Money tips, when used correctly, can help you get ahead and manage your finances better. But with all the different types of money and financial tips, how do you know which one to focus on?
Pieces of financial advice vary on many factors. It can be based on timing, reason, and even interpretation from the giver and receiver. With all these factors to look into, how do you choose the best one for you? It might get confusing fast and the last thing you want is to give up because you do not know what to take.
Financial advice can be a two-edged sword. It can either help you move forward in the direction you want or push you back and away from your goals. It helps to remember that the advice you take should always be based on your current needs. And because your needs change, that sound advice that made sense a few years ago might not be a good idea now.
However, there are certain money tips that do stand the test of time. This means that they still provide the same value now as they did before. These are the types that are easy to remember. And you might think that they are complicated types of advice. But in reality, these are the simplest ones to follow. Here are some of the tips you can consider taking up.
Set money aside for savings
Saving money for future needs never goes out of style. Although the fund you are focusing on could vary depending on your need, the idea remains the same. You set money aside every month so you can grow a specific account. It can be for your emergency fund, setting money aside for your retirement years, or even for post-grad studies.
Because of the health crisis, many people are trying to focus on their emergency fund and growing it as much as they can. At the height of the pandemic, many Americans had to rely on their emergency money to get them through job loss. Now that the economy is starting to turn around, many people are focusing on this fund.
Apart from your emergency fund, smart money tips could include retirement funds as well. The golden rule when it comes to saving for retirement is to do it as early as possible. This helps you compound your savings growing them as time goes by.
Debt is not all that bad
Debt, when unmanaged, is bad news. It can spiral out of control and leave you in the red for a long time. What’s worse, if you choose to neglect debt and leave it to compound over a long period of time, it can pull you away from your goals. Rather than saving money, you are forced to pay huge amounts of fees, penalties, and even interest.
But debt is not all that bad. This is one of the money tips you need to keep in mind as you try and work towards your goals. There are types of debt that can hold you back and there are those which can push you forward in the right direction. Take a mortgage loan, for example, it can help you buy the house you need while paying monthly for it.
The same goes for student loans where finishing with a college degree gives you a better chance of landing a higher-paying job. This can put you in a better financial position compared to most high-shool graduates looking for a job. You just have to make sure that you stick to your payments so it does stack up and give you a difficult time down the line.
Help is there if you look for it
It is ok to ask for help even when it comes to your finances. You do it when you are sick and go see a doctor. When your vehicle breaks down, you seek help from a trusted mechanic. Even when you have personal problems, you might call up a close friend and ask for pieces of advice to help you through your problems.
The same goes for your financial problems – you can ask for help if you need it. Especially when you are going through a difficult stage in your life. It can be getting behind on huge payments, getting a divorce and you’re trying to manage your finances or even planning for your future and your retirement in a few years.
There are finance professionals who can help you go over your finances and identify areas you can work on. In fact, CNBC shares that more Americans trust financial advisors now more than ever. They can also give you the steps you need to take to bring you your desired results. Seeking a professional might not be on top of any money tips you come across. But working with one can definitely point you in the right direction.
Debt consolidation is a big help
There are types of debt repayment plans out there but one thing that stands out is a debt consolidation plan. As the name suggests, this is where you combine most, if not all your debt payments under one account. When you do this and provided you do have the money to make payments, debt is a little easier to manage.
Take for example your credit card payments where you might have 4 different accounts. You pay them on different dates, send in different amounts, and have varying interest rates and payment timelines. But if you get to consolidate them under a 0% card, you get to save on interest payments and focus on one single payment amount and date.
Do not underestimate the value of a household budget
Perhaps one of the most underrated money tips you will ever come across is making the most out of a household budget. One of the reasons for this could be that people have gotten so used to a budget that they overlook the value it brings to their overall finances. It is one of the most useful tools you could ever have as you manage your finances.
One of the most significant advantages of having a household budget is the ability to make informed money decisions. Your finances will change every now and then based on decisions you make on a daily basis. Having a solid understanding of your financial position based on your household budget will help you make better decisions.
Investing early can lead to growth
If you win the lottery or get some huge windfall money, you can easily set that aside for future use. But that is more of an exception rather than the rule. For most Americans, investments take years to build up. Investing early and often so you can get compound interest to work to your advantage. The best time to invest was yesterday and today’s the second best time to do it.
Lend only what you can lose
If a relative or a close friend ever came to you to borrow money because they are in a tight spot, you’re not alone. There is nothing wrong with this and the problem only starts when people do not pay you back. One of the best pieces of money advice in this type of situation is to lend only the amount you can afford to lose. In case they don’t pay you back.
By doing this, you protect your peace of mind in case they fail to pay you back. It also minimizes its impact on your finances. And to a certain extent, you get to save the relationship you have with the person since you will not be affected too much by the debt.
There are only a few money tips that stand the test of time and it helps to focus on them as you work towards your financial goals.