If you’re like most people, you don’t have any sorta background in personal finance — or any other form of finance whatsoever — but you sure think it would be nice to have some spending money. You like the idea of a little extra cash for that exotic vacation, and heck more than a little more cash to buy that luxurious mansion stashed in a corner of your dream vacation island.
Point is, everyone likes money and everyone needs it but you’re not going to have a lot of it unless you understand it.
Money is really like bikes; unless you learn how to ride it, you’re going to keep getting chucked off onto your ass every time.
So if you’re like me and you’re sick and tired of a bunch of tired ideas about money that never work, you might want to read on for sure-fire tips on managing your cash.
Mindset
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Change your view of money
So many of us have the wrong view of money; we’ve been indoctrinated from childhood to regard it as that scarce commodity that there’s never enough of.
As long as you think money is scarce, hard, or difficult it would be all of those things to you. Money does not grow on trees and all those other sayings that have been handed down for thousands of generations have done one thing: they’ve messed with your mind! Chuck out all the nonsense. Do you see rich people speed past in their limos and secretly resent them? Do you think money is evil in some way? Check your views about money honestly; journal about it if possible and work on yourself.
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Never make financial decisions out of fear
So many of us make financial decisions out of fear; we are like the Chicken Little of finance. Fear is such a powerful and deadly force that it can close down a market. Most of the famous Wall Street crashes were fueled by panicked buying and selling. People have been known to dispose of assets worth millions for mere peanuts.
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Never regard money as the enemy
Money is your friend. Don’t believe me? Who else can get you anything on earth you want in exchange for themselves? That’s right, cash is your friend and has been from the moment you were born. Repeat after me: “Money is my friend; we go way back!” The mind is very powerful. If you regard money with fear or suspicion or dislike, you’re never gonna have a lot of it but if you regard it with the right mindset you will attract it.
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Second-guess your financial decisions
Yes even if you like to think of yourself as the very founder of Wall Street, do second-guess your financial decisions sometimes. If you play it by ear or move strictly on gut instincts, then you need to back-pedal every now and then and review your decisions. Sometimes, you could consider your decisions against established rules and regulations; against business practices, or even simply seek opinions from people you respect who are financial wizards.
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Educate yourself
If you’re reading this then it’s safe to say you’ve already got this one in the bag. But don’t just stop at this one blog post. Get books and get tapes and feed your mind. Heck make it a habit to read at least one financial book per month; actually factor it into your planner. Until you have soaked in as much financial knowledge as you can, you won’t get your subconscious interested enough in wealth creation for you to actually start making and managing good money.
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Be confident
Oversee your personal finance with boldness. Don’t approach your finances with timid apprehension: that’s a definite recipe for disaster right there. Listen, when it comes to finances, you need to be a confident person. It’s usually those who are not confident who give in to fear and we already know that money and fear do not mix.
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Keep in mind that accidental wealth is a myth
There is no such thing as accidental wealth; wealth is an effect of careful planning and strategy. Of course while some might argue that some people stumble into wealth through the lottery or some crazy-ass inheritance, the question is: how long does such wealth last?
If you’ve taken time to study people who are not financially savvy, you would see that regardless of how much money you shove into their hands, they tend to whittle it down, and down, and down until it’s at the same level as they are mentally. Studies have shown that most lottery winners end up far worse than they were before they won the lottery in a matter of two to five years!
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Resist normal
The ‘normal’ view to many people is scarcity. Times are hard and all that. But understand that the reality of this life is actually abundance. Look at the trees, the grasses, the earth itself: nature is vast and abundant. Scarcity is actually abnormal so when you accept it, it becomes your new normal. Dare the impossible and achieve it.
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Keep it in perspective
As important as money is, it is not the ultimate; it doesn’t solve everything. Train yourself to be happy even without the money and when it does come you know your happiness does not rely on it. Money will not transform your life into a more meaningful one nor will it improve your relationships with your loved ones. Simply put; money will only solve financial problems so keep it in perspective!
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Equip your mind for wealth
How much money you can make is tied to how much money your mind can contain. Haven’t you met people who say they don’t want to be rich; they just want enough money to keep the creditors away and get by? You might think they are being humble but in truth they’re not; it’s a fact. Poverty is often a state of the mind; it’s about more than just empty pockets and red bank balances.
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Count your blessings
Your gratitude for the little things in life helps you focus enough to see opportunities around you. When you are grateful for the things you do have, you somehow get more. Not to mention the positive chemicals you release when you rejoice can actually extend your lifespan and improve your health as opposed to the negative chemicals you release when you gripe constantly about poor ol’ you and the hand you’ve been dealt.
Goals
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Write the goals
Setting financial goals helps you know where you are financially and also helps you plan ahead and create a specific target. Of course you don’t just create goals, they have to be SMART (specific, measurable, attainable relevant and timely). When people have specific goals, they are better able to measure their progress towards those goals.
It’s not enough to simply wish to be rich, you have to have a specific target in mind and work towards that. For instance, you could target a $1,000,000 for the year 2019. In that case, a simple approach would be to break it down into bite-size targets like you have to make XYZ amount per month to be able to hit that million at the end of your financial year. Use numbers and dates to target what you want to save or what debt you want to repay by what date.
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Prioritize them
Prioritize your goals in order of preference. For instance, if you need to pay off the mortgage and also settle college debt, you would need to prioritize these goals in order of urgency and tackle them one after the other. It would be pretty unwise to aim at so many things at once because in the end you might hit none! Think of it like going to the grocery store with a list of items and limited cash. You would be sure to get the most important items first wouldn’t you? I mean there are some basics you really cannot do without no matter how hard you try.
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Set long-term goals
Some goals by their very nature are long term. For instance, paying off your mortgage debt or student loan would likely be a long-term goal. It’s important to specify where it falls on the time slot so you can decide on how to ration the repayment of the debts. For instance you could pay off a debt of say a $1000 in one go but for a debt of $100,000 you could ration it into as many as 50 repayments and pay up in smaller chunks. But learn to know which goals are long term because they are often not as pressing as short term goals.
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Set short-term goals
This could cover small debts or simple goals like perhaps saving a twenty every day. These small goals might not seem like much but give it time; when you look back you could be pretty amazed. For instance, someone who managed to save $20 each day would have $7,300 saved up at the end of one year and about $73,000 in ten years. You see where I’m going with this?
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Do it yesterday
Whatever decision you decide to take, do not procrastinate managing your personal finances. Rather, do whatever administrative tasks you need to do on a regular basis rather than procrastinating. When it comes to personal finance, procrastination is not your friend. So meet that financial adviser today, set up that savings account today; quit that money-gulping habit today! Time flies and one day you’re gonna look in the mirror and ask yourself: where did the time go? We all have, even though we don’t like to admit it. But the point is, that day will certainly come and you don’t want to be standing in your briefs, financially naked as the day you were born, gawking in confusion at the wrinkled stranger in the mirror with your heart thumping as creditors nip at your heels.
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Set financial goals
Rather than just setting generic goals or wishing upon an eyelash for wealth, you should also set specific targets of the exact amount of money you hope to make in a certain period of time. When you set financial goals, it sort of also streamlines your thinking into achieving the goals and satisfying your budget.
Create A Financial Plan
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Plan to get out of debt
There’s a reason the fictional Lannisters are a family to reckon with: they always pay their debts. You can’t wish debt away but you can certainly make it go away with careful planning and strategy. A great plan would be to set aside a particular amount of cash each month and apply it to all your debts. Then you could apply twice the amount to a particular debt until that’s paid off and then move the double amount to the next debt until you’re all clear. Of course it helps to start with payment of smaller debts first.
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Plan to pay less than the minimum on your credit card
Plan to pay less than the minimum on your credit card because doing otherwise would ensure you pay even more in interest. You don’t have to stress yourself if your financial capacities are unable to stretch a whole lot more. Just adding as little as ten dollars extra to the minimum payment would go a surprisingly long way towards making you more debt free. Sometimes interest compounds and rises to almost twice the principal. You don’t want that. I mean how would you feel tomorrow if you didn’t have enough money to pay for say college because you had to pay off outrageous interest from buying a pair of boots years back? Exactly! In this case, a tiny drop of water does make a mighty ocean.
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Create a budget
Most people without a financial background tend to regard a budget as a headache-inducing waste of time. But guess what? A budget is what saves you the financial headache. Some of you are gonna argue that a budget is all figures and hard to understand but it’s actually pretty easy. It helps you ascertain where your money is going and how to stay on track financially.
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Get control of your budget
You know how when you’re really hungry you go fill up two plates of food convinced you’re gonna scarf it all down only for you to eat a few spoonful and be completely satisfied? Yeah, your eyes were bigger than your stomach. A budget is like that. Once money comes into your hands you’re going to want to spend it on all the flashy things that stroll by and you’ll only remember the things you really need when the money is all gone. That’s why you need a budget; to help you keep your priorities in check. You need to be in control of your budget and not readjust it every minute to meet up with flimsy spending.
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Create a spending plan
A spending plan helps you plan ahead which in itself helps you avoid overspending. As a matter of fact, you should spend less than you earn and a simple way to do that is to reserve a fixed percentage of every income you earn for savings and another for your emergency fund account. You could authorize your bankers for an automatic withdrawal to transfer that sum each month from your account with them to your designated savings account.
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Retirement plan
Retirement plans usually come with a retirement account. The retirement plan system in the US is vastly different from what you have in so many other countries and relatively easier to follow. When you set up a 401(k) or Roth IRA account, you would wind up making some serious dough for yourself because the money continues to grow and grow in that account and you enjoy serious tax benefits compared to regular investing accounts. Sometimes, your employer might even offer to match whatever you invest in your 401(k) which doubles your earning. A general rule of thumb for retirement accounts is to save at least 15% of your income for retirement and do not touch it no matter what.
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Actually plan your financial blueprint
Can you really see Mark Zuckerberg making it big time without planning it? Wealth isn’t something that just happens by accident. I mean all the time you hear about people falling in love; when last did you hear about someone falling in wealth? Exactly. Wealth isn’t accidental; and the few people who get wealth accidentally, like say through the lottery, rarely keep it. Go figure!
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Don’t be afraid to spend money to make money
This is the part where I tell you to invest in professional development courses. Heck if you’re in business, taking a few Business courses won’t hurt or you could go the whole hog and get an MBA. If you’re following a career path, feel free to develop yourself by getting constant professional trainings and so on. Professional development would increase your capacity to earn more, climb higher on that corporate ladder, or heck to understand and run your business better.
Use The Experts
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Consult, consult, consult
I can’t say it enough; even Einstein needed some other person’s brains every now and then so you’re no exception. Consult those who know better about finances and make certain that you meet the right people for the right advise. Some people ignorantly assume that everyone who perhaps works in a bank or audit firm or stockbrokerage firms are qualified to give all manner of financial advice. Er, … wrong! There are different areas and different specialties. Make certain you know what exactly you need help with and get an expert who is a specialist in that particular field! Don’t meet an auditor for stock investment tips!
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Vet your experts
Yeah you don’t need a Harvard degree to know if a financial advisor knows his onions. I mean it’s like how you won’t approach a bald old man for hair-styling tips; same way you don’t want to approach a practically bankrupt advisor for financial tips. It should be do as I do not do as I say. And yes, just because someone is a financial advisor doesn’t mean they would advise you in your own best interests because so many of them are unscrupulous and ill-intentioned. They would cheat your right into the ground if you let them. Don’t be afraid to ask for lists of old clients and don’t be afraid to look up those clients! Referrals, baby.
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Pay your experts
I can almost feel your disappointment as that free consultation you were hoping to get from Cousin Henley just vanished into thin air. Pay your experts and pay them well! Pay them what they’re worth and stop scrimping! They tend to give you their best when they are well paid and they are less likely to make stupid mistakes simply because they could not be bothered to pay better attention to what after all amounts to cheap labour.
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Get a second opinion
Sometimes it doesn’t hurt to get a second opinion about whatever financial advice you’ve been given. This works especially if you’re a very greenhorn in financial matters. Do not make the mistake of expecting the experts to always agree: they won’t. But there are some basic issues which are universal all over.
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Check your comfort level with your expert
This is similar to the vetting thingy I told you about. If your advisor pushes you too much wayyyyyy out of your comfort zone, it might be time to take a closer look at their portfolio. Advisors would definitely advise you to take some risks yes, but they certainly shouldn’t push you into doing things you don’t want to do or things that put you or your portfolio at risk.
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Get a mentor
Okay so if you’ve read Kiyosaki’s Rich Dad, Poor Dad and you still don’t have a mentor, you’re doing everything wrong. Mentors step in and help you when you’re overwhelmed. They throw you a lifeline when you’re drowning. No, the lifeline might not be money, but it could definitely be advise that would make you a hell of a lot of money and save you money. Pick your mentor carefully because who you listen to matters. Not everyone can mentor you and for that matter not everyone should mentor you.
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Don’t be afraid to get help keeping track of your finances
Make it a habit to regularly check your credit report for errors, signs of fraud and identity theft. In case you didn’t know you are entitled to a free credit report from Experian, TransUnion, and Equifax every 12 months. You could plan and rotate them to get one every four months.
Also feel free to sample other technological offerings in your search for financial improvement. For instance, you could get an app to help track your spending or to provide digital budgeting. Try Mint.com for instance or several other apps on Google Play Store.
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Watch the professionals
Sometimes you might be in a place where you cannot afford a professional yet. Don’t give up just yet. So many professionals like lawyers and auditors and financial advisors sometimes offer pro bono services to startups or non-profits; they sometimes also organize free seminars and conferences. You would never know that if you aren’t watching them for those tips. Keep your eyes focused on them and don’t be shy to take advantage of the free meal in this case to broaden your knowledge of financial management.
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Make your own financial decisions
Yeah I can almost hear you wondering about this one. Listen your experts are there to advise you and not to force their own ideologies on you. Ask for their advice, pay for it, but until you are convinced and it makes sense to you, do not buy it. You have a mind of your own so seek advise because let’s face it, they are the experts and they know better. But never leave the decisions for your finances in someone else’s hands.
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Be tech savvy
Take advantage of technology and use money management tools like Quicken. That said, remember to not give up responsibility for your financial decisions to others.
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Apply wisdom in choosing your financial advisor
Some financial advisors work based on commission while other work based on fees. It might be advisable for you to patronize the advisers who work fee-based because they provide unbiased financial advise that is often in your best interest rather than the others who might be tempted to recommend investments they are involved with just so they can get a commission whether it is convenient for you or not.
Cash Savviness
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Keep the money in your wallet to a minimum
There’s a reason most countries are moving towards a cashless economy. Carrying a lot of cash in your wallet does a lot of things to you; most of them bad! You could fall prey to a group of bandits, pick-pockets or a mugger; you could lose the cash (note to self: losing money is not a positive motion on the financial matrix); or you could definitely over-spend. Plus it’s harder to keep track of what was spent on what when you use cash. So, as much as possible, do not carry cash around. Use a card instead and thank me later!
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Keep a financial journal
So you probably didn’t see this one coming, huh? Keeping a financial journal records your daily strides towards your financial goals as well as your daily fails. Seeing it all written down in black and white makes it easier for you to keep track of where you’re winning and where you’re failing and hopefully correct what needs to be corrected.
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Spend less than you earn
This is really a no-brainer and probably unworthy of mention at this point; but you would be surprised how much people fail in this one simple rule. So many people seem to be terminally incapable of spending less than they earn and they hope some manna would fall from the great blue skies and miraculously transform into cash. It won’t!
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Have an exit strategy for every investment
Without an exit strategy, it would be mighty tough to recognize the right time to cut your losses — or take profits off the table. The right thing to do would be to make certain that you plan accurately what to do when that market goes belly-up or how to sell off the investment and redirect the funds elsewhere. This is where a goal also comes in handy. Do not just play it by ear with your investments. Plan, plan, plan!
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Expect the highs and lows
Things aren’t always gonna be rosy. That’s life. So expect your boom periods and your drought periods. But no, do not wait in silent dread for the droughts or wait in dreamy, endless expectation of the glory days. Plan adequately and do not make things difficult for yourself by making vague, generic plans! Read up our section on this same post about how to plan properly.
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Authorize automatic deductions
Not only does it ensure you pay yourself first, it’s an easy and painless way to save for retirement. Fill the necessary forms with your bankers and do not cancel it even when you’re tempted to. Let them keep making those automatic deductions and you’ll be glad you did when you see your cash balance after a while.
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Have your own record of your financial reports
I’m not sure why you need to be told this, but you should definitely have your own record of your financial reports so that when the experts tell you the sky is falling, you can see it for yourself. Keep your records properly too because what if something happened to your financial service provider and you suddenly found yourself adrift? Think of it as backup.
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Read your financial reports
Yeah I know they’re probably not a page turner like your favorite novel, but trust me, they are one of the most important reading you could ever do. You’re actually doing yourself a huge favor when you read your reports and the good news is the more you familiarize yourself with them, the easier it would be to read them next time around and the easier it would be for you to make decisions about your finances on demand wherever you are. You can’t decide if you can or cannot afford something when you don’t know what your balance looks like.
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Make it fun
Humans are wired to love anything fun. Make financial intelligence fun for yourself by doing it in a creative way. I know people who started saving as a competition among friends to see who saved the most by Christmas and the habit stuck for life. Some one else papered her plans and budgets records in bright, colorful, cartoon papers. Whatever works for you so long as its fun and encourages you to be responsible about your finances. Know that financial seminar in Orlando? Well make a road trip of it with your friends and you all go attend.
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Don’t max out your credit card
So many people fall prey to this one. When you max out your credit card, you’re looking to get some penalties tacked on and that’s more money down the drain, in addition to the interest you also paid, which would have helped you towards your financial future. And here’s a tip: several serious financial gurus don’t even use a credit card at all! If they can’t afford whatever it is at that moment, they don’t buy it!
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Run a constant SWOT analysis on your financial health
Yeah it’s not brain surgery. You should run your life like a company which means apart from a personal SWOT analysis, you should be doing that regularly to your finances. It’s like being your own auditor and trust me, seeing everything in black and white kinda brings it home to you where the leakages are.
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Plan and pay your taxes
Having the tax man shadowing your every step, looking to get you convicted is not a very enjoyable way to live. Pay your taxes as and when due to avoid penalties cos when they start tacking on those zeros, your financial future starts to take on a slightly dimmer view. Not to mention the legal fees you would probably incur if they nabbed you for tax evasion. Also, plan your taxes properly. Tax planning could help close loopholes and save you money so be sure to discuss with a CPA or financial planner.
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Know your taxes
Sometimes when someone mentions taxes, a lot of people get dizzy; and no wonder because there are gazillions of different types of taxes. There are income taxes, sales taxes, property taxes, and so on. Some states do not have certain taxes but just about every state has property taxes. You need to know the taxes applicable to you and pay them accordingly. It could be dangerous missing out on taxes; dangerous to your freedom (think prosecution and imprisonment for tax evasion), dangerous to your finances (think legal fees) and even dangerous to your assets and investments. For instance, when property taxes are outstanding, the interest of the government is to recover its revenue. It could put a tax lien on the property and then sell off that lien to a third party by way of auction. If the third party buys the lien, they get a guaranteed interest rate based on local and state laws. If you miss your payments again within the allotted time that third party would be at liberty to sell off your property to recover his money. See?
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Keep an actual file for your taxes
Keep an adequately organized file of your taxes and make certain that you include information about charitable gifts, goodwill donations and income from side jobs in it so that you will make it all handy.
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Adjust your tax withholding
Tax withholding is simply that amount your employer is legally obligated to withhold from your salary and pay directly to the government. Sometimes though, it turns out you're over-paying and you get an annual refund on a portion of your taxes. A great tip would be to adjust your tax withholding rather than waiting to be over-taxed and then refunded.
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Keep track of deductible fees
Always, without fail, make certain that you are keeping your eyes on what your bankers, stock brokers, etcetera, are deducting from your accounts towards payment of fees. It might seem like peanuts but trust me it’s nice to know and plan ahead.
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Maintain a glowing credit report
Yeah you never know when you might genuinely need the help of Uncle Sam in some venture or something so be sure to keep your credit reports straight as that would influence your credit score.
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Pay off that student loan
If you have a student loan, consider signing up for Spared, Qoins or even Acorns. They help you save spare change and apply it to paying off student loan debt. Now who doesn’t think it’s a great idea to employ such creativity in paying off a student loan through tiny donations and contributions?
Watch Out For The Drainers
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Bad habits
Gambling would probably take the cake on this one; so would buying lottery tickets. I mean there’s a reason lottery tickets are called “a tax on the stupid.” You could get into the habit of buying gazillions of tickets and never win the lottery in your lifetime. But every dime you spend buying those tickets or playing those stakes could have been invested in a worthier cause. And worse, when a handful of people do win the lottery, he go through all that money in a year or less and are right back to where they started in no time.
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Cigarettes
This one may seem harmless (that’s discounting the possible damage to your lungs, of course) but in the final analysis, cigarettes are not good for you nor do they help your pockets. As with all other bad habits, they make you spend and the money might seem small at first glance but it definitely adds up. Besides, think how much more you would be spending if you had to have lung transplant. Apart from the harrowing and painful experience of being on the waiting list for ages, let’s not even factor in the cost of the surgery. And please don’t even bleat out insurance at this point.
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Alcohol
First off, many a bad decision were made when alcohol was involved. People tend to do stupid things when they are sloshed and one of them is lying dead drunk in gutters and getting divested of all their funds and valuables. When you have to attend a function, limit yourself to one glass. When you have a business dinner, do not imbibe alcohol if you’ve never taken one before.
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Wasting time
In case you didn’t get the memo, time is money. Procrastination makes you lose out on time, money, opportunities, resources, you name it! Have a daily to-do list and hold yourself accountable to it. Make certain that you start with the tasks you love most and get them out of the way because the successes you record from those tasks will motivate you and give you the strength to tackle the less savory tasks.
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Close your eyes to the grass on the other side
Stop trying to keep up with the Joneses. Stop buying clothes and shoes that you don’t need in order to impress people who don’t know even know you exist. No, the grass is not greener on the other side; it’s the same grass that grows everywhere except for the fact that the Joneses probably water theirs differently. Find what works for you and stick it. Don’t put your financial legs out of joint trying to impress people.
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Keep your eyes peeled for fraudulent deductions by self-auditing your account.
You would be surprised at just how much has fallen through the cracks because some financial institutions and banks have learned to deduct the odd cent here and there. It may seem trifle but it does add up; watch out for it and confront them the moment you notice it. People have been known to track their financial history through the eyes of an auditor and they often discover tons of money which the financial institution have found clever ways to hide.
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Don’t splurge; not even at Christmas
Okay this might be a bit of a stretch for most of us but the end result is unbelievable and no, it doesn’t make you Scrooge. If you could somehow figure out a way to not splurge, you could end up saving yourself lots and lots of money. A good tip would be to do your Christmas shopping way before Christmas because then there would be less possibilities of splurging. Make a definite list of all the people you wish to get gifts for and discipline yourself to buy the gifts strictly according to your list.
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A life of crime
Okay so this might not necessarily equate murder or kidnapping, but petty offences that attract fines are also not your friend. Remember how that cop pulled you over for over-speeding and you got a ticket? Well that fine you had to pay is money you could have used elsewhere to better your lot. Or how about that time you had to pay that lawyer some fancy legal fees to keep your tushy out of jail for obstructing justice or jaywalking? There’s no judgment here, but you do the math.
Besides most ex-cons find themselves pretty much at the bottom of the corporate or financial ladder because so many companies are hesitant to hire anyone who has got a criminal record. You can’t blame them either. So as much as possible, stay on the straight and narrow; keep your nose clean and out of trouble.
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Show me your friends
Yep, you knew this one was coming. It’s kind of silly to expect to suddenly morph into a financially responsible individual when the five closest people to you are reckless spenders who think living life on the edge means living from penny to penny. Sometimes just changing your friends is all you need to change your entire life!
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Eating out
Who doesn’t like the occasional trip to McDonald’s for a burger or KFC for one of their sizzling fried chicken? But the truth is that those things are drainers! Take more of home-cooked meals because you would spend less, eat healthier and save more.
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Overshot debt ratios
There are laid down rules for debt ratios which means certain debts have a standard ratio. For instance, consumer debt should be less than 20% of your net income, housing debt should be less than 28% of your debt ratio, and so on.
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Quantity over quality
In the process of trying to be financially prudent it is easy to fall into the trap of patronizing quantity over quality. In the long run, quality wins out because when you buy quality materials they tend to last longer and they tend to make life easier for you as they require less maintenance and save money.
Financial Security
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Guard your financial details
I know I don’t have to remind you to keep your Social Security number private, your ATM pins and heck, your bank details. And in this day and age of internet scams everywhere, you might want to do a double-take every time someone tries to get your financial details by phone or internet. When you use the ATM be conscious of guarding your PIN from prying eyes; be careful who you let see your financial details.
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Never repeat passwords on random sites
You would be surprised how so many people, young and old alike, use the same passwords for say their internet banking and Facebook. In a word… don’t! Hackers would just love it if getting into your Facebook also meant getting into your PayPal account. When you log into several sites, also be sure to look at the site information and make sure that it’s https:// because you could be running at a risk because non-https:// sites are risky.
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Have an account officer at your local bank on speed dial
In this day of strange happenings on the internet you want a financial officer on speed dial especially if you notice suspicious movements on your account so you can call in at once and nip it in the bud before you storm the bank in person. Or you could need help to move your funds in an emergency and your account officer would definitely come in handy.
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Have an emergency fund
Accidents happen. Kids could fall out of trees and break an arm. Your car might blow a tire. A relative could suddenly get cancer and require chemo; any number of things could go wrong and as long as you’re human, that’s pretty much a given. You cannot control it but you can certainly cushion the effect by having a rainy day account so you don’t tap into your savings. And no, it doesn’t qualify as an emergency fund if it’s less than three to six months living expenses.
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Read all contracts
Read all contracts before you sign the dotted lines. Come on people have lost lifetime savings and assets because they wouldn’t read the contracts properly before signing them. Shakespeare had this one down cold when he wrote the Merchant of Venice. You could lose a pound of flesh and worse if you don’t read the fine print! The other party could hide unfavorable terms and conditions in the body of a work and once you append your signature, you are bound by the agreement. Read the fine print on all agreements and get a lawyer to read through them for you too.
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Invest
When your savings start to pile up don’t be afraid to spread it into investments and get some hefty return on your money. I mean, let’s be honest, no one got rich from saving tons of money forever. When you save to a certain level you need to push some of those monies into investments that would yield you some tidy sums.
42
Stay out of debt
There’s really no point climbing out of debt only to crawl back in and be right back where you started. Stay out of debt by curtailing your spending. A very drastic measure I’ve known several people to use is to cut up their credit cards (sorry, credit cards companies) and limit their spending to what they do have at that moment. Besides there are several principles about money and not borrowing is one of them. When you borrow you’re breaking several principles.
41
Never co-sign or guarantee a loan
You would be amazed how many people have lost their life’s savings paying debts for others because they co-signed or guaranteed a loan. Do not be afraid to say no when asked because in the end, it’s gonna be your fat in the fire. When you guarantee a loan you are saying you should be held responsible for the repayment if the original borrower does not pay. And guess what? He likely won’t!
40
Update your beneficiaries
You know those insurance policies and IRAs and 401(K)s you picked out? Well you should update the beneficiaries every now and then to be sure you’re on the same page with what you really want. I mean you would be surprised how many people dropped dead only to have that ex they hate get the benefits from the insurance company or IRA. So every year review and if necessary, update the beneficiaries of your policies.
Everyday Habits
39
Don’t be afraid to haggle for a bargain price
It might seem like a few pennies but if you can get a cheaper price for whatever it is, it doesn’t hurt to knock the figures down. Besides when you start tacking on those extra dollars you saved, it adds up.
38
Pay your bills on time
Most times late payment attracts extra fees tacked on as a result and like we already established, extra fees are not needless payments which could have been applied to some other venture to better your lot. See where I’m going with this? When you pay your bills in time you avoid a lot of unnecessary extra bills piling on.
37
Compare prices
The beauty of the rise of the e-stores is that you can ascertain prices with the click of a button. Before you go out and purchase that flat screen TV, feel free to check other stores, online or physical, and compare the prices. Several times I’ve saved myself hundreds of dollars by this singular act.
36
Shop alone
Sometimes shopping in a group means you spend more money whether to impress your friends or simply as a result of peer pressure. Sometimes friends just egg each other on without meaning to and you would end up spending far more than you ever planned. So yes, if you can, do shop alone.
35
Learn to say no
Most people blow an emergency fund on things that are not in any way an emergency like say a wedding ceremony or a birthday party. While you should support your friends and loved ones as much as possible, never deflate or even so much as tap into, your emergency fund account simply to please anyone. If it’s not an emergency, say no! Some financially savvy people budget annually a certain percentage of their finances for assisting people and when that percentage is exhausted, they start saying no. It doesn’t make you mean, it just makes you disciplined. It means you’re not ready to be pulled down.
34
Recycle
Apart from the good you’re doing for the universe, you could probably make a few spare cash from recycling. And even apart from that, you could cut out purchases by re-using some things around the house like converting a paper grocery bag into wrapping paper or a glass bottle into a candle holder. The options are endless. You could even go to Youtube and watch several videos on how to turn supposedly useless stuff around the house into useful items for some other purpose.
33
Keep a to-do list
Yeah I can almost see you doing a double-take and wondering how a to-do list makes you more money. Apart from the fact that it could remind you of important appointments you might have otherwise forgotten which could fetch you money, it also saves you money actively. Haven’t you ever had several errands to run across town only to move in zig-zag motions doubling back frequently and burning gas simply because you did not streamline your activities and movements in black and white? Exactly!
32
Exercise
You’re absolutely not allowed to groan. Exercise opens up the brain, the mind and heck, the pores. Exercise makes you more cheerful and outgoing and approachable. (Didn’t know that, did you?) You are more productive when you’ve worked up a sweat; ergo, you’re definitely gonna earn more. Exercise sparks different areas of the brain responsible for creativity, productivity and so many other delightful functions. So get cracking on that treadmill. Besides the discipline it takes to have and maintain an exercise routine will serve you well in your financial life too.
31
DIY like crazy
DIY is the new black and for very good reasons. DIY saves you tons of money plus it helps you challenge yourself creatively. Your brain needs that; and for that matter so does your account. Sometimes you could convert items around the house to other uses or perform some tasks or chores yourself to limit spending on purchases or paying for services you could just as well have performed yourself.
30
Weigh each cost on an imaginary scale
Have you ever wondered whether a purchase was worth it or not? Before you cough out your money, be sure to do a mental check and ascertain why you are getting that purchase in the first place. Is it something you want or something you need? You would be surprised at how many times you managed to waste money buying mere trifles.
29
Buy household items and other commodities in bulk
If you’re picking up some commodities in bulk, you would definitely get a bargain price for them. That detergent company might offer three for the price of two; that dishwashing detergent liquid might come with a 30% price slash if you buy a pack. The list is endless but keep one thing in mind: but things that won’t go bad and where possible, do not buy if you do not really need it. Cheap isn’t a reason to buy what you don’t need.
Be Proactive About Money Management
28
Apply for scholarships
You know those trips you wanted to take? Or that further education you wanted? You don’t have to wait until you have the kind of money that rivals Trump’s. Apply for scholarships and grants; yes, even when you think you’re not worthy. Cast your net wide and you’ll be surprised. Most fellowships offer scholarships is you show good reason; some colleges offer courses at significantly lower prices than others and still have an awesome standard. You don’t have to be Ivy League if that’s not your thing but whatever you do, don’t sell yourself short. Apply for a scholarship rather than just taking on student loans!
27
Get life and health insurance
This is so obvious it probably doesn’t even have to be mentioned. Even if your employers pay your life insurance you can still score extra life insurance for yourself; you would be surprised how handy that could be in future. It’s usually people who have no insurance whatsoever who suddenly have all manner of crisis. Life insurance takes care of your loved ones should anything happen to you and health insurance keeps you from going bankrupt over any medical issue.
26
Insure valuables while you’re at it
Life is all about unexpected stuff so yes, it’s almost stupid risking every day without insuring your valuables like your car, your jewelry, your house, and so on. A fire could happen, it could be theft, it could be anything. But if you have insurance, you won’t feel the brunt of it as much as you would otherwise.
25
Keep track of your net worth
This gives you a summarized picture of your assets and liabilities and helps you to make informed financial decisions prone to fewer errors.
24
Rebalance your Portfolio each year
Review your brokerage account each year and make certain that your investment allocations are still in tune with your investment goals because your goals change as you move ahead. Goals are meant to be flexible mind, not cast in stone. So it’s alright to want to review that investment in a certain textile industry in favor of say an infotech company if the payback is more profitable the other way.
23
Never buy something expensive the first time around
Have you ever walked into a mall, clapped eyes on something you absolutely never planned on buying and suddenly felt as though you would positively die if you didn’t get it? You’re not alone; you can always see the movie: Confessions of a Shopaholic to see what I mean. It’s alright to be tempted; it just means you’ve got red blood flowing in your veins. But force yourself to walk away and check back later. You might be surprised to discover you really do not need that item after all.
22
Don’t be afraid to ask for a raise
Learn to approach your boss for a raise if you find your worth has exceeded what you are being paid due to better experience, or more skills acquisition. Being underpaid has a lot of negative effects on you and your psychology; it could even affect the quality of your productivity. Your company doesn’t necessarily have to pay top dollar but if they’re not willing to at least pay you your worth, it might be time to start looking for another job.
21
Review your salary frequently
A simple online search could give you a ballpark figure of what people in your field and with your qualifications can expect to earn. Review your salary every now and then to be sure you’re still being paid what you’re worth. And here’s a bonus tip for you: never go for a job interview without having an accurate idea of your financial worth in the market.
20
Pay yourself first
So many people make this mistake when they are faced with the option of paying off debts or spending. Pay yourself first by squiring away some money into a do-not-touch savings account. Some banks even employ a high-interest on some deposit accounts provided you restrict your withdrawals on that account. Speak to your local bankers and find out if they offer such products.
19
Declutter
Almost everyone experiences clutter one way or the other but clutter is really very unhealthy for you if you’re trying to stay on top of personal financial management. Learn to purge those little odds and ends out of your personal space. Having an organized space makes you more efficient, helps you spend less time on searching frantically for that shirt just before work or those batteries. Organize your personal space and it will somehow flow out to every area of your life.
18
Go for experiences and not products
A vacation is more memorable than a bag or shoe so if you absolutely have to treat yourself, get a vacation instead.
Control Your Income
17
Create new streams of income
Multiply your streams of income and understand that every stream of income should provide at least three different channels of wealth for you; one can give birth to many. For instance if you love writing, that ability can give birth to freelancing, blogging, editing, tutoring, self-publishing, and so many other delightful opportunities. It’s been shown that millionaires generally have no less than seven different sources of income and the secret is that one stream of income should be used in more than one way to generate funds. So while you love your six-figure salary and while we’re sincerely happy for you; we have to give you some great advice nonetheless: get something else to do too. In a word, do not absolutely do not, depend on your salary or single business. Besides, that kind of diversity is good for your brain.
16
Do something that fulfills you
Do something that fulfills you and makes you feel happy with yourself. Find a way to be aligned with your work and make money doing something that leaves you with a big, toothy grin. The most successful people view their work with the same healthy anticipation with which we view fun activities and hobbies like seeing a movie or dipping in our favorite pool in the middle of the afternoon.
15
Learn to negotiate
Whether it’s with the company you work for or clients you are trying to win for your business, you need to learn to negotiate. The rule of thumb is: negotiate from a position of strength. When you approach your boss for a raise, or a new company for employment, don’t go naming figures first. You might end up lowballing and shortchanging yourself just because you couldn’t keep a sock in it. But emphasize your strengths in a negotiation by reminding the other party what they stand to gain from you and the incredible value you bring to the table. If it helps, the Harvard Program on Negotiation offers a lot of free email courses that could help you boost your negotiating powers no end along with optional paid seminars.
14
Compare you to you
We have always heard that comparisons are bad; well not always. Rather than comparing yourself to your friends, learn to compare yourself now to the past you. Just discovering that the distance you have covered is miles ahead of where you used to be should be a great confidence booster for you. Learn to compare yourself to yourself and no one else.
13
Invest in yourself because you’re your greatest asset
Whether it’s a higher education or a new degree or just an online training, do not be afraid to spend money on yourself. Sometimes, these knowledge can be gotten for next to nothing or even for free. For instance, an online MBA could be gotten from the University of the People for less than $3,000. There are so many trainings you could pick up on Udemy or Teachable or so many other sites. You could even attend seminars and conferences. Expand your horizon and you will be shocked to discover just how much potential has been buried inside of you.
12
Relocate if you must
Sometimes personal finance is like real estate. Three words: location, location, location! If your environment does not favor the kind of business you do, it might be time to either change your environment or change your business. I mean for instance, you cannot really expect to have great sales if you’re selling winter jackets in the hot Tropics like Africa.
Financial Wisdom
11
Have an asset allocation plan
Yes this is one more plan you absolutely have to have. It’s really like budgeting ahead. Haven’t you ever seen people who suddenly came into some money and were so confused about what to do with it? An asset allocation plan helps you plan adequately and also helps you decide what percentage of your assets to put into what investment. For instance you might plan 60% for real estate, 15% for bonds and so on.
10
Give to receive
It sounds like it counterbalances but in truth when a fist is tightly closed, nothing goes out yes, but nothing comes in either. Whether you believe it or not there is a universal law that governs giving. You stand to make a whole lot more if you give to a charity. Besides charitable giving helps lower your taxes. Why do you think those Fortune 500 companies are always so keen on corporate social responsibility?
9
Sometimes you use what you have to get what you need.
Remember those jeans you last wore in 2002? Well someone somewhere would treat them like a gift from Santa himself. Do a yard sale and invest that money into something else worthwhile. Or better still, donate them to charity and enjoy the good energy that act of generosity would bring. So many people have actually managed to raise money for a side hustle from selling those things that need to be sold.
8
Teach your kids financial intelligence
Catch them young is the name of the game. Unfortunately curriculums do not teach financial intelligence so you owe it to yourself and your kids to teach them from an early age about finances. A great way is to get them the game of Monopoly; the fun buying and selling helps kids get in touch with their entrepreneurial sides.
Listen if you don’t teach them early, think how you would feel to have 48-year old losers living in your basement and shouting upstairs for milk. In your best interest and theirs, teach them early in the way they should go.
7
Wisdom can be imparted by association
This is the part where I tell you to show me your friends and I will tell you who you are. The five people you spend the most time with are your biggest influencers. Look at their lives; are they doing well financially? Do it now; change your inner circle of friends. Surround yourself with people who look like the picture of where you want to go. Spend time with financially savvy people who have the right idea about money and watch as their wisdom transfers to you.
6
Reassess the money ideologies you were indoctrinated with
Challenge the myths you learned about money. If they were the wrong ideology jettison them at once and leave room in yourself for a fresh set of progressive money ideas. They may have seemed like clichés then but they sent the wrong signal to your subconscious and you don’t need them because their effect on your financial life are counterproductive. It’s like sailing on an ocean with a hole at the bottom of your ship.
5
Develop the habit of self-control
This is a valuable skill for anyone and if you’re interested in managing your finances and building something worthwhile, you should be ready to control yourself. It’s self-control that will help you live within your limits; it’s self-control that will help you live without a credit card and avoid all those interests.
4
Start the college fund from the crib
Start saving towards your child’s college education as soon as the child is born because spreading it out over those years would make it easier for you to raise the full sum stress-free. You could start something as simple as putting aside $25 per month per kid. Of course, if it’s not possible to save for this and retirement definitely pick a retirement plan to save for because that kid might be a modern-day Einstein and win a couple of scholarships. But no one ever heard of a scholarship for retirement.
3
Buy used cars rather than new
When you drive a new car out of a parking lot the value instantly drops. Cars are a convenience. They might make life easier for you but they definitely do not amount to assets. So even if you’re rolling in dough, by all means get the second-hand cars rather than brand new because you would be effectively shifting the cost of the depreciative value to someone else. And yes, when possible, do not take loans for a car.
2
Make a yearly budget months ahead
Make a yearly budget months ahead and do not be afraid to adjust it as time goes on. Then you could plan effectively even from this year rather than waiting for the year to end and starting a fire brigade approach.
1
Avoid bankruptcy as much as you can
I have sadly seen people who get into a lot of debt telling themselves that if push comes to shove, they would simply declare themselves bankrupt and escape those mounting debts. This view point is so sad, misbegotten and unfortunate. Bankruptcy might save you from the immediate debts but it’s the proverbial Trojan horse. It would take a whole lot more from you. Bankrupts are usually so declared by the court. And once declared bankrupt, they tend to lose a whole lot more than they ‘gained’. Your reputation is one of them; you also lose credit worthiness; your financial institution suddenly begins to handle you with kid gloves and a ten-foot pole and let’s not even mention the several opportunities that would become closed to you forever. In some jurisdictions for instance, you could never be a director of a company or trustee of a non-governmental organization if you had at once time been declared bankrupt. So no, it isn’t a get-out-of-jail free card; it’s an unfortunate ‘gift’ is what it is.
You made it!
There are gazillions of personal finance tips, as you may have gleaned from this post but in truth, not one of them is worth the paper it is written on if you do not practice it. Make it a habit to begin to adjust your personal inclinations in line with this post. The next time you feel a hankering for ice cream, ask yourself if you really want to look back at retirement and realize you licked up your financial future in a vehicle called ice cream.
There are so many financial secrets and so many ways to manage effectively your finances; I think I proved that.
But one thing you should know is that these tips do not always work well in isolation; they do not thrive when just one is practiced. So yes, you need to consider lifestyle adjustments, disciplined approach to your finance and meticulous practicing of the various tips in this post.
In the end, you would certainly have a very balanced mindset and be less inclined to splurge, over-spend or do so many of the other wrong financial tips you are probably already practicing.