Everyone is looking for a way to take control of their personal finances and keep more of the money they make.
Like Pink Floyd said, grab that cash with both hands and make a stash.
A good summary, to be sure, but we all know that the intricacies of managing our individual finances can be a little more difficult. Use this handy list of personal finance tips to stay on top of your spending and on top of your finances.
#1 Watch Out for Fees
Keep an eye on fees. As more and more companies get into fintech (financial tech) services, and as banks offer more financial convenience features and services, one thing is certain to follow: fees.
No one likes paying fees, and financial institutions know it. That’s why they have gotten sneakier and found new ways to encourage customers to use fee-bearing services. Love Venmo, PayPal, and other money convenience apps?
#2 Rethink Purchases
Evaluate purchases by cost per use, not just the number on the price tag.
For example, a shirt that costs $5 is, at face value, less expensive than a shirt that costs $30. However, the $5 shirt may be of such low quality that it needs to be replaced much sooner than the $30 one. The $30 shirt can likely be worn time and time again before requiring replacement.
That’s an oversimplified example, but the core concept has a lot of utility.
Put this idea into practice when evaluating products of all kinds to get the most out of your money and help reduce the hidden costs of low-quality purchases.
#3 Be Aware of Interest
Pay off high-interest debt first. This might seem like common sense advice (it is), but it can be difficult to get an accurate picture of which accounts are hitting you worst with interest when you have multiple accounts with multiple creditors.
This is especially true if you are looking at the total amount of debt you have and that number is high.
It can be overwhelming and tough to know where to start paying off balances. High-interest balances will cost you more in the long run, and a general financial rule of thumb is to tackle these balances first.
Of course, don’t pay these balances at the expense of other debt. Always pay at least the minimum on all debts you have, if you are able.
#4 Get Rewarded
Keep an eye on credit card rewards. If you are going to be using a credit card, you may as well get as much out of it as possible.
Interest rates are just one aspect of what makes a credit card attractive. Travel points, the ability to use your points to shop online, balance transfer promotions, special VIP offers, and other perks all serve to make some cards better than others.
Exercise caution, however. Credit card companies love to flash these perks on cards that may have high fees, high interest, or other pitfalls.
Do your research and make informed choices in order to get the most out of the plastic in your wallet!
#5 Keep an Eye on Credit Utilization
Credit cards can be double-edged swords. When it comes to credit utilization—the amount of your available credit you actually use—the magic number is 30 percent.
Not only is this generally considered a manageable utilization of credit (though less is better), it is the amount that will help keep your credit score healthy.
There are a number of factors that impact your credit score, and keeping your credit utilization under 30 percent is a factor that can prevent score penalties.
#6 Know What an Emergency Is
Know a financial emergency when you see one; there are five types.
These are the only reasons you should be pulling funds from your savings or emergency accounts.
If what you want to spend on doesn’t involve one of these five scenarios, just say no. You might need to dip into your emergency fund if you . . .
❌ Lose your job
❌ Have a medical emergency
❌ Have an emergency car repair
❌ Have emergency home expenses
❌ Need to travel to a funeral
By the way, new countertops aren’t an emergency home repair.
This doesn’t mean you can’t spend money on yourself.
What it does mean is that if your spending leads you to thinking about borrowing from your emergency accounts, that’s a bad idea.
#7 Use the 72-Hour Rule
You may already be familiar with the rule of 72, but have you heard of the 72-hour rule?
It’s pretty simple, but it can have a profound effect on the way you spend money on big-ticket purchases.
Here’s how to put the 72-hour rule into practice: the next time you are considering a large (or even fairly small) purchase, ask yourself, Can I wait 72 hours to make this purchase?
If you can, do so.
You will often find that the thing you felt you needed doesn’t feel so necessary after a waiting period of 72 hours. Retailers spend lots of time and money to make us feel pressured to buy right then and there, because they know those tactics work. By waiting and thinking about why you really need the thing you were intent on purchasing, you will often find that you didn’t need it in the first place.
#8 Own Your Financial Journey
Don’t compare yourself to others financially. The most important thing you can do to increase your financial education, take control of your financial well-being, and grow your wealth is to focus on yourself and your circumstances.
Think of it this way: nobody out there is as invested in your success as you are. When someone draws a comparison between your financial circumstances and their own, they aren’t doing it to help you.
And if you are trying to imitate the financial circumstances of someone else, it can be really easy to overspend, under-save, or generally get off track.
Concentrate on your own circumstances and what you want to change. Stay focused on your own progress and growth, and you’ll be surprised at how far you will have come.
#9 Save Up for Large Purchases
Save for big purchases ahead of time. As finance personality Dave Ramsey says, “Christmas is not an emergency—it comes every year.”
Don’t let big purchases that you know are coming throw your financial wellness out of whack. Emergency spending is for emergencies only
Save money for large purchases to keep your personal cash flow healthy and to prevent yourself from needlessly going into debt!
#10 Change the Way You Measure Money
How do you measure your money? We all “measure” money in dollars and cents, but consider measuring your money in hours.
Let me explain.
It can be very easy to forget or underestimate the value of money when we think of it merely in dollars and cents. However, thinking about how many hours of work it took us to get those dollars and cents can have a powerful impact on our perception of value.
When you are considering an impulse purchase, think of the price in terms of how many hours you would have to work to purchase it
Is it just an hour? Is it a whole day? Is it a week!?
When you think about the hard work it took and the time you had to give up to earn that amount of cash, it can make you think twice before handing that cash over for something that provides a short-lived benefit.
#11 Don't Get Complacent
It's really easy to postpone decisions about the future, especially when it comes to money.
Missing just one year of compounding interest can have a devastating impact on the long-term growth of your money which means the sooner you get started the better.
Telling yourself that you will get to it later or that saving for retirement is something that you can start in the future only takes money out of your pocket in the future!
#12 Spend On The Real You
Spend money on the real you, not the imaginary you that you keep in your head.
We all have dreams and aspirations (which is good) but these long-term goals can hold us back in the here and now (which is bad).
What this boils down to is a need to banish thoughts of the "person you want to be" when making purchases.
Perfect example - you may be into running but do you need the shoes that Olympians use to train with? You might enjoy cooking for yourself but do you need the Chef-quality cookware set?
This can be tough as savvy marketers will do everything in their power to convince you to shell out more money by appealing to the person you want to be.
Fight back by making sensible choices and living below your means but don't give up on the imaginary you that lives in your head - even Olympic athletes and five-star chefs had to start somewhere!
The Bottom Line
The truth is that the best advocate for your own financial health will always be you.
Take this list of tips to heart and put them into practice, but more than anything else, take charge of your own financial situation!
That means being proactive, setting a budget and sticking to it, and constantly increasing your financial literacy.
Learning more and more about how the financial world works will not only be your best financial investment, but it will be the investment that pays dividends year after year.
Bryan is a the Senior Finance Contributor for ClydeBank Media. He specializes in the worlds of tech and finance, having both authored and collaborated with industry veterans on a variety of titles. Listen for his voice when searching for investment strategy and financial wellness tips. Bryan’s newest investing course is available now on the ClydeBank Media Campus.