12 Personal Finance Tips and Tricks to Make You Rich - Swift Salary
Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.
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You don't have to sacrifice all of your free time to start a side hustle, use the time you’re comfortable with and make a little bit of progress every day.
Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.
You should have a savings account, but your money is depreciating if that’s your only investment - average savings don’t yield more than inflation.
Real estate, peer-to-peer lending, exchange traded funds (etfs) and stocks are examples of common investments. Crypt occurrences are also an alternative although risky.
Net worth is what would be left if you were to sell everything you own and pay what you owe. If you have a positive net worth, continue working to increase your net worth, but if you have a negative net worth, analyze your budget and plan how to increase it.
Make sure to re-calculate your net worth every month or so to keep up to date with your finances.
You can't predict an emergency, but you can prepare for one. The best way to do so is to set up an emergency fund of 3-6 months of living expenses.
Common financial emergencies include job loss, natural disasters and car, house and health issues.
Is debt acquired to purchase something that is going to benefit you financially in the future, usually with low interest. That means it's either going to generate income or allow you to make more money in the future.
Examples of good debt:
That’s the debt that's acquired through purchasing something that depreciates, something that's going to lose value and generate zero revenue.
Credit card usage can lead to debt and the debt grows itself while unpaid. However, used responsibly, it's a good way to start building credit.
Most credit cards also have other benefits, such as rewards points, cash back, or travel points. But if you're incapable of paying off the balance in full every month, then you shouldn’t have it.
A clear set of goals can keep you motivated and help you plan to reach it faster.
Have different goals for what you want to achieve in the next 3-months, 1 year and 5 years. This way you'll have some short and long-term goals to look forward too.
Act as if your savings account is a bill to pay, so you’re less likely to spend it. Automate savings transfers if possible.
Take note of all your expenses, subtract them from your income and find out how much you have left per day, so you have a better idea how long it will take to reach your goals.
This will help you see how far purchases are going to set you back and affect your spending ability.
Create a plan for your money so you know where it's going every month.
A popular and effective way to budget is with the 50/30/20 rule, where 50% of your income goes towards necessities (bills, food, housing, etc.), 20% of your income goes towards savings and 30% you can use freely.
In order to do this, you need to track your spending by either writing your purchases down or using a free personal finance app.
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Your future self might have more income, but it’s also fairly likely that your future self might have less income and you’ll find yourself in a really bad situation.
Even if your future self is doing well, there are probably going to be other big expenses that you’ll want to deal with at that time, like buying a house.
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By following the conventional path of "school to loan to university to work" you risk running into serious debt. Being creative is a potential way to lessen or eliminate that.
Maybe finding a different and cheaper way of doing the same thing, doing a yard sale or getting a side job… Put your mind to it and you may find ways to get a financial boost.
When you buy mutual funds, you are charged a purchase fee upfront. This is a one-time payment to the fund management institution. Annually, you will be charged with a percentage of management fees, commonly known as “expense ratio”, which can be expensive.
Beware when advisors at your bank recommend mutual funds to buy. They might be earning a sales commission.
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No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed.
The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.
This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.
The principles that make a good budget, something you can stick to:
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