everyone should pick one or two spending categories that are a big priority for you and you’re willing to splurge on, and then decrease spending everywhere else.
For example, my significant other and I love to go out for food and drinks, and we love to go see live music. And often the two go hand in hand. Because of that, those are the areas where we spend the most money.
However, I buy all of my makeup from the drugstore, and I only buy new makeup when I’m out. Similarly, we only buy new clothing when something needs to be replaced.
Overall, we hardly ever shop. And because of that, we’re comfortable increasing our budgets a bit for the areas where we do like to spend a little more money.
This is going to look very different for everyone.
For example, I know some people who really love fashion. They’re budgeting money for new clothes every single month because that is what is most important to them.
And where we spend quite a bit of money eating and drinking out, I know people who might only eat out once per month. And they’re perfectly happy with that because eating out isn’t a big deal for them.
Create a Vision Board
You might not see a connection between your finances and a vision board. But I promise there is one!
My significant other and I have some big financial goals over the next few years, and I was having a hard time staying motivated to cut spending.
It turned out that a vision board was exactly when I needed. When I can literally look at our goals, it’s a lot easy to push myself to keep working toward them!
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!
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!
Make it a habit to use coupons when you shop, whether you’re shopping in the store or online.
Services like Ebates and Honey can help you to get good deals when shopping online. And coupon apps like Ibotta can help you get cash back on the purchases you make in stores.
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.
Ask For a Raise
Instead of increasing your income by starting a side hustle, you could also increase your income by asking for a raise. However, when you approach your boss about this, don’t make it about you wanting more money!
Make sure to demonstrate to your boss the value that you have brought to the company, and will continue to bring to the company.
This might seem like drastic advice, but it’s really not when you think about. Staying in a low-paying career for your entire working life will cost you an incredible amount of money over the course of your life.
For example, I currently work in a government job. Yes, it’s sometimes personally fulfilling and the benefits are great. But government jobs aren’t exactly notorious for their great pay, and I’m very conscious of that as I create my career goals for the next five years.
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!
Learn to Say No
When someone invites you to join them in a fun activity or going out to dinner, it can be tough to say no, whether it be because of FOMO or just because you feel bad saying no.
This can lead to a lot of unnecessary spending though!
I’ve created a rule for myself that I only spend money to spend time with people who I really enjoy spending time with. Sure, I’ll spend money to grab lunch with a good friend or have a night out with my best friend.
But I’m not going to spend money to grab lunch with a coworker or acquaintance I’m not interested in spending more time with just because I feel bad saying no.
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.
You can also use the debt avalanche method, where you put extra money toward the debt with the highest interest rate to get that one paid off first.
The debt avalanche method probably saves you a bit more money in the long-run, but the snowball method gives you small wins along the way as you get your smaller debts paid off.
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.
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
Maximize Your Employment Benefits
If your employer offers benefits like a 401(k) plan and is willing to match your contribution up to a certain amount, make sure to max out that benefit. Otherwise, you’re just leaving money on the table.
Not only does this benefit you in the long-run, but it also benefits you in the short term by reducing your tax burden for the year, as the money for your 401(k) comes out pre-tax.
Avoid Impulse Spending
I used to be terrible when it came to impulse purchases. Like, really terrible.
In college, I would go to the mall and if I saw a piece of clothing I liked, I would buy it. And a lot of those pieces would sit in my closet, never to be worn.
Now I keep a pretty minimalist wardrobe, so I’m almost never tempted to buy clothing!
However, I have had other spending temptations to deal with.
When I bought a house, it was home decor items. And I love to read, so I’ve struggled with impulsively buying books in the past.
Recently, however, I’ve made a rule for myself that I don’t buy anything on impulse. If there’s something I want to buy, I add it to my Amazon shopping list. Then, if I find myself continuing to think about it and decide I really need to have it, I can always go back and purchase it later.
If you’re someone who struggles with impulse spending, set a rule for yourself where you have to think about every purchase for 24 hours before pulling the trigger!
Use Windfalls Wisely
When I was in college, tax season was the best because it meant I was going to get a tax return that could be put toward a vacation or some other fun purchase.
Now that some time has passed, I see how much more wisely I could have spent that money!
Yes, it’s tempting to find something exciting to do with those small windfalls like tax returns or work bonuses. But they are much better spent going toward paying off debts or building an emergency fund.
And once your debt is paid off and you have a solid emergency fund, you can put them toward a financial goal like a house or retirement.
Unsubscribe from Sales Emails
You wouldn’t think this would make any noticeable difference, but it really does! If you unsubscribe from sales emails, you won’t be tempted the next time your favorite clothing store is having a big sale.
Save for the Holidays All Year Long
Most people drop quite a big of money during the holidays but don’t prepare for it ahead of time. In fact, I see a lot of people put all of their holiday expenses on a credit card, and then pay interest on it for the next six months while they try to pay it off.
What if instead you put a little money away every month, and then by the time the holidays arrived, you had enough money in the bank to cover everything?
The first year I did this, I couldn’t believe how much less stressed I was when Christmas shopping rolled around!
Sell Unwanted Items
You probably have a lot of time sitting in your house that you aren’t using. Well, you could make money from those items! Just because you don’t want them anymore doesn’t mean they wouldn’t be valuable to someone else.
I’ve had luck selling my clothing to consignment shops and selling household items on the Facebook marketplace.
Ask For an Increase in Your Credit Limit
Your credit utilization, or the amount of credit you’re using compared to your credit limit, is a big part of determining your credit score.
By asking for an increase in your credit, you can decrease your credit utilization and probably increase your credit score.
Most people only think to ask for an increase in their credit limit when they need that extra credit to buy something, but that’s the wrong time to make the ask!
Don’t Close Old Credit Cards
Like your credit utilization score, the length of your credit history also determines your credit score. The longer your good credit history, the higher your credit score.
This means that even if you aren’t using those credit cards any longer, you don’t want to close the accounts. By closing those accounts, you’re erasing years of credit history!
The only exception to this rule would be credit cards you aren’t using anymore that have a high annual fee.
Communicate About Finances
As I mentioned earlier, financial stress is one of the leading causes of divorce.
And it really does make sense. Money is a huge part of every single day of our lives. So if you aren’t communicating about money, you probably have some pretty large communication issues in general.
Remember that you are a team! My significant other any I talk about money all the time, whether it’s just checking in on how we’re doing for the money or we’re making a plan to reach one of our financial goals.
Get the Right Insurance Coverage
Insurance requires an up-front cost before you see any return on your investment. Because of that, it may be tempting to cut corners in this area. Don’t do it!
Figure out what insurance coverages you need to have in place, and get them in place. Insurance coverage might include: rental or home insurance, medical insurance, dental insurance, vision insurance, and life insurance (just to name a few).
Avoid Bad Debt
First of all, let me just say that in a perfect world, we wouldn’t have to go into any debt at all. But let’s be real, most of us had to take out loans for college, and most of us aren’t paying for our house in cash!
Since debt is a part of our society, at the very least we can work to avoid the bad debt.
Bad debt is any debt that does not have a return on the investment.
One example of bad debt would be car loans. Many of us take out loans to buy a vehicle, mostly because we want to buy something that is going to last a long time. But remember that cars lose so much of their value as soon as you drive them off the lot. So if you borrow a ton of money so you can get a fancy car, you aren’t getting that money back.
Another example of bad debt is personal loans. There are some situations where a personal loan might be your best option, but I also see many people taking out personal loans for terrible reasons, like to pay for weddings, vacations, and other unnecessary purchases.
Good debt is the kind where you’ll get a return on your investment.
For example, a business loan might be good debt. You need a little help to get it started, but you know you’re going to make that money back and then some.
Student loans are also seen as good debt since you’re using your degree to (hopefully) land a good-paying job. Although more and more people are finding out that their college investment isn’t exactly paying off!
Finally, real estate is a good debt. Unlike cars, real estate continues to increase in value, meaning you’ll get your money back and then some when you sell.
Don’t Increase Your Lifestyle Costs When Your Salary Increases
If you get a raise, that’s awesome! But don’t also your monthly costs to make up for it.
Many people start upgrading everything from their car to their house to their wardrobe when they get a big raise.
However, just imagine how well prepared you would be for the future if you kept your lifestyle the same each time you got a raise?
Ask for a Lower Interest Rate
It seems simple, but it really works sometimes! Sometimes your lender might be willing to lower your interest rate for a variety of reasons.
For example, I had been paying my student loan payment every month for literally years. And then one day I asked about a lower interest rate, and they said they could lower it half a percent if I set up automatic payments instead of making the payment manually every month.
Such an easy change to make, and it’s going to save me money over the life of my student loans!
The worst that can happen is they say no, so it never hurts to ask!
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 38 personal finance tips are a great place to start if you’re ready to get your financial life in order!