There is no financial freedom without financial literacy. Here’s 10 personal finance tips that are sure to increase you financial literacy.
1.Set A Budget
This first one sounds pretty simple, but its actually quite challenging seeing how most people struggle with it. If only more people knew how to budget their money we would have far less families in financial despair. Often times people who struggle financially don’t need more money, they just need to learn to budget the money they already have. Once you’ve created a budget for yourself stick to it, no excuses.
2. Use Cash
This tip is in part a follow up to the previous one. Using cash is one way to stick to the budget you set for yourself. Give yourself a set amount of spending money each week and once you’ve run all out of that money you’re done for the week.
3. 30% For Fun
No more than 30% of your income should be spent on your lifestyle activities. These activities include eating out, movies, and the occasional shopping spree.
4. Chuck The Credit Cards
Credit card debt can be a slippery slope, so be cautious about use them. However a good credit history is often necessary to have unless you are independently rich and can pay for everything with cash. Keep the credit cards at home and only use them for emergencies.
5. Set A Goal And Create A Plan
A goal is just a dream if there is no plan behind it. This is true for all goals including financial goals. Create a SMART (Specific, Measurable, Achievable, Realistic, Time Based) goal for your financial future. Envision where you would like to be financially in the near and distant future.
6. Pay Your Debts
Credit card and loan debts are often the worse because of their high interest rates. When paying off debts think about which ones have the highest interest rate and attack those first. If you have multiple collections on your credit report, one strategy to help you pay them off is by targeting the ones with the lowest balance first. This way you can start to remove the collections from your credit report faster.
7. Save Money
We all been told to save money ever since we were kids, but saving money is a lot easier said than done. Saving money should be prioritized just as much as paying your bills. When setting a budget for yourself saving money should be something you account for. In fact it should be the first thing you account for. Where you save your money is also important. Aim to keep your money in a savings account that builds interest. Even if you only have a small amount to save, earning interest on some of your money is better than not earning any at all.
8. Read About Financial Literacy
The best way to change how you think about money is to learn about money. Try to absorb as much information as you can. The more you know the better off you’ll be. One book I personally recommend is “Rich Dad Poor Dad”, by Robert Kiyosaki. In this book Robert goes over the lessons that the wealthy teach their kids about money that poor people don’t.