Best personal finance tips for you to manage your  money

Best personal finance tips for you to manage your money

Every time you get your paycheck, it becomes your responsibility to manage your money.

You have many choices with your money. Can either spend it all or strategically manage your money.

Personal finance can help you manage your money and build your wealth.

Your financial decision will decide where you will go financially.

Rich and poor are not differentiated by money they are differentiated by their money habit.

Rich invests their money first and spends what’s left. Poor people spend their money and invest nothing.

Here are the financial tips for you to help you become financially confident.


Pay yourself first

No matter what you do, this should be your first step.

What this step says. “Every time you receive your paycheck, you spend but only nine parts.”

The 10% you save for investments.

10% should be the minimum, you can save as much as you can.

This is the first financial tip for you. And this is also the most important tip for you.

If Your Goal is to become financially free then you must follow this step.

The term “Pay yourself first” comes from the book The richest man in Babylon. This is one of the best personal finance books.

How you can Pay yourself first?

You can do it by automating your savings.

Open a recurring account with the bank. Every time you receive your paycheck; a fixed amount of money will be deducted from your account.

This is the best way to save money.

Once you have enough money to save the next step is to invest that money.


Start investing early in life

The only way to become wealthy is through investing. It is important for you to invest your money.

Start small, it is better than not investing.

Those who start investing early in their life have benefits over those who start late.

It is the compound interest that creates the difference.

10 years difference can seem less to you but if you start 10 years late you will be far behind than those who start investing yearly.

Let’s say you start at the age of 35 and Your friend starts at the age of 25.

Both decided to put 5000 per month until retirement. Suppose you both get 15% compounded rate of return.

Total investment Investment yearMaturity value
You₹1,500,50025₹16,420,375
Your friend₹2,100,00035₹74,303,272

You can see your friends just start early and receives ways beyond return than you. So it is important that you start investing early.


Take insurance

We always worried about insurance for our cars and homes. We pay their insurance premium regularly.

But we ignore to insure ourselves. Most of us never buy insurance for ourselves.

You must take an insurance plan. That will help you with your difficult times.

There are many insurance plans you can take.

There are two insurance you must take

1 Health insurance

2 Life insurance

Health insurance can cover your medical expenses. You should take health insurance for each of your family members.

Life insurance can protect your family in your absence. If you are the breadwinner of your family then it is very important that you should take your life insurance.

If something happens to you then life insurance can protect your family.

Can open Term insurance. Term insurance has a very little premium to pay every month.


Have a retirement plan

You should plan for your retirement. We work our whole life but never plan for our retirement. We hope that our employer or government can take care of us.

You can never rely on someone else for your finances.

You all should invest in a government pension scheme.

Some amount of money you put every year in the pension fund. You can only withdraw this money at your retirement.


Be frugal

Learn to live below your means.

It doesn’t mean you don’t buy the stuff you like.

It means never to spend money on the thing you don’t need or you don’t like, just because you have to show off someone.

Most of the rich people never show off.

Never spends more than you could earn.

Don’t buy things on credit. Frugality comes with discipline.

You should not buy things you can not afford.


Save money for taxes

Taxes can be one of the biggest expenses. You can not avoid taxes. But you can minimize your taxes.

There are many tax-saving schemes where you can invest your money.

You can invest in tax-saving mutual funds like ELSS(Equity Linked saving schemes). Its lock-in period is for 3 years. It can help you save taxes.

Some of the best Tax saving investments under 80C are

ReturnLock-in-period
1 ELSS( Equity Linked Savings Scheme)15-18%3 Years
2 NPS(National Pension Schemes )12-14%Till Retirement
3 PPF (Public Provident Fund)7-8%15 Years
4 National Saving Certificate7-8%5 Years
5 Bank FDs6-7%5 Years

personal finance tips

Final thought

You are responsible for your finances. Take care of your finances. Never make a bad purchase,

And never buy anything on credit. Try always buying with cash.

You can do so by not carrying a credit card with you whenever you go shoppings.

Shubham Pal

A student and an investor. Shubham has a passion for investing in the stock market. He loves to talk about investing, money, and the stock market. He is a follower of Warren Buffett. He loves to read personal finance and investing books.

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