We have undoubtedly accumulated a plethora of knowledge over the years covering the financial beat, whether it is the scores of psychology studies we have covered linking better financial decision-making to behavior change or the hundreds of “I got out of debt” success stories we have reported.
As a result, we’ve decided that since it’s Financial Literacy Month, there is no better time than now to compile our 50 best money advice into one enticing, incredibly useful read. These pearls of financial knowledge are as current as the day they were published and cover everything from the best ways to budget to how to increase your earning potential like a pro.
First, a few financial fundamentals
1. Make a budget calendar
Consider scheduling appointment reminders for these crucial financial tasks in the same way that you would for an annual doctor’s appointment or automobile tune-up if you don’t trust yourself to remember to pay your quarterly taxes or frequently pull your credit report. a reliable starting point? Our final financial schedule.
2. Investigate Your Interest Rate
Which debt should you settle first? A: The one that charges the most interest. Which type of savings account ought you to open? A: Whichever has the lowest interest rate. Why does credit card debt cause us so much pain? A: Put the compound interest rate to blame. The bottom line is that knowing which debt or savings commitments to prioritize depends on paying attention to interest rates.
3. Monitor Your Assets
Your net worth, which is the difference between your assets and debt, can provide a broad indication of your financial situation. If you keep an eye on it, it might alert you if you’re going backward in your financial goals or help you stay informed about the progress you’re making.
The Art of Budgeting like a Pro
4. Always create a budget.
Every other ambition you have in life should begin here. Here is a guide to creating a fantastic personal budget.
5. Consider an All-Cash Diet
This will help you get out of a spending rut if you do it frequently. Don’t trust us? These three people’s lives were altered by the cash diet. And she discovered that it wasn’t as terrifying as she anticipated when she went all cash. Really.
6. Spend a minute daily on money
Founder and CEO of LearnVest Alexa von Tobel, who firmly believes in putting aside one minute each day to review her financial activities, provided this advice. This quick, 60-second action can help you spot issues as they arise, monitor your progress toward goals, and set the tone for your day’s spending.
7. At least 20% of your income should go toward your financial priorities.
Priorities include setting up an emergency fund, eliminating debt, and increasing your retirement funds. Seem like a significant portion? Why do we adore this song? Read on.
8. Plan to spend around 30% of your income on lifestyle expenses.
This applies to activities like going to the movies, dining out, and happy hours—basically, anything that doesn’t provide necessities. You can save money and indulge at the same time by adhering to the 30% rule.
How to Be Motivated by Money
9. Create an economic vision board.
You need encouragement to start developing better financial practices, and creating a vision board can serve as a constant reminder of your financial objectives.
10. Specify your financial objectives.
When describing your financial goals, use dates and numbers rather than just words. When and how much debt do you wish to pay off? What amount and when do you want to save?
11. Adopt a mantra for your spending.
Choose a motivating phrase that serves as a brief guideline for your spending. Consider the following questions: “Is this [fill in the blank] better than Bali next year? “; “I only charge products that…”
12. Commit to Yourself
It may sound cheesy, but it nonetheless works. Just ask this author who, after recognizing that taking charge of her finances was a way to value herself, paid off $20,000 in debt.
13. Set manageable financial goals
According to one study, people are more prone to quit up when a goal seems further away and we are less certain about when it will occur. So, in addition to concentrating on long-term objectives (like purchasing a home), try to set shorter-term objectives along the road that will provide dividends more quickly, like setting aside money each week to go on vacation in six months.
14. Delete Negative Money Thoughts
Self-fulfilling prophesy, hello! You’re setting yourself up for failure if, before you even begin, you tell yourself, “I’ll never pay off my debt!” So stop thinking the worst and start repeating more uplifting mantras.
15. Become financially and physically fit.
Because you tend to be more productive after working up a sweat, one study found that getting more exercise results in greater compensation. Thus, taking up jogging could improve your financial situation. Additionally, good money management is linked to all the routines and discipline associated with, example, running marathons.
16. Develop your palate
Savoring involves enjoying what you have right now rather than attempting to find happiness by accumulating more things.
17. Find a Finance Buddy
One study found that friends with comparable features might learn excellent behaviors from one another. This is true for your money as well! Try inviting several friends over for lunch on a regular basis to pay off your debt, as this woman did, paying off $35,000 in the process.
How to Increase Your Income Potential
18. When negotiating a salary, insist on the company providing first-name figures.
You can’t tell if you’re lowballing or highballing if you immediately disclose your present salary. A potential employer can be pushed higher if you can get them to mention the number first.
19. You Are Not Limited to Salary Bargaining
A prospective employer can be open to negotiating your work schedule, title, maternity and paternity leave, vacation time, and the projects you’ll work on.
20. Never assume you are ineligible for unemployment benefits
Only 50% of those who were qualified for unemployment benefits applied while the last recession was at its worst. Know the guidelines for unemployment.
21. Discuss your current salary with your employer in light of their needs.
Your company is more concerned with keeping a good employee than it is with whether you want more money for a bigger house. Therefore, be sure to underline your exceptional worth to the organization when requesting a raise or negotiating your wages.
How to Manage Your Debt
22. Start with little debts to help you overcome larger ones
According to studies, if you have a ton of debt, paying off the smaller ones can give you the confidence to take on the bigger ones.
Like paying off a little balance on a department store credit card before moving on to the card with the larger balance. Of course, we usually advise paying down the card with the highest interest rate, but there are occasions when motivating yourself is worthwhile.
23. Never Cosign for a Loan
In the event that the borrower—your friend, relative, loved one, or whoever—misses payments, your credit score will plummet, the lender may pursue you for the debt, and it will probably endanger your relationship. Additionally, the bank doesn’t trust the borrower to complete the payments if a cosigner is required. Bonus advice for parents: Before agreeing to cosign a private loan for your college student, make sure your child is eligible.
24. Each Student Must Complete the FAFSA
It doesn’t harm to fill out the form even if you don’t think you’ll receive assistance. This is due to the fact that 1.3 million students missed out on Pell Grants last year—grants that don’t require repayment! —since they failed to complete the paperwork.
25. Federal student loans should always be preferred to private loans.
If your post-college work goals don’t precisely pan out, federal loans have flexible payment terms. Additionally, federal loans frequently have lower interest rates. Therefore, be wise about the loans you take out and make an effort to avoid these other common student loan errors.
26. Look into your options for repayment if you’re having trouble making your federal student loan payments.
Ask your lender if they provide graded, extended, or income-based plans by giving them a call. Here is further information about these choices.
27. Choose mortgage payments that are less than 28% of your monthly income.
When determining how much housing you can afford, use it as a rough guideline. Discover more details about this number here. after which indulge in some voyeurism to see what other couples can manage to pay for.
How to Shop Wisely
28. Calculate the cost per use of purchases
If you neglect the quality aspect, purchasing a trendy $5 shirt rather than a straightforward $30 garment could appear more fiscally prudent. Consider how many times you’ll use it or wear it when evaluating whether the newest tech toy, kitchen appliance, or piece of clothing is worthwhile. In fact, you may take experience costs per hour into consideration!
29. Invest in Memories, Not Things
You get more satisfaction for your money if you spend it on things like a concert or a picnic in the park as opposed to expensive material goods. Research supports this.
30. Solo Shop
Have you ever had a buddy say, “That looks so cute on you! for every outfit you put on, “You’ve got to get it!” Instead of strolling through the mall, save your mingling for a walk in the park, and give your purchasing some real thought.
31. Spend money on the real you rather than the ideal you.
It’s simple to make purchases for someone who represents what you aspire to be: a chef, a professional stylist, or a triathlete.
32. Get Rid of Overdraft Protection
Although it seems great, banks are actually using it to get you to overspend and then charge you for the privilege. Find out more about overdraft protection and other banking mistakes to avoid.
How to Make Smart Retirement Savings
33. Start putting money away right away.
Not next week. Not if you receive a pay boost. not the following year. Today. Since the force of compound growth will have more time to develop the money you contribute to your retirement savings today,
34. Avoid at all costs early withdrawals from your retirement account.
Early withdrawals from your retirement account will cost you dearly. To begin with, you’re undoing all of the sacrifices you’ve made in the past to save money by not allowing it to be invested. Second, early withdrawal fees, which are typically quite high, will be charged to you. Finally, the money you withdraw will result in a tax bill. All these elements make early cash out a very risky move.
35. Give money to get money
When your company makes a financial contribution to your retirement account, this is known as the 401(k) match. However, you won’t receive that contribution unless you first make one. See, that is why it is called a match.
36. Increase your retirement savings when you receive a raise.
You know how you’ve always vowed to save more money whenever you had more? You have our ire for that, you know. The first thing you should do after receiving a pay raise is boost your automatic transfer to savings and your retirement payments. It’s only one item on our to-do list for beginning our retirement savings.
How to Track and Build Your Credit the Best
37. Regularly review your credit report and monitor your credit score.
This woman discovered the hard way that having a subpar credit score might end up costing you thousands of dollars. She didn’t get her actual credit score, which would have conveyed a different narrative instead she merely looked at her credit report, which appeared to be good.
38. Don’t use more than 30% of your available credit at a time.
You can determine it by dividing the total balance on all of your credit cards by the total amount of credit you have available. This ratio is also known as your credit utilization rate. Your credit score may suffer if you use more than 30% of your available credit.
39. Get a secured credit card if you have bad credit.
Similar to a standard card, a secured card helps establish credit, but it forbids overspending. And you can acquire one even if you have bad credit! Here is all the information you require regarding secured credit cards.
How to Obtain the Right Insurance
40. Increase Your Life Insurance Coverage Beyond Your Employer’s Policy
This is due to the fact that your employer’s basic policy is frequently far too limited. Not persuaded? Learn how an additional life insurance policy helped one family.
41. Get renters insurance
It naturally covers theft, vandalism, and natural disasters, but it may also pay for things like medical expenses for those wounded on your property, harm you cause to another person’s property, and rent if you are evicted.
41. Purchase renter’s insurance
Naturally, it covers theft, vandalism, and accidents, but it may also pay for things like medical expenses for those injured on your property, harm you cause to another person’s home, rent if you have to move because of damage to your apartment, and even items taken from storage facilities. Not bad considering that $30 a month!
What to Do to Get Ready for a Rainy (Financial) Day
42. Include savings in your monthly spending plan.
You’ll never have money to save if you postpone doing so until you always have a sizable financial buffer at the end of the month. Instead, start immediately to include regular saves in your budget. Discover more about this and other costly savings errors—and how to correct them.
43. Save money outside of your checking account.
Uncommon knowledge: If you see money in your bank account, you will spend it. Period. Opening a separate savings account is the first step on the fast track to saving money, making it less likely that you will use your vacation funds unintentionally for another late-night online shopping spree.
44. Open a savings account with a bank other than the one where you have a checking account
It’s simple to move money from your savings account to your checking account if you retain both of your accounts at the same bank. way too simple. So stay away from the issue and these other financial hazards.
45. The (Almost) Magic of Direct Deposit
Why, you inquire? Because it gives you the impression that your paycheck is where your savings come from, even though you know perfectly well that it doesn’t. You won’t likely miss the money you set aside for saves if it never makes it to your checking account. In fact, you could be pleasantly surprised by how much your account increases over time. Look into more options for starting your emergency fund.
46. Take into account joining a credit union
Although credit unions aren’t for everyone, they may be the best option if you want better customer service, kinder loans, or higher savings account interest rates.
47. There are five different kinds of financial emergencies.
Hint: One of them isn’t a wedding. Only withdraw funds from your emergency savings account in the event of a job loss, a medical emergency, a car accident, unexpected house repairs (such a leaky roof), or the need to attend a funeral. If not, just decline if you can’t afford it. We go into further detail here.
48. You shouldn’t save too much money.
Though uncommon, it is conceivable. When you have enough saved up to cover your short-term financial needs and more than six months’ worth of expenses in your emergency fund (nine months if you’re self-employed), it’s time to start thinking about investing.
Approach to Investing
49. Keep an eye on the costs
Your returns may be impacted by the fees you pay in your funds, generally known as expense ratios. Even a seemingly insignificant price of 1% will end up costing you in the long run. We often advise sticking with inexpensive index funds.
50. Once a Year, Rebalance Your Portfolio
Although we don’t recommend trading, you should occasionally check your brokerage account.