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12 Personal Finance Tips and Tricks to Make You Rich - Swift Salary

Set Financial Goals

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.

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12 Personal Finance Tips and Tricks to Make You Rich - Swift Salary

12 Personal Finance Tips and Tricks to Make You Rich - Swift Salary

https://www.swiftsalary.com/personal-finance-tips/

swiftsalary.com

14

Key Ideas

Side Hustle to Make More Money

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. 

Take Action

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.

Communicate With Your Partner

Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.

Start Investing

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.

Know Your Net Worth

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.

Have an Emergency Fund

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.

Good Debt

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:

  • Student Loans: typically have low interest rate and raises future income, if you are headed to a profitable field you enjoy.
  • Mortgages: usually long-term loans with low interest rates and tax deductible interest.
  • Business loans: investment towards something with the goal of increasing your net worth.

Stay Out of Bad 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's Danger

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.

Set Financial Goals

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.

Invest on Your Savings First

Act as if your savings account is a bill to pay, so you’re less likely to spend it. Automate savings transfers if possible.

Break Down Your Income & Expenses

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.

Learn to Budget

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.

Spend Less Than You Earn

In order to do this, you need to track your spending by either writing your purchases down or using a free personal finance app.

SIMILAR ARTICLES & IDEAS:

Salary is not the same as savings
Having a high salary does not automatically make you rich; having a low salary does not automatically make you poor.

Your net worth is more important than how much money you make. It’s amazin...

Saving is more important than investing

Pay yourself first is such simple advice, but so few people do this. 

The best investment decision you can make is setting a high savings rate because it gives you a huge margin of safety in life.

Live below your means...
....not within your means. 

The only way to get ahead financially is to stay behind your own earnings power.

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Tony Robbins

It’s not about your resources, it’s about your resourcefulness.”

Tony Robbins
Be Creative To Afford What You Want

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. 

The Problem With Mutual Funds

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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Making Your Budget Too Strict

Budget for the life you have. When you’re going through your budget and assigning spending categories, be realistic. 

Don’t tell yourself you’ll never buy a single discretionary i...

Budgeting for a Life You Can’t Afford

This becomes a problem when you’re spending for a life you can’t afford. It puts pressure on your budget and encourages you to live in a paycheck to paycheck cycle.

Assess your financial situation, cut back on your expenses, prioritize your money goals, and then come up with a new spending plan.

Budgeting Without a Purpose

It’s hard to stick to a budget that doesn’t have a goal.

When there isn’t one, your budget becomes an afterthought rather than a spending plan to reach your financial goals.

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Financial planning

 ...is the process which provides you a framework for achieving your life goals in a systematic and planned way by avoiding shocks and surprises.

Try making a budget
  • Create a full inventory of expenses in front of you: Categorize them into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.
  • You can create a hierarchy of needs and decide which one’s to address first. It’s all about prioritizing. 
  • Accept that you have limited resources and unlimited wants. But you have to manage your resources. The sooner you accept this fact, the better you can control your impulses towards avoidable expenditures.
Maintain a personal balance sheet

It’s a statement wherein you can jot down your assets and liabilities.

  • Pull together your bank statements and other proofs of the liabilities
  • List down your assets like the bank balance, all investments, home value, and value of other assets.
  • Take a sum of all the assets to arrive at the total value of your assets.
  • List down your liabilities the (car loan, home loan, credit card balances etc.)
  • The sum of all the liabilities will show the value of the money you owe.
  • When you subtract the value of liabilities from assets, you get your Net Worth.

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Keep everything as simple as possible
The more credit cards you have, the more chances you have for identity theft and the more chances you have to miss a payment. The more investment accounts you have, the less attention you can give ...
Don’t ever let your “future self”...
...take care of your current situation.

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.

Focus on...
  • Building an emergency fund: set up an automatic weekly or monthly transfer from your checking account to your savings, then leave the savings alone until an emergency appears.
  • Eliminating high-interest debt: Set up a simple debt repayment plan by organizing your debts by interest rate, then attempt to make a double payment on whatever debt has the highest interest rate.
  • Saving for retirement: It will actually end up being a much smaller burden than you expect,  lifted up by the pleasure of knowing that you’re securing your retirement.

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A Monthly Budget For Your Money

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

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.

How to Create a Good Budget

The principles that make a good budget, something you can stick to:

  • Being Realistic: Being too strict is a recipe for failure.
  • Making Adjustments: A budget is not set in stone, but a fluid thing.
  • A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
  • Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
  • Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.

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3 Financial Basics
  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accou...
Budgeting Like a Pro
  • Consider an All-Cash Diet, as limiting yourself to physical currency combats overspending.
  • Set aside 1 minute a day to check on your financial transactions, to identify problems, track goal progress and set your spending tone.
  • Allocate at least 20% of your income to financial priorities like emergency funds, debts and retirement fund.
  • Budget about 30% of your income for nonbasic spendings, like entertainment. Abiding by the 30% rule, you can save and splurge at the same time.
How to Get Money Motivated
  • Draft a Financial Vision Board, it motivates and helps you to stay on track with your financial goals.
  • Set specific financial goals stating the reason, the way, numbers and dates.
  • Adopt a spending mantra, a phrase that serves as a rule of thumb for how you spend.
  • Love yourself. Taking control of your finances is part of that.
  • Make bite-size money goals. Make the bigger ones but also small step goals to get there.
  • Don’t be a financial fatalist, and switch to more positive mantras.
  • Get your finances and body in shape. The discipline associated with regular exercising translates to managing your money well.
  • Appreciate what you have now, instead of being a consumerist.
  • Get a Money Buddy. Studies indicate people pick up good habits from friends with similar traits.

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Characteristics Of The Wealthy
  • They live in homes just large enough for their needs and drive used cars.
  • They have affordable interests.
  • They don’t worry about having the highest credit scor...
Rich And Wealthy

By making wealth your priority now, you could be both later. Establish a strong financial foundation that will give you financial security and peace of mind moving forward. 

Living paycheck to paycheck is a guaranteed way not to build wealth.

If you’re just starting on your personal finance journey, it might not be time for you to start acquiring these assets yet.

How To Become Wealthy
  • Investing in stocks is simple if you avoid lucky stock picking. Keeping long-term perspective, invest early, especially in low-cost index funds.
  • Rental properties.
  • Small business ownership.
  • Delaying gratifications.

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Popular Personal Finance Books are Inspirational

Most of the popular finance books lack substantive advice on investing. They are inspirational & their core message is a good one: You are ultimately responsible for your own financial...

Rich Dad's Most Unconventional Idea

R. Kiyosaki's "Rich dad, Poor Dad" reads like a novel. The most shocking message of the book:

Don’t focus on your job or career. Think primarily about building personal wealth.

Rich Dad's Questionable Financial Advice

“With low interest rates, and an uncertain stock market, the old adages of saving and investing for the long term make no sense.”

It is what Kiyosaki recommends in his famous book, but saving and investing for the long term are exactly what most experts say you should do.

The Golden Rules of Personal Finance
  • Spend less money than you earn
  • Always plan for the future: you should always look forward beyond the current month
  • Make your mon...