If you’ve stopped on this article, chances are you’re ready to get serious about your personal finances. Achieving your financial goals is possible. In this article, we’ll share 12 simple rules for learning personal finance in record time.
Get ready to tackle your wallet!
Rule #1: Begin with the end in mind
On your journey toward learning personal finance, start with a clear goal in mind.
Do you want to ensure a secure future for yourself and your family?
Are you planning on making a large purchase?
Or do you recognize you’re living paycheck to paycheck and you want to see that change?
Regardless of your current financial situation, you can change it with a positive attitude and a willingness to learn.
First, sit down and write out where you envision the state of your finances a year from now, three years from now, and five years from now. You are more likely to stick with the following rules if you have clearly defined goals to achieve.
As you learn about personal finance, you’ll begin making informed decisions to help you reach even longer-term goals, like 20 to 30 years from now!
Rule #2: Start your day with financial inspiration
We live in an age when information is at our fingertips.
Start each day with a dose of financial inspiration to keep you going.
You can check out a podcast during your commute, like Optimal Finance Daily or Afford Anything, or browse a personal finance website like Penny Hoarder. By grabbing just 10-15 minutes of inspiration each morning, you will remain focused on your goals while learning invaluable lessons in personal finance.
Rule #3: Do an annual assessment
When you first make the decision to dive into personal finance, you’ll want to do an assessment of your current financial situation and your overall net worth.
This includes making a list of all your bank accounts, credit accounts, and bills, with their balances. Is there an opportunity for elimination or reduction?
What is net worth?
(Net worth is the value of all your assets minus your liabilities; that is, all the cash in your bank accounts + the value of your house + the value of your car – the amount owed on your car – the amount owed on your house – credit card debt.)
Net worth is a great benchmark for measuring progress year to year. Which brings us to rule number 4...
Rule #4: Perform routine check-ups
Your annual assessment will give you a broad look at your finances, but your routine check-ups are where you will likely catch errors.
Is a company overcharging you?
Did a payment that you expected to receive not clear?
You’ll want to routinely check your bank and credit card statements to make sure everything is correct.
Rule #5: Automate, automate, automate
Set it and forget it with automation!
You can use automatic payments with your bank or other account holders to make sure you never miss a due date.
Your employer may also have services, such as automatic withdrawals for retirement or health savings accounts. Often, as a bonus, employer-sponsored plans offer benefits to help you at tax time.
During your routine check-up, you’ll want to monitor your automatic payments to make sure they are drafted.
Psst! Automating your savings is just the tip of the iceberg. Services like Stash and Acorns allow you to put your investment plan on autopilot as well!
Rule #6: Wait 24 hours
So you’re scrolling through Facebook, and the coolest pair of shoes pops up.
You immediately click over to the website and find a matching shirt and necklace to make up the perfect outfit for an event you don’t even have on your schedule yet.
Before you know it, they’re all in your shopping cart and you’re ready to check out.
Next time this happens to you, don’t hit submit.
Impulsive shopping is real, but cut it out by following the 24-hour rule: if you’re still thinking about this outfit 24 hours later, then go back and check out.
But chances are, you’ll forget about it shortly after clicking off the website.
Rule #7: Befriend like-minded individuals
Everything is better with friends, right?
Check out Meetup to see if there’s a personal finance group near you. You can also find group chats on Facebook, like Dream Catchers: Live Richer, where individuals are eager to discuss personal finance tips and share ideas to help keep you motivated.
As you talk through scenarios with these like-minded people, you’ll learn what works best for you and where to find helpful resources.
Rule #8: Save early, save often
The number one thing to remember is that you can do it!
Many people fall into the trap of not saving because they don’t believe the amount they can save is worth it.
But it adds up!
As soon as you can save, do it, and stick with it. This is especially true for long-term savings. With retirement accounts and certificates of deposit, you earn compound interest. This means the longer you leave funds in these accounts, the more return you’ll receive on your investment.
Rule #9: Don’t be afraid of credit
Credit has a bad reputation, but you don’t have to be afraid of it.
Take the time to learn about credit so you can make informed decisions. Credit is analyzed using a combination of factors that produce a score that businesses use to make financial decisions on your behalf, such as whether you should be approved for a loan or charged a deposit on a new account.
These credit factors include hard credit inquiries, credit card balances as they relate to the total amount of credit available to you, how long you’ve had credit, your payment history, the number of accounts you have, and the number of derogatory marks you’ve received.
Credit can be a valuable financial tool; just be aware before diving in.
Rule #10: Plan for rainy days
Things happen. Be prepared by having an emergency savings account.
If you already have one, great! If not, then put it on your list of goals.
Determine how much you need to save by totaling your monthly expenses. Be sure to look at anticipated quarterly or semi-annual payments, such as insurance, and divide by the number of months in your term to determine the monthly amount to plan for.
Start by trying to save enough for one month, then two, and so on until you have enough in your emergency account to last six months.
Rule #11: Find resources that make saving easy
Using websites and apps can be to your advantage when it comes to finding savings.
Giving Assistant is an aggregator that provides discount codes and online sales for more than 3,000 retail locations.
• You can become a Savvy Shopper for free and earn cash back on your purchases.
• You can also upgrade to Power Shopper for only $5.99 a year, where you’ll earn twice as much cash back on your purchases.
That’s simple savings!
Rule #12: Be okay with failure
If you slip up one month, it’s okay!
Learn from your mistake by observing your patterns and behaviors.
What caused you to fail?
Was it in your control or not?
What do you need to find more information about?
Although it may not feel great, don’t let a slip-up derail you from your goals. Learning personal finance is a marathon, not a sprint.
As you go along your personal finance journey, take each win and loss as a learning experience. In no time you’ll be a guru, ready to pass on wisdom to others!