Understanding how to manage your personal finances like a pro is essential for paying bills, building savings, amassing wealth, and enjoying a long and comfortable retirement.
Although banks and financial advisors sometimes charge clients hundreds or thousands of dollars for personal finance advice, the Internet provides a vast array of free resources for individuals who seek to increase their financial literacy without making a huge dent in their pocketbooks.
We are going to provide effective tips and tricks that you can implement to help you better manage your personal finance and some reliable places you can find these tips.
- What are the Best Personal Finance Websites?
- What are Some Financial Tips That Everyone Should Know?
- How do you Manage Money Like the Rich?
- How do I Start Investing?
- How can a Personal Financial Crisis be Avoided?
What are the Best Personal Finance Websites?
Below are 10 highly valuable personal finance websites that offer resources and information to help you reach an array of goals, from living frugally to choosing the right credit products and investing wisely.
1. WiseBread.com
Wise Bread is an extremely popular personal finance community that includes bloggers and experts in its membership. As they like to say, “You don’t have to sacrifice your financial independence to enjoy life.” That’s the driving force behind what they do, and their goal is to help people live well.
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The most popular areas of the site are the “Personal Finance” and “Frugal Living” sections. It also offers a “Life Hacks” area that covers everything from technology tips to managing an organization.
2. Kiplinger.com
Kiplinger takes a much different approach, but it’s valuable in its own way. This site is only one of many distribution channels for this D.C.-based publisher, but it’s definitely one of the most popular. In addition to personal finance tips and tricks, Kiplinger gives you solid and accurate business forecasts.
It’s seen as a trusted thought leader. One of the greatest benefits of Kiplinger is the variety of content available to the visitor. It has slide shows, videos, quizzes, news columns, special reports, blogs, and more.
3. TheMilitaryWallet.com
For families in the military, The Military Wallet is a unique and specially tailored personal finance site. The site’s goal is to assist the military community in becoming fiscally smart and informed about the variety of benefits and programs available to it.
Financial topics such as investing, insurance, and retirement are covered in detail, as are subjects like military discounts and post-military money management.
4. BankingSense.com
Banking Sense is one of the most valuable and instructive resources on this list. It has a unique way of presenting valuable financial news, tips, and advice without using highly technical jargon or phrasing that’s difficult to understand.
The site covers such topics as credit cards, insurance, small-business finance, personal finance, taxes, and more. Part of what makes Banking Sense so useful is its community aspect. Readers are encouraged to interact and comment with the content, so they can learn from one another.
5. CashMoneyLife.com
Having been featured on top media websites like The Wall Street Journal, The New York Times, Yahoo! Finance, MSN Money, and more, Cash Money Life stands out as a reliable source of advice on personal finance and small business.
Set up in a typical blog format without all the bells and whistles that make other sites so confusing, readers can come here to get clear information. One of the most popular sections is the “Free Money” page, which provides information about referral bonuses, free trials, and the like.
6. Bankrate.com
One of the most knowledgeable and respected sites on this list is Bankrate. Launched in the pre-Internet area, way back in 1976, this former newsletter has transformed itself into one of the most respected websites in the personal finance arena.
As its name implies, Bankrate supplies plenty of information on bank rates, mortgages, and credit cards, but it’s also a source of personal finance advice in such areas as financial planning, retirement, and investments.
7. ModestMoney.com
Modest Money readers appreciate this site for its honest and unassuming approach. Started by an “average guy,” this blog provides an unbiased and simplified look at financial product reviews, credit card deals, and other finance blogs.
8. MyMoney.gov
The only government-operated website on the list, MyMoney.gov offers its own unique spin on personal finance. It has information about earning, borrowing, saving, investing, spending, and protecting your money. Other popular pages include financial tools and money quizzes.
9. CreditCardForum.com
If you’re really into personal interaction and online communities, check out the Credit Card Forum. The New York Times says it’s “for people who love credit. Its posters are a fount of tips and tricks for acquiring cards.” As you may have gathered, the personal finance information found here focuses on credit card offers and how to use them wisely.
10. DoughRoller.net
The last site on our list is Dough Roller. This blog gives information, resources, and tips on how to make, donate, save, and spend money in fiscally smart ways.
People who regularly read Dough Roller are intensely loyal because they appreciate the broad variety of content. Whether you like blogs, podcasts, newsletters, or anything in between, Dough Roller has something for you.
If you’re looking for reputable resources and solid information on personal finance, start with these 10 sites. You won’t be disappointed, and best of all, they’re free!
What are Some Financial Tips That Everyone Should Know?
Here are 10 key tips to getting ahead financially.
1. Get Paid What You’re Worth and Spend Less Than You Earn
It may sound simple, but many people struggle with this first rule. Make sure you know what your job is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a $1,000 a year can have a significant cumulative effect over the course of your working life.
No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in savings. And, it doesn’t always have to involve making big sacrifices.
2. Stick to a Budget
An important step to consider when trying to get ahead financially is budgeting. After all, how can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need to set up a budget whether you make thousands or hundreds of thousands of dollars a year.
3. Pay off Credit Card Debt
Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so convenient to use, and it’s so easy to forget that it’s real money we’re dealing with when we whip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don’t, and end up paying far more for things than we would have paid if we had used cash.
4. Contribute to a Retirement Plan
If your employer offers a 401(k) plan (or another type of employer-sponsored retirement savings program), you should consider contributing to it if you can afford to. Often, with 401(k) plans, your employer will contribute the same amount that you put toward your account up to a certain percent. This is often referred to as an “employer match.” If your employer doesn’t offer a retirement plan, consider an IRA.
5. Have a Savings Plan
You’ve heard it before: Pay yourself first. If you wait until you’ve met all of your other financial obligations before seeing what’s leftover for saving, chances are, you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% of your salary for savings before you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.
6. Invest
If you’re contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.
7. Maximize Your Employment Benefits
Employment benefits like a 401(k) plan, flexible spending accounts, medical and dental insurance, etc., are worth big bucks. Make sure you’re maximizing yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.
8. Review Your Insurance Coverages
Too many people are talked into paying too much for life and disability insurance, whether it’s by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents.
On the other hand, it’s important that you have enough insurance to protect your dependents and your income in the case of death or disability.
9. Update Your Will
In 2020, just 32% of Americans had a will. If you have dependents, no matter how little or how much you own, you need a will. If your situation isn’t too complicated, you can even do your own with software like WillMaker from Nolo. To better protect your loved ones, consider writing a will.
10. Keep Good Records
If you aren’t careful about keeping thorough records, you’re probably not claiming all your allowable income tax deductions and credits. Set up a system now and use it all year. It’s much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.
How do you Manage Money Like the Rich?
If you want to be rich, you need to properly manage your money like a truly rich person.
You don’t really need to be swimming in money like a millionaire but you can grow your wealth by simply emulating the financial habits and strategies that the rich live by. Here’s how;
Live within your means
This is the number one golden rule when it comes to personal finance. Luxury has a way of attracting us where we sometimes find ourselves wanting things we cannot afford. But is it worth it if it will lead to bankruptcy? The lifestyles we choose to adopt will most certainly determine the futures we want to have.
For example, if you earn 50k it does not make sense to be living in a house that charges rent from 6ok and above. You may think that it is affordable but with all other expenses included you will have nothing left to spend on. Spend less, save more! There is no other way around it.
Keep track of your expenses
Many of us, at one point in our lives, are all guilty of using the phrase, “I don’t know where all that money went”. Sounds familiar right? If this statement applies to you in any way, then it’s time to get rid of that regretful feeling. Ensure you record all your expenses, both planned and unexpected. This will help you track your money and assist in pinpointing the unnecessary expenses you indulge in.
Set Saving Goals
You may want to save money but this fails to materialize if you do not have a specific reason for saving. To save successfully, have something you are saving for. It could be a house you have always wanted to buy to take or a business that you have been keen on starting.
Having this plan allows you to have a goal to which you work effortlessly to achieve. It keeps all your spending and expenses in check especially if you make it better by adding a deadline.
Understand the cost of debt
“What are the monthly payments?” is what poor people ask when considering a huge or expensive purchase. That’s the wrong question. A better question is “what is this really going to cost me?” When you multiply the monthly payment by the number of months of the loan, you’ll see a shocking number that’s way more than the cost of the purchase and that’s before taxes and other expenses.
Prioritize your expenses
Understand the difference between wants and needs. Before buying that house or car ask you need to ask, Is it a priority right now?
Nothing messes up your finances like doing the right things at the wrong time, no matter how much money you have. Setting priorities will help you save money by putting first things first.
If you have two projects you want to attend to, plan and decide which goes first in terms of the budget available and the time it will take to recover the money spent. Also, give priority to things that bring monetary gain to you rather than those that only take.
Don’t just save, invest.
While saving your money instead of spending it is a good habit to get into, the wealthy know that the real road to riches begins with investing. In order to grow your money, you need to put it in a place where it can earn a high rate of return.
The higher the rate of return, the more money you will earn. Investment vehicles such as stocks, bonds or businesses tend to offer the opportunity to earn higher rates of return than savings accounts. Therefore, if you want the chance to earn a higher return on your money, you will need to explore investing your money.
Make a budget
The big task lies here because making it will seem easy but sticking to it is what will determine whether your plans will work. To save money, list down all your necessities and look for where to find them at reasonable prices.
Highlight the unnecessary expenses to track how you can cut down on them. The rest of the money serves well as savings. Walking around without a budget is a bad habit since you end up using your money on things you didn’t intend to.
If you want to be rich, manage your money using these 7 principles and you’ll be on your way. You’ll have to make some sacrifices in the short-term, learn some stuff and work hard to earn the money you invest.
Remember the goal, spend less! Save More!
How do I Start Investing?
To get started investing, pick a strategy based on the amount you’ll invest, the timelines for your investment goals, and the amount of risk that makes sense for you.
Rent, utility bills, debt payments and groceries might seem like all you can afford when you’re just starting out. But once you’ve mastered budgeting for those monthly expenses (and set aside at least a little cash in an emergency fund), it’s time to start investing. The tricky part is figuring out what to invest in — and how much.
As a newbie to the world of investing, you’ll have a lot of questions, not the least of which is: How do I get started investing, and what’s the best strategy? Our guide will answer those questions and more.
Here’s what you should know to start investing.
Get started investing as early as possible
Investing when you’re young is one of the best ways to see solid returns on your money. That’s thanks to compound interest, which means your investment returns start earning their own return. Compound interest allows your account balance to snowball over time.
How that works, in practice: Let’s say you invest $200 every month for 10 years and earn a 6% average annual return. At the end of the 10-year period, you’ll have $33,300. Of that amount, $24,200 is money you’ve contributed — those $200 monthly contributions — and $9,100 is interest you’ve earned on your investment.
There will be ups and downs in the stock market, of course, but investing young means you have decades to ride them out — and decades for your money to grow. Start now, even if you have to start small.
If you’re still unconvinced by the power of investing, use our inflation calculator to see how inflation can cut into your savings if you don’t invest.
Decide how much to invest
How much you should invest depends on your investment goal and when you need to reach it.
One common investment goal is retirement. If you have a retirement account at work, like a 401(k), and it offers matching dollars, your first investing milestone is easy: Contribute at least enough to that account to earn the full match. That’s free money, and you don’t want to miss out on it.
As a general rule of thumb, you want to aim to invest a total of 10% to 15% of your income each year for retirement — your employer match counts toward that goal. That might sound unrealistic now, but you can work your way up to it over time.
For other investing goals, consider your time horizon and the amount you need, then work backwards to break that amount down into monthly or weekly investments.
Open an investment account
If you don’t have a 401(k), you can invest for retirement in an individual retirement account, like a traditional or Roth IRA.
If you’re investing for another goal, you likely want to avoid retirement accounts — which are designed to be used for retirement, and thus have restrictions about when and how you can take your money back out — and choose a taxable brokerage account. You can remove money from a taxable brokerage account at any time.
A common misconception is that you need a lot of money to open an investment account or get started investing. That’s simply not true.
Many online brokers, which offer both IRAs and regular brokerage investment accounts, require no minimum investment to open an account, and there are plenty of investments available for relatively small amounts.
Understand your investment options
Whether you invest through a 401(k) or similar employer-sponsored retirement plan, in a traditional or Roth IRA, or in a standard investment account, you choose what to invest in.
It’s important to understand each instrument and how much risk it carries. The most popular investments for those just starting out include:
Stocks
- A stock is a share of ownership in a single company. Stocks are also known as equities.
- Stocks are purchased for a share price, which can range from the single digits to a couple thousand dollars, depending on the company. We recommend purchasing stocks through mutual funds, which we’ll detail below.
Bonds
- A bond is essentially a loan to a company or government entity, which agrees to pay you back in a certain number of years. In the meantime, you get interest.
- Bonds generally are less risky than stocks because you know exactly when you’ll be paid back and how much you’ll earn. But bonds earn lower long-term returns, so they should make up only a small part of a long-term investment portfolio.
Mutual funds
- A mutual fund is a mix of investments packaged together. Mutual funds allow investors to skip the work of picking individual stocks and bonds, and instead purchase a diverse collection in one transaction. The inherent diversification of mutual funds makes them generally less risky than individual stocks.
- Some mutual funds are managed by a professional, but index funds — a type of mutual fund — follow the performance of a specific stock market index, like the S&P 500. By eliminating the professional management, index funds are able to charge lower fees than actively managed mutual funds.
- Most 401(k)s offer a curated selection of mutual or index funds with no minimum investment, but outside of those plans, these funds may require a minimum of $1,000 or more.
Exchange-traded funds
- Like a mutual fund, an ETF holds many individual investments bundled together. The difference is that ETFs trade throughout the day like a stock, and are purchased for a share price.
- An ETF’s share price is often lower than the minimum investment requirement of a mutual fund, which makes ETFs a good option for new investors or small budgets.
Pick an investment strategy
Your investment strategy depends on your saving goals, how much money you need to reach them and your time horizon.
If your savings goal is more than 20 years away (like retirement), almost all of your money can be in stocks. But picking specific stocks can be complicated and time consuming, so for most people, the best way to invest in stocks is through low-cost stock mutual funds, index funds or ETFs.
If you’re saving for a short-term goal and you need the money within five years, the risk associated with stocks means you’re better off keeping your money safe, in an online savings account, cash management account or low-risk investment portfolio.
If you can’t or don’t want to decide, you can open an investment account (including an IRA) through a robo-advisor, an investment management service that uses computer algorithms to build and look after your investment portfolio.
Robo-advisors largely build their portfolios out of low-cost ETFs and index funds. Because they offer low costs and low or no minimums, robos let you get started quickly. They charge a small fee for portfolio management, generally around 0.25% of your account balance.
How can a Personal Financial Crisis be Avoided?
Financial crisis on a personal level can be prevented or at least made much less likely if you take various simple steps. These simple steps can help you avoid financial mishaps of various types.
Plan and Budget Well
Financial planning and budgeting are a good way to avoid financial crisis and upsets. You can sit down with a pen and paper and write out all your monthly or annual expenses, your income, any tax information, and anything else that affects your finances and get a much clearer sense of where you are financially.
You can also use various computer programs to do the same thing. This is an essential step in getting on firm footing financially. You need to have a good sense of what is going on financially in your life in order to maximize your advantages and prevent confusion and monetary mishandling.
The budget you write out need not be hugely involved, but it should cover all the basic areas of your finances and deal with expenditure versus income. It might also include investment ideas, ways to reduce costs, and auxiliary measures in case there is some unexpected financial trouble.
Find the Least Expensive Basic Items
Purchasing and using the least expensive items can help reduce your budget considerably. This can be anything from the car you drive to the way your heat your house to the food you buy to the insurance you have. Basic items are things that you need on an ongoing basis.
This may seem like a “no brainer” but it is quite possible that you are not saving as much in your ordinary expenditure as is possible. You may be able, for instance, to find excellent used clothing rather than going to a discount store and buying cheaper clothing that will wear out faster.
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Or you may be able to find cheap insurance of one sort or another that is perfectly adequate, such as health insurance. The way you save money says a lot about how well you understand how and where to save it. Try finding deals in unexpected or less accustomed areas of your finance and you may find that you can save more than you thought.
Safeguard against Job Loss
Losing your job is the classic event that can really cause you to have a financial crisis. Thus it makes sense to have one or several means of guarding against this. One way is to get unemployment insurance. You should be eligible for some kind of unemployment compensation from your local employment office.
Make sure you understand clearly what your rights are here and what the stipulations are. You can also purchase private unemployment insurance if necessary.
Another way to guard against the problems associated with job loss is to have alternate income sources available. You might, for instance, start a part time small business from your home that could become full time if necessary. Or you could get some training in another field that could enable you to get a job in that field should the need arise.
Keep Car in Good Condition
Keep your vehicle in good shape by having regular tune ups, fixing small problems before they become bigger ones, performing routine checks (such as the oil and other fluid levels) and driving your vehicle responsibly.
Keep in mind that if your car breaks down, this can affect many other areas of your financial life such as being able to get to your job. Cheap insurance for your car is a reasonable way to save money, but augment this with good preventative maintenance of your car.
Final Words
Keeping in mind that the way your finances are organised is unique to you, these financial rules of thumb that can help you maintain a strong foundation no matter the complexity or desired outcome of your plan. Financial health is a building block of life and should be taken just as seriously as your physical health.