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Personal Finance Tips

It has always been important to have a solid financial plan, especially during times of economic uncertainty. In this list, here are five financial tips that I use on a daily basis that have worked for me and I hope you find value in them as well.

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1. Always Have a Savings Cushion

We hear quite frequently that sitting on cash is a mistake because of the "silent tax", otherwise known as inflation eating away at it year after year. While this is true, and it is not the best investment to hold a huge portion of cash sitting in a savings account with a low-interest rate, it is essential to have at least a few months of savings on hand to protect yourself in case of an emergency. Without having some savings on hand, you would be walking on a thin line where any event that could happen may place you in a tough position. In the event of a sudden expense, you cannot avoid it.

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2. Pay Yourself First Before Other Expenses

Make sure you are taken care of first financially, whether it is investments, savings, or having cash on hand for a rainy day before everything else. If you do not pay yourself first, then you are creating a system where you are making everyone else surrounding you a little wealthier, but at the end of the day you are out of money, and nothing left for you. This is a perfect formula for restricting your financial freedom because if you do not have your own finances in order first, it is hard to help everyone else around you in the long-term

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3. If you Carry Debt, Pay the Smaller Debts off First Before the Larger Ones

I like to think of this as a snowball effect and a consolidation technique. Starting off small and compounding to a large payoff, and eliminating the small debt early on so you can focus on tackling the larger ones. By taking care of the smaller debts first, you are setting small, but achievable goals to pay off your debt without being overwhelmed with focusing on paying off the larger debts first, potentially hurting your morale. Working to consolidate as few debts as possible also helps to clear your mind and focus more.

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4. Diversify Your Money When Possible

Most people that have any investments most likely have just a 401k and nothing else. While it is a great resource to have, it puts you in a high-risk situation because you are at the mercy of the stock market. It is especially tragic to hear about a couple investing in their 401k for 40+ years and when the time comes to draw off of it, the market crashes. Diversifying in multiple investments, better protects you from experiencing this sudden loss. In addition to a 401k, having a real estates fund, such as Fundrise, or a cryptocurrency investment.

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5. Cash is Still King, so Use it Whenever Possible

At the end of the day, cash is still the best form of payment whenever possible. Cash also helps you manage your money better because it is physically on hand and this is what you have to work with. If you can only buy what you can afford in hand, you are more likely to make smarter purchases. By relying on a credit or debit card, most people do not pay close attention to where their money is going and they are more likely to make impulse purchases because they do not have the physical money in hand. Money that is out of sight is out of mind and is usually more costly.

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IDEAS CURATED BY

Creta ★

@crt7

🙋Am a self taught Digital Creator , Editor 💻 from India 🇮🇳 , as well as a Technologist and a COD Gamer 🎮. Interested in learning📒 new things always for keeping up with the trend .

CURATOR'S NOTE

Tips for Personal Finance and investing money in a better way.

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