There’s no better time than today to read up on some helpful personal finance tips to change your finances for the better. From ways to boost one’s earning potential to listing the best ways to budget, here are some important nuggets of financial wisdom that every individual who manages money should go through:
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1. Create a financial calendar
This is for those who don’t trust themselves to remember to read their credit reports or pay their quarterly taxes. A financial calendar with appointment reminders for these important to-dos about money is a great place to begin.
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2. Check interest rates
It’s always advisable to pay off the loan with the highest interest rate first. The savings account with the best interest rate is the one to go with. If credit card debt is giving you headaches, blame it on the high compound interest rate. The bottom line is to pay attention to interest rates.
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3. Track your net worth
The difference between one’s assets and debts is your net worth, which is the ultimate big-picture number indicating one’s financial health. Keep an eye on your net worth, as it will keep you updated on the progress of your financial goals.
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4. Set up a budget
Budgeting is important to identify financial problems and correct them quickly. One way to avoid overspending is to stick to all cash. Allocate a minimum 20% of your income for priorities like paying off debt, emergency rainy day funds, etc.. Budget around 30% of income for lifestyle spending, allowing you to splurge and save at the same time.
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5. Draft a financial vision board
A vision board could motivate you to adopt better money habits and remind you to stay on track with financial goals. Remember that financial goals should be specific. Dates and numbers need to be employed to describe what one wants to accomplish with their money.
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6. Adopt a specific spending mantra
Picking out a positive phrase can act as a rule of thumb to help you in your spending habits. For instance, ask yourself if buying a specific item is worth it, or if you’ll be able to continue using it for a long period of time.
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7. Keep debt at bay
There are many ways to keep debt at bay and stop it from building up. If you have multiple sources of debt, try to settle the smaller ones first. This gives you the confidence to tackle the bigger ones. One shouldn’t cosign loans either – it can make your credit score fall if the other person defaults. Mortgage payments shouldn’t exceed more than 28% of one’s monthly income when you shop around for a house.
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8. Shop smart
Last, but definitely not the least, shop smart. Evaluate purchases by cost per use, and try spending on experiences such as picnics and concerts rather than material things. Shopping solo can also help you to cut back on spending.
