A 2023 survey by NerdWallet, conducted by The Harris Poll, revealed that three out of four Americans maintain a monthly budget. While this might initially seem promising, 84% of those individuals admitted to occasionally exceeding their budgets. This suggests that while people may have good intentions, sticking to a budget can sometimes be difficult or even impossible.
If this sounds familiar, the good news is that there are many strategies you can use to improve your spending habits and overall approach to managing money. Below, we’ve outlined 30 practical tips to help you develop better financial habits and gain a clearer understanding of your current financial situation.
20 Personal Finance Tips
1. Create a Budget
If you don’t already have a monthly budget, start by creating one. Budgeting helps you become more aware of your financial situation, which is useful even when you’re not struggling. By forming this habit early, you’ll be better prepared to identify areas where you can save money and make adjustments when necessary.
2. Use the 50/30/20 Rule
The 50/30/20 rule is a guideline for managing your money:
- Allocate 50% of your income to essentials like rent and groceries.
- Use 30% for discretionary spending such as entertainment or vacations.
- Save 20% or use it to pay down debt.
While it may not be possible to follow this rule exactly every month, using it as a general framework can help you stay on track.
3. Set Financial Goals
Having financial goals gives you something to work toward, whether it’s saving for a vacation, building an emergency fund, or paying off debt. Start with one specific goal and set a timeline to achieve it. Achieving these goals can be motivating and encourage you to aim for even bigger accomplishments.
4. Use a Financial Calendar
Keep track of important dates, such as payment deadlines and tax filings, by creating a financial calendar. Setting reminders can help you avoid late fees and stay organized. Regularly checking your credit report is another good habit to add to your calendar.
5. Prioritize Interest Rates
If you have multiple loans, focus on paying off the one with the highest interest rate first. For savings accounts, look for those with the best interest rates. Understanding how interest works, especially with credit cards, can save you money in the long run.
6. Track Your Net Worth
Your net worth is the difference between what you own and what you owe. Being aware of this figure can guide your financial decisions and encourage you to reduce debt and increase savings.
7. Monitor Your Credit Score
Your credit score plays a significant role in your financial future. A strong credit score can help you qualify for lower interest rates on loans and credit cards. Regularly reviewing your credit report helps you stay on top of your financial health.
8. Learn About Personal Finance
Books, podcasts, and online resources about personal finance can provide valuable insights and inspire positive changes in your financial habits.
9. Open a Separate Savings Account
Having a dedicated savings account makes it harder to dip into your savings for non-essential purchases. This separation can help you resist temptation and keep your savings on track.
10. Try Using Cash
Switching to cash for everyday purchases can help you become more mindful of your spending. This approach, often called the “all-cash diet,” makes it easier to see how quickly money is spent.
11. Build an Emergency Fund
An emergency fund can cover unexpected expenses like medical bills or car repairs. Aim to save enough to cover three to six months of living expenses.
12. Save at the Start of the Month
Instead of saving whatever is left at the end of the month, prioritize saving first. Set aside your desired savings amount as soon as you receive your paycheck.
13. Cut Variable Expenses
Fixed expenses like rent are consistent each month, but variable costs, such as dining out and shopping, can often be reduced. Focus on cutting back in these areas to save money.
14. Take a Daily Money Check-In
Spend one minute each day reviewing your finances. This small habit can help you stay on top of spending and track your progress toward financial goals.
15. Create a Vision Board
A financial vision board can serve as a visual reminder of your goals, whether it’s buying a house or paying off debt. Display it in a place where you’ll see it often.
16. Plan Your Meals
Meal planning can save you money and encourage healthier eating. Preparing your meals at home instead of eating out frequently reduces daily expenses like coffee and lunch costs.
17. Use Finance Apps
Personal finance apps can help you track spending, set goals, and receive reminders about upcoming bills. Apps like “You Need a Budget” or “Quicken Simplifi” can simplify money management.
18. Develop Passive Income
Consider creating a passive income stream, such as investing, renting out property, or selling digital products. This can provide extra financial stability without requiring constant effort.
19. Turn a Hobby into a Side Hustle
If you have a skill or hobby, think about ways to monetize it. For example, teaching music lessons or selling handmade items online can bring in extra income.
20. Negotiate Your Salary
Advocate for a higher salary when starting a new job or during performance reviews. Over time, earning more can significantly impact your financial well-being, especially in the face of inflation.
Final Thoughts
Improving your financial habits doesn’t happen overnight, but consistent effort can lead to meaningful change. By applying some or all of these tips, you can take control of your finances and work toward a more secure future. Remember, progress is better than perfection—start small and build from there.
