3 Basic Personal Finance Tips
Stay out of debt. Save money. Bring in more money than you have going out.
Stay Out Of Debt
You want to stay out of debt. The problem is that our culture actively encourages people to do things that may or may not benefits them that a lot of people go into debt for, like going to college.
Society encourages people to be consumers rather than products. Buy the latest tech gadget. Subscribe to entertainment streaming services like Netflix, Amazon Prime, and YouTube Premium. Buy the newest television even though your television, if you have one, is acceptable. Buy the latest laptop or desktop computer even though your current one meets your needs.
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Why Is Debt Bad?
Debt is bad because you have a negative net worth. You must pay back your debts and loans before you can build up a positive net worth. Debt is also financial slavery. It is the foundation of the American financial system is debt. The system wants you to be a debt slave. Whatever society or the system wants you to be. It’s best to do the opposite.
What To Do If You Have Debt
Pay off any debt you may have immediately. Come up with a plan. Start by paying off your credit cards first because they have a higher interest rate. You can then begin paying off the debt with the next highest interest rate. Pay them off in as large of chunks as possible.
Eliminate All Unnecessary Expenses
While working to pay off your debt, eliminate all unnecessary expenses you may be paying each month. You don’t need to go out to eat every week. Cook at home. You don’t need to go to the bar. Drink at home. Better yet, work to reduce drinking alcohol as much as possible. Your productivity will skyrocket. Cancel all subscriptions that don’t help you on your self-development journey. Stop donating money to organizations that likely don’t use your money wisely.
Live A Minimalist Lifestyle
You can live a minimalist lifestyle while you have debt. Stop going out to eat. Stop buying unnecessary items that you do not need. You can become comfortable living a minimalist lifestyle. You may start to realize that you don’t need all of the things that you have.
You may enjoy the minimalist lifestyle instead of keeping up with your friends and the Kardashians. You can live simpler to prevent going into debt again. You can
Learn Basic Money Management Skills
Learn basic money management skills as you work to pay off your debt. There is a reason why the education system does not teach you the basics of money. Society does not want you to be financially free.
Learn The Basics Of Savings
What Is Saving?
Saving restricts your consumption to convert your energy and labor to better your situation. The act of saving is how you can start to build wealth which you can then direct to higher-yield investments.
By saving money, you work to better your situation, which is your ultimate goal. Self-interest is natural, and saving naturally follows human self-interest.
Savings are the excess money that you have left over each month. Like a squirrel who stores nuts away for winter, humans are similar in that they naturally want to save money to build up their savings for a rainy day.
Basics Of Saving
You can start by knowing how much you spend on necessities each month. You can then figure out how much the income you spend on needs. You can decide if there is anything that you are spending money on that you could eliminate to save more money.
You can decide how much money you want to save each month. A typical budget will recommend between ten to twenty percent. If you're going to live a more frugal or minimalist lifestyle, you could save more of your income.
Spend Or Save?
It is ultimately up to you if you want to spend or save your money. The more money you save, the quicker you will be able to achieve your financial goals. Saving is the first step towards reaching financial freedom.
Practical Steps To Start To Save
There are five basic steps to help you get started on beginning to save money:
Decide on a budget and stick to it. Overestimate the amount of money you expect to spend you first start to follow a budget. This is a strategy to help you to more likely end each month with additional funds. You can direct the excess capital into your savings account.
Pay yourself first. Once you know the amount you need to live each month, set aside a certain amount of funds. You can automatically set up your checking account to send money to your monthly savings account. You want to save between ten to twenty percent of your monthly paycheck. You will then see your savings accounts begin to grow over time. You will feel more financially secure when you see your savings account rise.
Save shrewdly. Choose the best savings method that matches your financial goals. Make sure to check which banks offer the highest rates for savings accounts.
Plan for the unknown. Build up a rainy day or FU Fund to cover a minimum of a year’s worth of expenses in case something you did not plan for happens. You may get fired from your job. You may resign from your position for some reason. A health issue could come up that may make you unable to work. Plan for the unexpected.
Set financial goals for yourself. Life goals are essential, and the same goes for financial goals. Set clear and measurable financial goals by using SMART goals. This strategy will help you know how much money you need to save and how long it takes to achieve your financial goals.
SMART Goals
Real-life goals that you want to reach are excellent motivators. Once you have built up your FU Fund and have enough to support yourself for at least one year, you can begin saving for the things you want to have or experience. You can have short-term goals, which are a year or less of what you want to buy with your savings. You can have financial long term goals for larger purchases and significant expenses. Here are some examples of how to use SMART goals to reach your financial goals.
Specific financial goal that inspires you. Set clear objective goals that will help you to save for it.
Example: Save enough money to buy my condo or house.
Measurable goals let you plan to meet the financial task. You can research to determine measurable numbers to know how much it will cost you. This will help you keep track of your budget as you achieve your financial goal.
Example: I want to buy a condo or a house at a maximum price of $200,000.
Attainable goals that will pay off. When you set goals, make sure they are realistic and achievable.
Example: I can save enough money each month to buy a condo or house in that price range in a few years.
Relevant goals that make sense. Set a plan that is worthwhile to you in the long term.
Example: I am OK living in an older-style house for which I can pay cash.
Time-related financial goals with a set deadline and a time frame will help you stay committed to achieving your financial plan.
Example: I can buy a house in five years if I save twenty percent of my monthly income.
Bring More Money In That You Have Going Out
This is a fundamental concept. But many people spend more than they make each month. This means you have a negative net worth at the end of the month. As this trend continues, you will continue to have a negative net worth.
You want to ensure you have more income than you spend monthly. You can have a positive net worth by each month's end. The money can go into your savings account that you can build for a rainy day or save for a large purchase.
Build Up Your Savings
You want to find ways to build up your savings. Savings are how you can begin to build wealth. Savings are the first step toward financial freedom. You don’t need to be rich to be financially free, but you don’t want to have any debt. You want to have enough money saved to start planning for retirement or an emergency.
FU Fund
A rainy day or FU Fund is critical to have. A FU Fund is an emergency fund. An FU fund is the money you save over time in case of an emergency. Having a minimum of one year’s worth of money saved will cover the costs of all your necessities. If you can have more than a year’s worth, even better!
Pick Up A Side Hustle
You can pick up a side hustle to help you to start paying off your debt faster. With the Internet, you have many options when deciding on a side hustle. You could do an in-person side hustle job like delivering food or groceries on Grubhub, Uber Eats, and Instacart. You also could find a side hustle online by becoming a freelancer on sites like Fiverr and Upwork.
Resell Things You No Longer Need Or Use
If you have things you no longer need or use, you can resell them if they are in good condition. You could sell them on Facebook Marketplace, Craigslist, and other specialty resell sites. This is an excellent way to get rid of anything you no longer need while making money to pay off your debt.
Turn A Side Hustle Into Online Business
If you have more time and are more ambitious, you could start a website, YouTube Channel, and Substack. You can learn how to run, operate, and manage an online business. You will need to learn how to delegate responsibilities to other people who have skills you do not have. This will help you to grow your business while saving you valuable time. A business is a real asset.
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Gives You Flexibility
You will be more flexible and can make choices when you bring in more money than you are spending. The money you can save, invest, use to start a business with, or make you feel more secure gives you options. It is a good feeling to have choices. Flexibility can help to slowly free you from the rat race that most Americans are in due to poor financial literacy, rising inflation, and rising wages not keeping up with inflation.
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