3 Personal Finance Tips Nobody Told You About
Most of us grow up financially illiterate. We fail to learn some of the most basic lessons in personal finance, simply because our teachers never taught us and our parents never told us either.
It’s likely that your teacher’s and parents weren’t very good with money either. So we can’t really blame them.
If you struggle with money you may often think things like “what is it that everyone else knows that I don’t? Where are they getting all their money from?”.
Does this sound like you? This article looks at 3 personal finance tips you have probably never heard before but will help you to save, afford the things you want, and maybe even retire a little earlier.
- Wealth Is Built Over a LifetimeWhen you see old people driving around in a brand new Mercedes, it’s not because they won the lottery but because they have been saving their money tirelessly over a period of about 40-50 years.
We like to think that large sums of money just appear out of nowhere from either getting lucky, receiving a huge bonus or selling a silicon valley start-up at the age of 22.
For the vast majority of us, wealth is created by continuously saving small amounts of money each month, over a very long period of time. The sooner you start the better and the earlier you will be able to retire. Put anything from 5-20% away each month and never touch it.
- Focus On What You Can Afford, Not How Much You Spend
Most of us have a budget and if you don’t then you need one. A budget is a great way of tracking your spending, learning from your spending mistakes, and adjusting until you find the right cocktail for your money to grow.
However, most of us focus our budgets on what we can’t spend. Firstly, this creates a negative relationship with money and results in people whining about their finances all the time. Secondly, your focus should be on what you can afford, not what you can’t spend.
Next time you sit with your budget, look at how you can use your money. If you have something coming up you really want to do, think about how you can afford it. Set up a mini savings goal and work towards it gradually each month.
- Saving Money is Almost Better Than Saving It
Walk into any successful business in the world and the owner will tell you that saving money is just as important as making money. People that work in procurement know this all too well.
To allow yourself to keep more of your hard-earned cash, look at all the different ways in which leaves your account. Direct debits, weekend partying, and various media subscriptions drain your account before you can even see your monthly income enter your bank account.
Start to assess all your types of spending and actively look at reducing that spending or stopping it completely. If you own a home, take a look at no deposit electricity schemes, install energy-efficient appliances that reduce your bills, shop at different supermarkets, and stop using the heating so much.
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