7 Personal Finance Tips for Beginners

01. Build a Buffer

Imagine seeing a product you have always wanted. After checking your account, you realize you have enough to cover the purchase, so you swipe your card without a second thought. Two days later, your account has overdrawn; your monthly Hulu subscription has just come out. Building a buffer can be essential to mitigate overdrafts (and any associated fees).

02. Create and Maintain a Budget

Though it can be a bit stressful, it is essential to know where you stand financially. Establishing and honoring a monthly budget can be crucial in obtaining your financial goals.

03. Pay Off Debts

Debtfree living. However, it may seem like a dream now, but with hard work and dedication, you can become debt free. To revisit The Total Money Makeover, “When you tie up your income, you lose”. It may be worth considering ways to invest your money as opposed to getting into debt only to pay them off with interest. 

04. Create an Emergency Fund

“It is going to rain. You need a rainy-day fund.” Dave Ramsey, Total Money Makeover Baby Step One. There is going to come a day when you are going to need to fund an emergency. Thus, there is no better time than the present to start saving. Ramsey recommends saving $1,000 to start an emergency fund, eventually leading to  “a fully funded emergency fund” that covers “three to six months of expenses.”

05. Read Books on Finance

“The beginning of wisdom is this: Get wisdom, and whatever else you get, get insight.” Proverbs 4:7 (New Revised Standard Version). An essential part of becoming financially successful and maintaining said success is knowledge; knowledge is power and a means to an end. It is a foolish man who lacks understanding, so go out and learn as much as possible in hopes that your future financial decisions are well-informed and calculated.

06. Set Aside a Retirement Fund

401K, Roth IRA, Simple IRA, Roth IRA… there are many to choose from. Recall tip number 5, knowledge is power. Consider looking at the retirement funds your employer and financial institutions may offer and how those funds may assist you in planning for your retirement.

07. Spend Less Than You Earn

Recalling the idea of creating a budget. It can make or break even the most well-planned-out budget. Living below your means can make the budgeting process more manageable. It can also make it set aside for savings less stressful.