In this article, I round up the top 100 personal finance tips provided by our experts from diverse backgrounds, locations, and education. At over 16,000 words, this is certainly a long read and the biggest anthology I ever put together. I don’t expect you to read it all in one go. Rather, I recommend bookmarking it and reviewing it periodically throughout the year. That way, you can review specific sections when you might need them most.
Let’s get started.
Start here for our top 100 personal finance tips
Set a financial goal
My top personal finance tip is to set financial goals for yourself. We often think of New Year’s resolutions in terms of our fitness or professional development at this time of year. Still, it’s just as important to set financial resolutions as well. Consider your short-term, mid-term, and long-term goals, and craft your budget with these in mind. Whether you’re focused on building your rainy-day fund, purchasing your dream home, or planning for retirement, having goals in place will give you an incentive to prioritize your spending and make fewer impulsive purchases in the long run.
Valerie Moses, Senior Relationship Manager at Addition Financial
Avoid surprises
Check your account balances daily. Set aside 5 mins to review your checking, savings, credit cards, and investments regularly. Doing so will ensure that you’re always on top of the day-to-day activities in your financial house. Further, it’s one great way to avoid identity theft, and in my experience, it helps improve my credit score.
You can supercharge this method by paying off your credit cards, in full, at least twice a week. This way, your credit card becomes a fancy debit card with points and insurance while avoiding interest charges.
Andrea Spallanzani – Travel Addicts Life
Examples of goals
The best way to improve your finances is to set true goals you care about. And orient your money around achieving those goals. Make a list of the things you want in life:
- Becoming debt-free
- Make $50 today, then $100+
- Starting a family
- Buying a house
- Traveling
- Making home improvements
- Going to grad school
- Sending your kids to college
- Retiring early
- Giving generously
Then, structure your budget around bringing those dreams into reality. Spend time thinking about when you want to achieve each goal and how you can do it. Start setting money aside every month so you’re always moving closer to them. This process automatically aligns your spending with your priorities and values. If you can do that, you’ll be a lot happier, and you’ll be much more intentional with your money.
Jamie from Mr. Jamie Griffin
Have a MEGA money goal
If you keep falling into the same old money habits no matter how much you try, it could be that your goals are just not motivating enough.
Goals like “put a bit more into savings,” or “learn about investing,” or “start a rainy-day fund” are good and all. But they’re so mundane that you’ll probably put them off until next year. Another year after that. Yawn.
This year, take some time and make a MEGA money goal that excites you and would make you proud to achieve. Something you’ve always kind of wanted but never believed you could get.
- Pay off all your bad debts, then save up $20,000 to go motorcycling across South America.
- Invest in learning new skills to get that job you’ve always wanted!
- Become a landlord to have the cash flow for the rest of your life!
Those are the types of goals I could get excited for – enough to change my money habits with ZERO prompting.
If you’re excited about your goal, you’ll naturally feel inclined to learn how to make it work for you. Otherwise, you’ll spend yet another year spinning your wheels with the same old goals.
Leif Kristjansen – FiveYearFIREescape
Aim high
My best personal finance tip is to determine how much money you need. Are you aiming for millions of dollars? Why? Take a real hard look at your expenses, and you’ll realize that you might not need as much as you think. You might also realize that you need far more than you think! The point is the amount of money that you need is deeply personal, and you can’t rely on the media to tell you what that is.
Melanie – Partnersinfire.com
Consider your values
Take some time to think about your values and then consider whether your spending aligns with those values. Too often, we spend without thinking about whether we’re using money in a way that reflects those values. Digging into your values can help you set your money priorities for the coming year. And help you direct your financial resources in a more satisfying way.
Miranda Marquit, MBA
Pay attention
My top personal finance tip is to pay better attention to your money. Many people don’t pay close attention to their pay stubs, budgets, debt payoff plans, credit histories, and other important financial details. Carving out an hour or so every month to better understand where your money comes from, where it goes, and how well it helps you reach your financial goals, you know to make smarter money decisions every day.
You’ll also notice that you naturally start thinking harder about where you spend when you pay closer attention to your money.
It’s essential that your spending aligns with what you value most. You don’t need a new or fancy car, ultimate cable TV package, or anything else just because your friends or neighbors do. By cutting spending on things you don’t need and care little about, you can focus your finances on what you value most – for me, three top priorities are my kids’ education, owning a nice home, and travel.
You’re in charge of your budget and where your money goes. By paying attention to where your money goes and focusing your spending on what you care about most, you’ll get the most from every dollar you earn.
Eric Rosenberg
Remain prepared for the unexpected
If nothing else, 2020 was the year that showed us that anything can happen. And that we must remain prepared at all times for things we may not be able even to imagine. No matter how secure we think we are, most of us are just one mishap away from serious problems. While we don’t want to live our lives in fear, and we want to balance work and fun, the top personal finance tip we have is to make this the year that you become financially prepared.
If you don’t have an emergency fund, start there. If you have an emergency fund but have debt, start working diligently to pay it down. And, if you’re barely keeping your head above water, try and get to a place where you can climb on a raft. Wherever you are at in your financial journey, focus on improving your financial security to buffer against future unknowns.
Tawnya, Money Saved is Money Earned
Get clear on what matters most to you
Get clear on what matters most to you to ensure you are intentional with your money, from your monthly spending to your saving habits. It means sitting with yourself (and your partner, if you have one) and asking some deep questions. What kind of life do you want to have? Are you living it now, and if not, what do you need financially to get there?
Once you have the vision to work towards, you can start setting goals and priorities that get you closer to building your desired life. In practice, being intentional with your money may look like creating a personal budget or setting financial goals like paying off debt, saving for a house, or growing your wealth through investing.
When you are clear on your ultimate goals and priorities, it gives purpose and intention to the way you spend your money. A budget is ultimately just a plan, after all. Whether you are establishing a personal monthly spending plan or setting a budget for your wedding, it’s essential to know your priorities and goals so you can allocate your funds accordingly.
Jessica Bishop The Budget Savvy Bride
Make the financial plan purposeful
Our best personal finance tip is simply making a plan for your money. Creating a purposeful plan with your money is the foundation of reaching your financial goals this year. A monthly budget will not only tell you where your money is going but opens your eyes to know how to use your money more effectively. It can be challenging to start a budget just like any other habit, so giving yourself some grace in the first few months is essential.
Your budget should be a forecast of where you want your money to go for the month. You can use many tools just as pen and paper-like our budget template, apps like Personal Capital, Mint, or YNAB, or even excel. Find a method that works best for you and your situation, and start creating good habits around it. Whether you are trying to save money, pay off debt, or increase your net worth, it all starts with breaking those big financial goals into a monthly budget.
Kelan & Brittany Kline, The Savvy Couple
Budgeting
Get organized!
Often, people struggle with money because they don’t know what they’re spending or don’t know where their money is going.
So, for this personal finance tip, take stock of your money at the start of a new year. Set up a plan to track your spending. Figure out where your investments are and if they still align with your goals. Make a list of your debt and create a plan to tackle it.
The first step to improving your finances is understanding them, and there’s no better time to do that than the start of the New Year!
Connor Brown, After School Finance
Track your spending for a few months. When you review the numbers, cut out the spending that you feel is wasted. Your savings rate will rise, and you’ll know that you’re putting your life energy into the things which you value.
Doug Nordman of The Military Guide, FI since 1999
Mind the gap
Do you know how much money you’re bringing in? What about how much money goes out? Is there a gap? When you live paycheck-to-paycheck, especially without a budget, you’re living on the emotional edge of stress. Stress like that affects all the other areas of your life. Think, your relationships, your work, and your health. When you’re constantly worried about whether you can afford something, your entire life suffers.
If you make a committed effort to start and continue budgeting, you won’t have to live with not knowing if you’ll be able to make next month’s bills or if you can afford enough groceries. Even though it feels overwhelming, scary, and like you can totally put it off for later, the longer you wait, the worse you’ll feel.
Budgeting lets you gain awareness around your money, and that’s the first step to taking control of your financial life. Once you know what’s there, you can take the next step, and then the next. Before you know it, your stress levels will go way down.
Colleen Mitchell, Life Coach & Host of This is Type 1 Podcast
Don’t forget the fun money
Budgeting is an essential tool to help you manage money and there is lots of good advice out there about how to create the perfect budget. What can often be forgotten when you are getting all financially serious is that you still need to enjoy life and be able to live.
So for this personal finance tip, no matter how tight your budget is, try to build in a little fun money. In fact the tighter the budget, the more important it is to have a little guilt-free spending money. Money that you allow yourself to spend guilt-free on whatever you want. You may well have large debts to pay off or are facing a drop in income that means belts must be tightened and budgets must be cut.
Fun money, regardless of income limits, is essential to keep you on track with your budget.
Even if it’s just $20 a month, it will make a world of difference to you. Fun money can be the difference between sticking to your budget while you focus on debt pay off and blowing it out of the water because you feel too restricted.
Emma, Tuppennys Fireplace
Keep it simple with automation
The most efficient and easiest-to-follow tip for your money is to automate everything. I’m a finance nerd, so I love budgeting and tracking every penny. Still, if you don’t want to, automation has made it possible to be successful financially without being strict on yourself. Automate the important stuff, like bills, investing, saving, giving, and even your debt payment plan. Then live on what’s leftover. As long as you don’t spend more than what’s leftover, you’re going to see a positive change in your money.”
Kalen Bruce, MoneyMiniBlog
Audit your tax return for a clearer picture
Your tax return will give you all sorts of interesting numbers: Adjusted gross income, modified adjusted gross income, taxable income, but it won’t show you the most important financial number of all: your personal net income. How profitable are you, as an individual or a household?
Put another way, after all your expenses, how much was leftover? We have a pretty good pulse on how much we make each month, but our spending can fluctuate.
I think it’s worthwhile to look at all your credit card statements and bank statements — even if just for 1-3 months and not the whole year — to get an accurate picture of what came in and what went out.
For example, with this personal finance tip, let’s say you brought in $5,000 last month and spent $4500. The $500 leftover would be your monthly profit, and your lifestyle has a 10% profit margin.
(If your personal profitability is greater than 5% of your income, congrats — you’re above average!)
As the CEO of your own life, this personal profitability metric — the gap between your income and expenses — is your biggest lever toward financial independence. Naturally, it makes sense to tackle it from both sides of the equation. Spend with intention, avoid lifestyle creep, and aim to grow the gap with increasing income.
Nick Loper, Side Hustle Nation
Use technology to help with your budgeting
Download a budgeting/spend tracking app like Truebill or Mint, and take a detailed look at all of your spending by category. These apps offer an easy-to-use, secure way to consolidate all of your financials into one place so you can manage your money more confidently. Once you’ve connected all of your accounts, take a look at your spending habits. You’ll be surprised at the kind of money you may be spending on certain categories over a year.
That $4 coffee from Starbucks every few days may not seem like a lot, but it can quickly turn into hundreds of dollars per year. Once you’ve decided what you can cut out of your budget, don’t just stop here. Find a new place to use your money to your advantage. Save more to grow your emergency account to 3-6 months of expenses, contribute more to your retirement, or start saving for a car/house down payment. Creating good habits can be the beginning of a long life of financial success.
Jonathan Hess, Financial Coach
The budget isn’t the most important thing in personal finance
A budget isn’t the most important part of your personal finances. It’s the habit-forming that comes with it. I don’t know a single person who has set a monthly budget and hit it to the exact penny (or at least I haven’t). We are human, and life is hectic. Unexpected expenses (and income if you’re lucky) will always pop up when we least expect them.
We budget because having a plan is right for your emotional relationship with money, but when life gets in the way, that’s okay too! People tend to set a very strict budget, and as soon as they can’t follow that budget, it all goes out the window. If you have the occasional month where you can’t stick to your budget, that’s okay. The important part of budgeting is habit-forming. Fit your budget to your lifestyle, and be aware that sometimes it won’t go to plan, make your tweaks, and get back into it next month!
Lorne A Jenkins, Mini Money Management
Budget first, spend later
For this personal finance tip, I recommend always save, spend little, and build a saving pot ready for the worse and good times. Making a budget before spending is essential when saving money. Open a separate bank account and tuck in a small amount every so often, monthly, weekly, or quarterly. Budgeting and planning over the next coming weeks can save you from unexpected costs. I’ve always forecast the next coming months on a spreadsheet giving me an accurate financial position. I note down as many recurring expenses as possible, along with my income and other items that may contribute to my current or future financial position. You never know when unforeseen, sudden costs may pop up that could derail your budgeting entirely, so it is always best to be prepared.
Alexa Mason, Single Moms Income
Consider the anti-budget
Automating your finances using the ‘pay yourself first method’ is an effective and straightforward way to minimize lifestyle inflation, pay down debt, and build savings and investments. Also known as the “anti-budget”, this approach is one of the simplest ways to manage your finances. Here’s how you can get started with. this personal finance tip.
First, you’ll need to determine how much money you can allocate to investments, savings, paying down debt, and regular expenses every month. The best way is to track your spending for two months. It will allow you to develop a baseline for spending, allowing you then to work in reverse. Don’t worry if there isn’t much leftover at first; it’s all about getting started.
Next steps
From there, you can determine how much (if any) is left over for investing, saving, and paying down debt.
If you don’t have any emergency savings, I would suggest starting there first. You could set up an automatic transfer from your primary bank account to a secondary account. Ensure this transfer occurs within a day of receiving your paycheck (ideally via direct deposit). If you’re just starting out, do this until you’ve built one month of emergency savings.
The concept is the same for other categories. If you have high-interest debt, such as credit cards, that should be your next focus area. Similarly, set up automatic payments and do your best to pay well over the minimum amount every month if you can.
From there, you can start automating contributions to a 401(k), pay off other debt, and build a six-month emergency fund. The key is moving the money as soon as you get paid. Then you can spend the rest on other regular expenses. This is a powerful mind trick that will allow you to simplify your money management process. Check out our article on this topic for more information.
Mark – Financial Pilgrimage
Spending Money
Practice Pausing
An excellent way to avoid FOMO and impulse spending is to intentionally pause before making purchases, allowing you to control non-essential spending. With this personal finance tip, if you feel the urge to buy something non-essential, remove yourself from the situation and write the desired item and cost down to revisit for consolidation later.
For large purchases, you may consider the 30-day rule, where you would give yourself 30 days to decide whether you should purchase the item. After the 30 days are up, you can determine if you would still like to buy it.
In many cases, you may only need to walk away from your phone or laptop and sleep on it before realizing your desire to click “buy now” has subsided. By stepping away and thinking about the purchase, you can reflect and avoid making impulse purchases.
Lauren Anastasio, CFP at SoFi
Don’t spend too much on gifts
My #1 personal finance tip is to try to reduce your expenses on gifts. Gift-giving is not necessarily the easiest thing on our budget. There are so many occasions for gift-giving: anniversaries, birthdays, Christmas, special holidays, you name it. You may even want to treat yourself from time to time as well for some much needed self-love.
Gift-giving is a universal gesture that you care about someone. However, it is not necessarily the amount of money you spend that matters the most. More often than not, it is the thought behind the gifts that matters more to the recipient. For just under $25, you can still have plenty of thoughtful gift ideas for any recipient, whether he/she is a home cook, a home décor lover, a family person, or an introvert. As long as you put your thoughts into your gifts, your budget-friendly picks can just be as personal.
Bella – Bella Wanna
Think first, spend second
My top personal finance tip is to question your spending. Too many times, we buy things without putting a lot of thought into them. We think we need an item, so we buy it. I challenge you to take a step back and think about your purchases more.
Before buying something, ask yourself if you need the item. How will it improve your life? How much joy and fulfillment will you get from it? Asking these questions can be eye-opening, and you will find that you start buying a lot less stuff.
I love this tip because anyone can do it. You just have to make it a habit to stop and think before buying things. And as a result, you will be able to save the money instead, helping you to get ahead financially by paying down debt or saving for a goal you have.
Jon Dulin, Founder at CompoundingPennies.com
Consider the time value of money
A top personal finance tip is to start a budget for your family and stick to it. If you are at the store and see something you want, think to yourself, “do I really need this?”. I use Instacart to avoid impulse purchases at the grocery store. It has saved me so much money—factor in your hourly rate after taxes. For example, I make about $40 an hour after taxes. If I see a product I want and it’s $40, it would take 1 hour of work to pay for it. If you think about your money as in the time to earn it, then it will make you think twice before making a purchase. Another great tip is to use cash so you can see how much everything is costing. If you use a credit or debit card, you can’t feel the weight of the money!
Becky Beach from Mom Beach
Start with why
One of my favorite buzz phrases by Simon Sinek, “Start with Why,” is something I like to practice for big spending. Ask yourself, why are you spending this money? Is it something you need, or is it a want, or is it merely for what it says about you to others? It doesn’t mean making all spending skeletally minimal. After the year we have had, maybe a holiday rental is a need. Spending mindfully rather than mindlessly is key to a fulfilling relationship with money.
Aparna Aggarwal – Elementum Money
Avoid free trials
I am one for trying out something new, whether it’s a new meal plan or a subscription box. So, when there is a free trial available, I am ready to check it out first hand. The only way to figure out if something works for you is to get a feel of it, right? But the catch with most of these “free trial” products is that they require a credit card to get you started.
Even though you don’t get charged during the trial, you will have to pay once the trial period is over. The downside with this personal finance tip is that we might end up forgetting to cancel the subscription and get charged. The best tip to avoid this is to keep track of any free trial sign-ups, so you can cancel it before the trial ends. A simple phone reminder or a note in your daily calendar can help avoid this costly mistake.
Saranya Ramanathan, One Fine Wallet
Saving Money
Automate your savings
Baby steps made all the difference for me. Starting with small goals and automating is what really got me moving. Signing up for Dobot jump-started my emergency savings. Setting an automatic monthly deduction to my retirement account from my checks was also really useful – even if I could only do 1% or 2%; eventually, I could raise it. Mel, brokeGIRLrich
Optimize cell phone spending
My top personal finance tip is optimizing your cell phone spending. If you’re buying a new phone, searching for the best price could save you a decent chunk of change. People willing to purchase a slightly outdated model, such as last year’s iPhone, can save even more. Don’t forget to shop around for cell service providers, too. Many MVNOs (Mobile Virtual Network Operators) offer rock bottom prices while providing similar service to the big carriers.
Lance Cothern, CPA, personal finance expert, and founder of Money Manifesto.
A little goes a long way
Save a little bit of money from every income source and every payment. Whether it be a paycheck, a side job, government stimulus check, or unemployment, put a portion of what you make into an emergency fund account.
Setting up an automatic bank transfer to move money into your savings account once or twice a month is a great way to make this painless. Just as important, automating the transfer keeps you from telling yourself, “I don’t have any money to save.” When you automate your savings this way, you’re likely to find that you don’t even miss the money. It’s not like you have to convince yourself to take a little bit out of your budget to save each month.
Then, after a short while, you’ll notice that your emergency fund has grown enough to handle most small emergencies. After a more extended period and more aggressive saving, you can save for bigger emergencies, including losing your income for several months.
The key is to leave the money in your saving account and keep putting money aside. Don’t touch the money for anything except real emergencies that you were unable to plan for. The best part about having an emergency savings fund is you don’t have to use your credit cards, and you can keep your credit cards paid off.
Robert Taylor – The Real Estate Solutions Guy
Keep the savings separated
Open a high-interest savings account at a bank that is different than your day to day bank. There are many no-fee options for making this easy. Then set up automatic transfers into your savings. Having your savings in a different bank than your chequing account makes it harder for you to spend your money. And, with this personal finance tip, setting up automatic transfers makes it easier for you to save.
Maria, Handful of Thoughts
Cancel unused subscriptions
Do a complete audit of your recurring bills. Chances are there are several subscriptions you forgot about or rarely use but are still paying for each month.
Canceling a $10/month subscription may not seem like much, but finding just three subscriptions you can cancel at this rate adds up to over $300 in savings for the year.
If you subscribe to multiple streaming services, cancel the ones you don’t use, or see how you can piggyback off of someone else’s subscription if they allow you to. If you pay for software, see if you can find a cheaper alternative. A recurring bill audit is the fastest way to cut down on hundreds of dollars per year quickly.
Paul Kim from simplerate.ca
Meal plan to save on groceries
Many people vow to cook more at home, but this goal doesn’t necessarily translate into savings. It’s still possible, and likely you overspend on groceries and still feel like you have nothing for a meal. Meal planning ensures you buy only the ingredients you need for each meal throughout the week, which lowers impulse buys and reduces food waste. And for this personal finance tip, you can use services like TheFresh20.com for help with meal planning. You can stretch your grocery dollars even further by uploading pictures of your receipts to the Fetch Rewards app. It rewards you with points good towards gift cards to stores like Target, Amazon, and Walmart to help offset future grocery purchases.
Andrea Woroch, Money-Saving Expert
If you haven’t already – set up an emergency fund
One of the most important financial moves to make is to set up an emergency fund if you haven’t already.
If the pandemic taught us anything, it taught us that unexpected things happen, and we need to be financially prepared. For this personal finance tip, being able to cover unexpected costs or living expenses if you suffer a drop in income with your own money instead of relying on credit will greatly benefit you in the long run. Having to take out credit cards or short-term loans will create bigger financial problems if you cannot repay them.
Your aim should be to have a couple of months’ worth of living expenses in the bank so you’ll have some leeway in case your finances take a turn for the worse. If that sounds a bit too daunting, don’t worry, something is better than nothing, and everyone has to start somewhere.
Also, make sure that you’re saving your emergency fund into an easy access savings account so you can get to it quickly and easily if you need to.
Holly Andrews, Managing Director of KIS Finance
The case for 12 months of barebones expenses in the emergency fund
There is one thing we all learned growing up: there are no certainties in the future. A common recommendation I often hear in the personal finance world is to pay down your debt first as aggressively as you can and worry about saving later. But with the current economic climate and high risk of unemployment, you must prioritize getting cash in the bank.
For this personal finance tip, if you don’t have a substantial emergency fund yet, start saving today. Some people recommend three months, others for six months. But I firmly believe you should have enough to cover 12 months of your barebone expenses.
How? Track your expenses and cut back as much as you can. Negotiate with your creditors, check if you can stretch the payments out without paying extra interest. You’ll be surprised about deals and payment plans you can get from credit card companies and banks to help people during the pandemic.
Having a cash cushion to rely on will make managing your finances much more relaxing.
Sara from Gathering Dreams
An unintended consequence of an emergency fund
If you haven’t already, build the basics of financial health by building your credit and emergency savings, which are your safety nets to fall back on during uncertain times. If you have good credit, you increase your chances of being able to take out a personal loan, qualifying for a credit card, refinancing your mortgage to a lower interest rate or monthly payment, or take other credit-related actions that could help you out in a financial pinch. Another compliment to good credit is emergency savings.
Having emergency savings may prevent you from taking on debt in case of job loss, medical emergency, or other crisis. At the very least, emergency savings can reduce the amount you have to borrow. Some research shows that even just $100-$200 in emergency savings could mean the difference between keeping your housing or losing it, and keeping your utilities turned on. The bottom line is, as you plan your money goals, build the foundation for your long-term financial health too. The good news is that there are tools that could help you achieve both these goals simultaneously, like Self.
Lauren Bringle, Accredited Financial Counselor® and Content Marketing Manager with Self Financial
Make saving a priority
My top personal finance tip is to make saving money a priority. If you have the means to save an extra $1,000 for an emergency fund, do it. Last year taught many of us that a large emergency fund is critical for peace of mind. I recommend storing your emergency fund in a high yield savings account such as an Ally Online Savings Account. This is where I keep my 6-month emergency fund.
Saving for an emergency fund can seem daunting at first, which is why I recommend saving $1,000 first. Saving $200 a month for five months can do just that. Once you hit $1,000, don’t stop there. Calculate your total monthly expenses for three months and make it a goal to save that amount in your emergency fund. You can make your emergency fund even stronger by saving six months of living expenses. If you lose a job, a pandemic happens, or your house needs a major repair, your emergency fund can save you. It’s totally worth the peace of mind.
Alexis Schroeder – FITnancials.com
Hindsight is 2020
Here’s what I think I’ll be focusing on when it comes to money: balance. Everyone who is even remotely interested in financial independence knows how important it is to save money – especially with what happened last year. I mean come on, talk about the importance of having some money set aside for a rainy day! But last year has also taught us how important it is to appreciate the little things in life. So if you can offset a little, and splurge by adjusting your budget here and there, then I believe it’s OK not to feel too guilty about it.
Adriana – Money Journey Today
Invest in your emergency fund
2020 was one of the most unpredictable years in the past few decades, and many people have suffered (financially) because they didn’t have an emergency fund. My advice for this personal finance tip is to invest quite a bit of money into this type of fund and keep it intact unless there is a real emergency. People often mistake savings funds with emergency funds. However, these should be two separate entities, and the latter should only get used if there is truly no other option. Ideally, an adequate emergency fund should be enough to keep people going for at least six months without additional profits.
Malte Scholz, CEO of Airfocus
Don’t be a J.O.B.
Financial independence is about making more money than you spend from something other than a J.O.B., which stands for Just Over Broke. I became financially independent by buying one rental property at a time that made me more than $250 a month in passive income. Passive income is where you work one time and get paid over and over again. The 1 property that makes me $250 a month in passive income is $3,000 per year. Imagine you invested in real estate and bought ten rental properties that made you $250 a month in passive income. That is $30,000 a year in passive income! My suggestion is to always focus on making money in passive income where you work one time and get paid repeatedly. Start investing in real estate, and eventually, you can become financially independent and never work a J.O.B. again.
Dustin Heiner – Founder at Master Passive Income
Dealing With Debt
Live below your means
My top personal finance tip is to pay off your debt and live below your means to build up your rainy-day fund. If 2020 didn’t open your eyes to expecting the unexpected, then I can’t help you. For those who want to be prepared for anything in the future, make sure you pay off your debt and have money set aside in emergencies like being furloughed or laid off.
It’s best to take care of yourself than to rely on the government to help you out in times of need is my philosophy because no one cares as much about you as you do.
Benjamin K. Walker – Founder & CEO, Ditto Transcripts
Look for arbitrage opportunities
In general, arbitrage is where you buy something at a lower price and sell it at a higher price. Since I am a real estate guy, I’ll relate it to real estate. With interest rates being so low, you can take advantage of super-low interest rates by borrowing money to buy or refinance a property. Let’s say you own a property free and clear, and you refinance it and obtain $100,000 at a 3% interest rate.
Now you invest that $100,000 in something else that returns 7%. The gap between 7% and 3% is called arbitrage. Now you can take the returns from your investment returning 7%, and use it to pay off the loan you just took off at 3% (and pocket the difference).
Kyle McCorkel – safehomeoffer.com
Eliminate your housing payment
If I could only give one personal finance tip, it would be to find a way to eliminate your housing payment.
Known as house hacking, it involves finding a way for other people to pay for your housing. One common house hacking technique involves buying a multifamily property such as a fourplex, moving into one unit, and renting out the other unit(s), so your neighbors pay your mortgage.
Alternatively, you could bring in housemates, rent out storage space, or park for cars, caravans, RVs, or boats. My partner and her husband brought in a foreign exchange student, and the stipend covers most of their mortgage. My wife and I live for free, as her employer provides us with free furnished housing.
Once you’ve created free housing for yourself, the next challenge is to put all the money you were previously spending on housing toward savings and investments. It does you no good to score free housing if you blow it all on new jackets, gadgets, and dinners!
G. Brian Davis – Founder & Real Estate Geek at SparkRental.com
Don’t depend on credit to sit on cash
I have a friend who works in an unstable industry, and since the pandemic started, her earnings have fluctuated. For the first six months, she earned about half her usual salary, and she was always afraid of being laid off.
She has a whack of cash in her bank account (earning zip in interest); frankly, way more cash than she should have in a bank account. But it makes her feel secure to see a high cash balance. So, when money was tight, she put her expenses on credit cards instead of spending her cash. Now, her credit cards are nearly maxed out.
But good news: her salary is back up to normal so she can (more than) pay her expenses again.
Psychology is powerful
You’d think she would use some of the cash in her bank account to pay down her credit cards now that her salary is up and things have leveled out. Instead, she is paying only the minimum payments each month. And, at the same time, is sitting on this cash in her bank account. The opportunity cost here is horrendous. For example, $10,000 in credit card debt will cost her another $10,000 in interest charges and take her almost 10 years to pay off.
With this personal finance tip, if she used the money in her bank account to pay off the debt in full and then saved the money she would have spent on credit card minimum payments to re-up her bank account balance, she would have over $20,000 in her bank account by the end of the same 10 years. (If she chose to invest the money, she could have even more).
Having money in the bank may lend a sense of security, but it might come at a cost you’d better think hard about whether you want to pay.
Nora Dunn – The Professional Hobo
Tackle student debt
My top personal finance tip is to get on top of your student loan debt. Many student loan servicing companies such as Navient are under more scrutiny than ever before. Hence, more pressure to actively ensure borrowers are not exploited or put into payment plans that end up costing them tens of thousands of dollars over their lifetime. So get on to your student loan servicing company and demand the best deal. There has never been a better time to do this, and with Biden winning the White House, these companies have lost one of their allies. Keep on any legal settlements involving borrowers in your situation and any class actions that could help you reduce your payments or obtain relief.
Rick Wallace – Founder, Navient Settlements
Extinguish your credit card debt
Kill your credit card debt NOW with the debt repayment method that works best for you. By kicking credit card debt to the curb, you can save a lot of money on interest.
Some repayment methods include:
- The avalanche method.
- Known as debt stacking. You’ll pay off your accounts in order from the highest interest rate to the lowest.
- The snowball method.
- Pay off your debts in order from the smallest balance to the largest.
- Using balance transfer credit cards.
- You simply transfer your credit card debt balances to another card with a lower interest rate. This can save you money on interest while making payments and help you pay off debt faster.
Mason Miranda – Credit Card Insider
Aim to have total student loan debt at graduation less than your annual starting salary
If you keep your student loan debt in sync with income, you should be able to repay your student loans in ten years or less. Otherwise, you’ll struggle to repay your student loans. You will need extended repayment or income-driven repayment to afford to make the monthly payments (and then you’ll still be repaying your own student loans when your children enroll in college).
A longer repayment term reduces the monthly loan payment but increases the total interest paid over the loan’s life. You can pay less interest overall by choosing a shorter repayment term. Borrowers should choose the repayment plan with the highest monthly payment they can afford.
Federal and private student loans do not have prepayment penalties so that you can make extra payments beyond the required monthly loan payments. For this personal finance tip, use the extra payments to pay off the loan with the highest interest rate quicker. This will save you the most money, reducing the average interest rate you pay. It will also lead to all of your loans getting paid off quicker.
Mark Kantrowitz
Organize your debts on a spreadsheet
Most of us have some debt, whether it is a mortgage, a car loan, student or personal loans, and credit cards. If you don’t have a handle on your debt, it can seriously affect your credit and life.
There are many methods of paying off debt. Still, we recommend using the avalanche debt method because it minimizes the amount of interest you pay on your debt and accumulates while paying it off. The avalanche debt method works by paying off each debt from highest interest rate to lowest interest rate.
Start by organizing all of your debts in a spreadsheet with the interest rate, outstanding balance, and monthly payment. Then be sure you can afford to pay each minimum monthly payment. With any extra money you have, start by paying down the debt with the highest interest rate, and once that gets paid off, begin paying the next highest.
By paying off each debt according to the interest rate, you are minimizing the amount of debt you’ll have to pay to lenders as interest accrues over time.
Rebecca Hunter – CEO, The Loaded Pig
Just do it
Paying off your student loans isn’t fun, but embrace a mindset of getting them done and over with as soon as possible. While investing makes sense, and you should have an IRA of sorts, working to eradicate your student loan debt if you have it does more than you might think. For one, you can better your debt to income ratio when you’re student loan debt-free. Second, paying off your student loans gives you back a nice chunk of monthly cash flow. Thus, this personal finance tip provides you the flexibility to invest more, save more, travel more, or even start a business! So, highly consider getting rid of those student loans!
Josh Hastings MoneyLifeWax.com
Map it out
It’s a new year and a great time to start focusing on your debt, and by focusing I mean, working on paying it off. Debt is expensive! When you add up the cost (interest charges) of having that debt, you know it’s money better spent in other areas of your life.
Where should you begin? With a map!
Your journey out of debt is like any other trip. The better the map, the more efficient the route you plan, the faster and easier you’ll arrive at your destination. Which, in this case, means freedom from debt.
Your map starts with a clear picture of where you are, and that means how you spend your money and where it’s going. In other words, you need to track your transactions. I have been using Quicken since 1987–every day. Also, I use Google Sheets to help organize and track my finances and, I enter ALL transactions manually and balance every account.
What people say
I know some people will say, “Scott, what about downloading your transactions automatically and saving time!” Well, I do that too, but only to check what I entered directly. Why? Because when you enter your transactions, write them down yourself, you get forced to think about and focus on what you’re spending. You know exactly where you are–all the time.
So if you want to start down the road to debt freedom, you can simply draw that map. Get a written journal, start a spreadsheet, begin to get organized, and track your spending. Then you will have a clear picture of how to plan your trip.
Scott Bilker – Creator of DebtSmart.com
Pay attention to the debt with the highest interest rate
One of the most popular touted theories in personal finance is to pay off the smallest balance first for a psychological win. For a most effective standpoint, pay off the highest interest rate and concentrate on that first. It is the one that is most affecting your budget. However, we also have to look at the other big income elephant in the room. You can look at your credit card statements. Most people don’t see the MINIMUM PAYMENT WARNING BOX. This box tells you if you make no additional purchases and pay the minimum payment for how long it will take and the total you will pay. For example, on a simple $288.64 card at 26.99% with a minimum payment of $29.00, it will take you 16 months, and the total you will repay is $444.
Carma S. Peters – NCCO, President & CEO, Michigan Legacy Credit Union
Stop looking at purchases as monthly payments
One of the biggest traps I fell into during my outlandish spending days was looking at costs of purchases in terms of the “minimum monthly payment.” For example, I once financed a $30,000 fishing boat with no money down and justified it because it was “only $325/month” and could afford it.
Do this a few times, and it is not hard to rack up massive amounts of debt, much of which is high interest. Before you know it, you have obligated your entire paycheck to your payments, and you are living paycheck to paycheck.
Think big picture and avoid thinking in terms of monthly payments. It will help you avoid making an unnecessary and impractical purchase. Remember, you work hard for your paycheck, and there is no worse feeling than watching it vanish faster than it appeared.
James Watson – Owner at Omaha Homes For Cash
Refinance the mortgage
Current mortgage interest rates have reached unprecedentedly low levels—spurred by the Federal Reserve’s reduction in interest rates in response to COVID-19. If the interest rate on your current mortgage is at least 1% higher than the current interest rates being offered, you may want to consider refinancing your mortgage.
With this personal finance tip, by refinancing at a lower rate, you may be able to reduce your monthly payment amount or shorten the term of your mortgage (e.g., dropping from a 30-year term to a 15-year term). Since there are closing costs involved in refinancing—typically 2% to 5% of the loan amount—it’s important to consider these costs before refinancing.
Trish Tetreault, a Senior Financial Analyst here at FitSmallBusiness
Renegotiate the deals
Most people take out a loan, mortgage, or insurance and never think to check if they are still getting the best deal after a year or two. Start by comparing your current household and auto insurance against similar policies. If there are policies with similar terms at a lower price, ask your current insurer if they can do a ‘price match.’ If they can’t, and you would make a significant saving with another insurer, it is time to change.
The first step in renegotiating a loan or a mortgage is to review your Credit Reports. To increase your options and to lower interest rates, you need to have the highest score possible. Check your credit reports for any errors and notify the relevant bureau to have them removed. It would help if you aimed to reduce your revolving credit utilization to around 20% to improve your scores. Once your Credit Score is healthy and you have done your market survey of similar deals with other lenders, discuss your current lender about getting more favorable terms.
John Davis – Score Sense
Borrow All the Money You Can
My top personal finance tip: Borrow All the Money You Can! With historically low-interest rates, historically high government stimulus funding, and the initiation of a new post-COVID-19 economic cycle, asset returns on EVERYTHING will far outpace their financing costs for the next few years. If you can borrow money at 3% and purchase an investment compounding at 10%, you will net 7%+. The bigger the spread between the two, the bigger the reward. I have never seen financing spread this favorably. But don’t get complacent. The time to sell and pay off the debt will come, but not this year.
David Waddell CFP®, CEO and Chief Investment Strategist, Waddell & Associates.
Review your credit cards
The beginning of a new year is a great time to take stock of the credit cards you’re currently carrying and ask yourself if they’re still a good fit. A quick way to tell is to tally up the dollar value of the card’s perks, like rewards points, discounts at merchants, or statement credits for specific purchases (and remember: you have to use these benefits for them to count). If the card’s value is higher than its annual fee, the card still earns a spot in your wallet. If not, downgrading to a no-fee version of the same card allows you to leave the account open while eliminating the yearly cost. As a bonus, keeping old credit accounts open can be beneficial to your credit score.
If you decide to shop around for a new card, pick one that offers rewards that match your spending habits, so you earn more where you use your card the most. Because of the pandemic, where our money goes each month has changed dramatically. Opt for cards that earn cash back or travel rewards for things like grocery store purchases, online shopping, restaurant takeout, and streaming subscriptions.
Despite current travel restrictions, it’s not too soon to think about future vacations and the credit cards that can lower the cost. If you’re considering a travel rewards credit card, we recommend you apply for it at least five months before you book awards travel, so you have time to earn the card’s sign-up bonus. When you’re ready to book, you’ll have earned a bonus that can shave hundreds of dollars off the cost of the trip.
Sara Rathner – Credit Cards and Travel Expert at NerdWallet
Making More Money
Get serious with making more money
I would tell my younger self to make money more seriously. Not everything is about money, but money matters in more ways than my younger self would have liked to admit. Money gives you options and it gives you choices. Money is power. Making mindful and smart choices about money when you are young gives you more choices and opportunities in life. Understanding the power of money helps you understand how to harness it as well.
When I was younger, I was confident that money did not matter. You either had it, or you did not, but it wouldn’t necessarily affect every part of your life. I was wrong. It’s not that I wish I had started saving more money at a younger age (although I certainly wish I would have done that)- I wish I would have taken a more serious outlook when it came to taking control of my finances and making financial decisions.
Robyn – A Dime Saved
Build high income skills
My top money tip would be to build high-income skills. If this is the year where you’re going to make more money and grow your income, be sure to build extra skills.
Building high-income skills will ensure that you raise your income in the long-term. You will reach your (financial) goals faster and can work toward your dream life. Whether you want things like working fewer hours or working toward financial independence, it will enable you to do just that.
Also, when you build skills that many people want to pay for, your financial stress will decrease. You have essential skills that many people need, and you know that it is simple for you to find a job. It will bring you peace of mind and increase your income over the long term. The best way to start is with a plan that enables you to work toward your ideal life.
Marjolein – Radical FIRE
Find ways to make extra money
My top personal finance tip is to find ways to make extra money. Earning extra income allowed me to pay off my $40,000 student loan debt in just seven months. Making extra money may allow you to pay off your debt, pursue your passion, save for retirement, stop living paycheck to paycheck, save for a vacation, and so on. There are so many great reasons to make extra money, and it can help you bridge the gap that you may have from how you usually make money to save more.
And, there are plenty of options when it comes to side job ideas. You could find a part-time job, create your own business, pick up random jobs off Craigslist, work online, and more. Lastly, I always like to mention one little tidbit – the average person watches around 35 hours of TV each week, which is more than enough to make extra money. So, if you can even just cut that time in half and use that time towards side hustling, you can save a good chunk of change to apply towards your money goals.
Michelle Schroeder-Gardner – Blogger, Writer, MakingSenseofCents.com
Learn a skill you can do with your hands
My #1 tip to start is to take the time and learn a life skill that requires working with your hands.
Some examples include gardening, baking, and woodworking. These skills can have minimal startup costs, and you can learn a plethora of information (for free) on YouTube and online blogs.
If 2020 taught me anything, it was the importance of being physically active outdoor and minimizing screen time to preserve my physical health and mental health. These activities help you stay mentally and physically active.
Staying at home for an extended period, the relaxation and relative inactivity began causing harm.
It seemed like my 30-something-year-old body felt like it had aged several decades almost overnight. Being active and doing something new is what helped me avoid burnout and keep a daily routine. I also get to spend time with my children and help them learn a skill that can last a lifetime.
Another benefit of learning a skill is that you can have good conversation topics with friends. We have been surprised by how many other people have similar life experiences and can learn from them to improve our skills.
Josh – Money Buffalo
Ask for a Raise
When assessing our finances, we tend to think of our income as a fixed variable. However, it’s a good idea to regularly evaluate your role and your compensation to ensure your salary keeps pace. It’s time to ask for a raise if you’ve taken on more responsibilities, are responsible for a big company win, or have reached a work milestone or performance review.
Pick up a Side Hustle
If a raise isn’t in the cards, consider picking up a side hustle to make some extra income. This can be particularly effective if you have a savings goal in mind. Dedicate what you make with your side hustle to your savings or investment account and watch the money grow!
Anna Caldwell – Accredited Debt Relief
Establish multiple passive income streams
My best personal finance tip for would be to establish multiple PASSIVE income streams. I can’t stress the passive part enough.
Thanks to technology evolution, we’re now presented with multiple ways to earn extra money while we sleep. It could be through dropshipping, affiliate marketing, or making YouTube videos that add value to people’s lives.
Now, people may have the wrong impression that earning passive income is easy money. That is far from the truth. An affiliate marketing website, for example, will take about eight months to a year before you see it flourish. But that would also mean populating your site with valuable, high-quality content, proper SEO strategies, and a well-crafted website design.
The possibilities are endless, and all you’re left to do is to find what’s best suited for you. But most importantly, keep putting the work in. As long as your consistent with your output, you’ll reap its benefits in no time.
David Meltzer, CEO of East Insurance Group
Focus on earning more income
The top personal finance tip that I can give someone is to focus on earning more income. Most of the popular personal finance tips are focused on saving, cutting, and scrimping. It’s good advice, yet you can only save so much. If you want to reach financial independence (or have some breathing room) faster, you need to make more money.
After all, who would you rather be?
- Person A, who makes $50K per year and saves $30K. Or,
- Person B, who makes $150K per year and saves $60K?
Technically, person A has a higher savings rate (60%), but person B saves more in absolute dollar amounts. Many people will tell you that your savings rate is all that matters, but this ignores the fact that you can always cut expenses. Since this is true, Person B will be in a better financial position.
Income doesn’t get the respect it deserves. Savings gets all the attention, and income is the redheaded stepchild. :
James Pollard – The Advisor Coach
Don’t put all your eggs in one basket
Find a side hustle. Don’t put all your eggs in one basket and solely rely on your job. Current times have shown us nobody’s job is safe. It has also shown us the value and needs of essential gig workers who deliver groceries on Instacart.
But the gig economy is much bigger than delivering groceries or driving for Uber.
For example, there’s TaskRabbit for on-demand services, Rover for petsitting, Turo for car rentals, Airbnb for room rentals, AmazonFlex for package delivery, and Doordash food delivery, to name a few.
The gig economy has presented plenty of options to make money on the side. So this year, make a point to diversify your income and find a side hustle.
Edwin Contreras – Do Six Figures
Investing
Don’t overcomplicate things
Investing can get very complicated if you’re overthinking it, but the most straightforward path forward works most often. I get so many questions about whether or not the stock market will crash or if things are overpriced, and the reality is that no one knows. The truth is that even if it is and has the potential to drop in the near term, buying today means you’ll still make an excellent long term return that’s much better than the alternative(keeping it in cash).
People who bought right before the 2000 crash still made a solid long-term return, and people who bought right before the 2008 crash even made a solid long-term return. And, people who buy today before the next crash if it comes(whenever it may be) will still make a solid long-term return as long as they’re investing in something diversified like an S&P 500 index fund.
Now, the keyword here is long term because stock investing should always be long term. If you need the money tomorrow or even in a year, then keep it in cash, but if it’s money for retirement, then invest today, invest tomorrow and invest as long as you can. The best time to invest in the market will always be behind you when the stock market is rising(as it does in the long run), so the second-best time is today.
Jaroslaw Grochal – Time in the Market
Watch the fees
Are you building your retirement nest egg by investing in the stock market? It’s a smart move to make but be cautious of the various fees you may get charged to handle your portfolio. When you purchase investment products such as mutual funds, index funds, or ETFs, you will be paying different types of fees. These can include Management Expense Ratio (MER), front-load fees, back-load fees, and even no-load fees. It is valuable to know because it will determine how much money you are giving away to have your funds managed. Not knowing this key information could be costing you hundreds of thousands of dollars over several decades of investing in the stock market.
Do your research to find out the fees that you are paying for. Sometimes these fees are not transparent, and you may have to read through a prospectus to find this information. Take the time to understand the investment you are buying into and how much risk you are taking on. Can you find a comparable financial product for a fraction of the cost? You may be surprised to find that with a bit of digging, you may be able to switch to a similar product that could be saving you thousands each year, which could help you reach your financial goals faster.
Sandy Yong, Author The Money Master
Focus on the dividends
Spend less than you earn, and intelligently invest the difference. Intelligent investing is investing in quality dividend-paying stocks when they are priced low (undervalued).
- Step one is to learn how to select quality stocks (do not blindly invest in the latest flavor-of-the-month stock).
- Then, determine when those quality stocks are priced low.
- And, step three is to build a solid portfolio of income (via dividends) generating stocks.
Are you concerned about dividends? Look for companies with a strong history of paying and growing dividends. For example, Coca-Cola has been paying dividends since 1893 and has had 56 years of consecutive dividend increases.
As a shareholder, the dividends are yours to keep. You can spend that money if you wish or reinvest it. Step four is to remain patient and focused (ignore the noise generated by the financial media) and don’t forget about the first 3 steps. Dividend increases and compounding (reinvesting your dividends) over time will grow your passive income each year. Without dividends, you are only hoping for the stock price to go up, hope will not cover your living expenses, but dividends eventually will. When your passive income covers your living expenses, your day job becomes optional.
Kanwal Sarai – Simply Investing
Think about starting a new business
Thousands of small businesses closed in 2020 due to economic stresses caused by the pandemic. Some of them may eventually reopen, but many will have closed for good. It will leave yawning gaps in many communities, mainly where restaurants, bars, and beauty services are concerned. These services will be in demand again when life returns to something closer to normal.
If you’ve ever thought about starting a business, the end of the pandemic might be an ideal time to do so. Services with a strong social component will likely be a good bet. Just keep in mind that some of the shifts to online services in some sectors might be permanent. Retail, for example, maybe a risky prospect unless you’re able to carve out a niche-specific to your community. The reason: you’ll be competing with Amazon and discount brick and mortar stores, which now control more market share than ever.
Chris Motola – Financial Analyst at MerchantMaverick.com
Consider a Roth IRA
Consider making your retirement contribution to a Roth IRA instead of the traditional IRA. We all love the instant tax deduction from contributing to a traditional IRA, but it might make more sense to pay your taxes now rather than in the future. Lower rates for individuals as part of the 2017 Tax Cuts will expire in 2025, and climbing deficits may mean higher rates in the years to come. You pay income taxes on Roth contributions now but get to withdraw that money tax-free in retirement, potentially avoiding a hefty tax bill!
Joseph Hogue, CFA – PeerFinance101.com
Take advantage of dollar-cost averaging
Investing is challenging due to a myriad of factors ranging from behavioral to psychological. Getting started with investing and continuing should ideally be automated, so we do not second guess ourselves, trying to time the market or chase the next hot sector. It is hard to know what causes the markets to rise and fall daily. Also, trying to time the market is a fool’s errand and will result in lower returns.
The other advantage of automated investing is dollar-cost averaging. Dollar-cost averaging avoids the mistake of making one poorly timed lump-sum investment. And the best results from investing come from putting money to work in the market with regular frequency.
John – Financial Freedom Countdown
Start early
Start investing as early and as soon as you can. The effects of compounding interest are tremendous. I’d recommend utilizing an IRA or Roth IRA to maximizes your retirement account growth. For those who are self-employed and have maxed out their IRA’s, a SEP IRA may be another great option to increase retirement contributions.
Zach Zorn – MoneyNomad.com
Consider the dividend aristocrats
Financial freedom is the point where your passive income exceeds your expenses. Truly passive income isn’t tied to what you do. It comes from your assets, not from time spent working.
Dividend growth stocks are possibly the best securities for generating rising passive income. Dividend growth stocks have a unique characteristic; they pay rising dividends over time.
It means that your yield on cost will increase over time as dividends per share rise. The yield on cost is the starting yield of an investment. So if you purchased a stock that had a share price of $100 and it paid $3.00 per share in dividends, then your yield on cost would be 3.00%. If the dividend increased to $6.00 per share over the next several years, then your yield on cost would rise to 6.00%. You’d be making 6.00% on your initial investment.
Dividend growth increased the yield on cost
The power of dividend growth investing increases the yield on cost as a company’s per-share dividends rises over time. Not all stocks are equally likely to pay rising dividends.
There is a select group of high-quality dividend growth stocks called the Dividend Aristocrats. To qualify to be a Dividend Aristocrat, a company must meet the following characteristics:
- Be in the S&P 500
- Meet certain size and liquidity requirements
- Have paid increasing dividends for 25+ consecutive years
There are currently just a handful Dividend Aristocrats. For a company to have increased its dividend every year, it must have (or at the very least had up until now) a strong and durable competitive advantage. It makes the Dividend Aristocrats an excellent place to begin your search for high-quality dividend growth stocks.
Ben Reynolds – CEO of Sure Dividend
Invest in your personal brand
My top personal finance tip is for people to invest in their personal brand. If last year taught us anything, it’s that nothing in this life is inevitable. One of the things you must do going forward is to acquire the skills necessary to make yourself marketable in your desired industry. Furthermore, in this remote work climate, you need to take steps to remain active in the networking game. Find people who are doing what you want to be doing–and invest in your brand on LinkedIn. That’s where the opportunities will be. It will have a direct effect on your bottom line and earning potential.
David Domzalski – Founder & Public Relations Consultant at Run The Money
Try not to get wrapped up in the world’s issues
Back in March 2020, I was freaking out. Everybody was. I was jobless, my stock portfolio was down 30%, and there was zero good news insight. I’ve always had a small emergency cash fund, but dang, I never thought I’d have to start using it!
It’s tough to think logically when your emotions are a complete wreck. That’s why I like to keep notes, affirmations, and flashcards with good advice stacked on my work desk. They remind me not to get wrapped up in the world issues or whatever’s going on around me. One of my flashcards says, “Think long term. Whatever you’re going through right at this moment is probably just a small insignificant bump in the long road of your life”.
Reading this back in March 2020 helped calm me down. Bad times can last days, weeks, months, or sometimes years. But eventually, they pass. My advice to people out there building wealth is to keep thinking long term and stick to your investment plan no matter what happens around you. 2020 was a rollercoaster – but those who stuck with the long term plan faired the best in the end.
Joel – Budgets
Invest in yourself
My top personal finance tip is not to keep too much of it one the bank account. In the US, we can expect to see at least a short-term rise in inflation. About 20% of all the dollars got printed in 2020. And, people have been getting generous subsidies thanks to the Covid-19 relief programs. Additionally, there haven’t been a lot of opportunities to spend all that extra cash. Although many people are building their safety nets, there will probably be a spending spree. The vaccination program will hopefully help the business recover, but the supply may not keep up with the demand.
You may discover that it’s a little late to buy assets like gold or stocks (Dow Jones index has recovered to an all-time high) unless you have some excellent insights. But there’s always something that you can do with your money- invest it in yourself. It’s the advice that Robert T.Kiyosaki gives in his books over and over again. At the moment, there are thousands of online courses available, often with generous discounts thanks to the Covid-19 pandemic.
I, for example, subscribed to a year-long learning program to enhance my current skills. As a result, I expect my salary to keep up with inflation in the future.
Gert Mikkal – Dad Progress
Create passive income
One personal finance tip is to focus on investing in assets that will return money each quarter and year to help create income streams separate from your job to start building wealth and an income stream for your retirement. It could mean investing in stocks that pay dividends, and it could also mean investing in real estate or any vehicle that pays monthly via rent or similar methods. Setting up investments that return money each month and year will help you become more comfortable in the present and the future as you look toward retirement.
Stacy Caprio – Fiscal Nerd
Stay the course
Every year, it’s important to stay the course on your investment plan. Investing is necessary to retire, and by consistently sticking to your plan every year, you ensure that you will stay on track.
Rather than try to time the market, as some folks did in 2020, continue to invest in tax-advantaged accounts, and max them out as you can. It includes accounts such as your 401(k), Roth IRA, Health Savings Account (HSA), and more.
Most importantly, if you have a 401(k), you should invest enough to get your employer match. It is essentially free money and should be taken advantage of if it’s available to you!
Kevin – Just Start Investing
Invest leftover student loan
College is fun, and nothing makes the period even more enjoyable than the thousands of dollars you get in student loans. The feeling around campus is that whoever gets approved for the most amount reserves the bragging rights. That said, at that age, not one seems to remember the stark reality that the money is a loan and that it has to be repaid, with interest nevertheless. As such, how you spend your loan will impact your financial future, something that my younger self should have known.
For starters, it’s best only to take the minimum amount that you need to get by. It will ensure a low principal amount and interest when it comes to making repayments. Most importantly, you should invest any leftover cash from the loan. You can try your hand in stocks, passive income streams, or even establishing a school-based business. Apart from kick-starting a side hustle, your investment has the potential of covering the debt when you officially enter the job market.
Swati Chalumuri – HearMeFolks
The case for a SEP IRA
Start the new year out right: If you are a business owner with few or no employees, consider opening a SEP IRA. This IRA functions almost exactly like its more widely-known relative, the Traditional IRA. So what’s so great about a SEP IRA? Well, with a Traditional IRA, you can only contribute $6000 per year ($7000 if you are over 50). However, SEP IRAs let you contribute up to 25% of your gross income per year. Better yet, all contributions (Employer & Employee) are tax-deductible.
SEPs are tax-deferred brokerage accounts, meaning all your distributions in retirement will get taxed as income. It’s worth noting that the percentage that’s contributed is set by the employer each year. If business was slow, there is no obligation to pay into any accounts associated with the SEP.
So what is the catch?
The business owner must contribute an equal proportion of their employee’s income to their plan. Just to be clear, this is not a contribution matching account. The employer is merely taking a portion of one’s income and contributing it to the employee’s SEP instead of paying them directly. For example, if you (as a business owner) contribute 10% of your yearly income, you must also split off 10% of each employee’s annual income for their account.
Given the flexibility and sheer investment/write-off power, SEPs are a great retirement option for small business owners.
Landon Davis – Owner at College Bread
You reed a really detailed plan for your money
Most people think that saving into a 401(k) is a retirement plan. While there is no doubt that saving is necessary, it is far from everything you need to consider for long-term wealth and security. A retirement plan is a written document showing all aspects of your current and future income, expenses, debts, and assets. Having everything written down can give you true peace of mind now and help you know what you need to do for a better future.
How do you get this detailed roadmap? Forbes Magazine called the NewRetirement Planner a “new approach to retirement planning.” It is an easy-to-use, really comprehensive, do-it-yourself planning system. It helps you create a plan, find opportunities, and stay on track.
Connellan Coxwell – NewRetirement
Don’t forget the free money
Make sure you’re contributing at least the full amount to your company 401k. However, the “full” amount is at least as much your company will put in for free (aka literally free money). For example, if your employer offers a dollar for dollar matching contribution up to 4%, you want to contribute at least 4% on your own to get the full amount. If you only contribute 2%, then the company only contributes 2%, so on and so forth. Don’t leave easy money on the table!
Taylor Hoffman
Being on the sidelines is risky
You need to start investing! 2020 was the year in which income inequality became impossible to ignore. While millions of families struggled to make ends meet and lost their jobs, the top 1% thrived and became more wealthy than ever. The reason is pretty simple; the most wealthy Americans own the vast majority of the stock market. And while it’s true that most people simply can’t purchase more stocks if their income is too low, there are millions of people that don’t invest in the stock market because they are afraid. So if you’re in a position to invest your money, the #1 thing you can do is to start investing in the stock market so that you don’t get left further behind. Investing may seem risky, but it’s even riskier to watch from the sidelines.
Camilo Maldonado – Co-Founder, The Finance Twins
Make investing a habit
To increase your savings rate without feeling the impact, make it an annual habit to increase your savings rate by close to the full amount of your yearly raise. If, for example, you get a raise of 3%, schedule your 401(k) contributions to increase by 2% on the effective date of your raise. You’ll savings rate will go up by 2%, but you’ll still see a slight increase in your take-home pay. Do this every year, and you’ll soon reach an impressive savings rate without feeling like your sacrificing a thing.
Fritz Gilbert – The Retirement Manifesto
Don’t chase shiny objects
Don’t chase the shiny object by trying to time the market. Instead, remember that time in the market is far more important when you’re young and in the accumulation phase. It is best to ignore all the noises and stop paying attention to the daily market volatility. Contribute as much money as you can regularly and invest in a well-diversified vehicle. Allow your portfolio to grow long term and take advantage of the magic of compound interest.
Bob Lai – Tawcan.com
Don’t get caught up in the euphoria
We ended 2020 with a lot of stock market euphoria. And I often hear from the mainstream media how much of it was driven by new individual retail investors opening accounts and investing with the latest online stock trading brokers. On the surface, this is great news. Because getting started investing is one of the first steps to financial independence. It’s not that hard to start with a first step right now – mt4 download, an application accessible for anyone who is interested in trading. On the other hand, many significant stock market declines have been preceded by a spike in interest from individual investors.
Don’t get caught up in stock market euphoria. Understand that stocks go down. And, they can remain down for many months and years. Invest in small amounts, regularly, and reserve only a small portion of your portfolio for the most speculative companies and their stocks. Also, invest in a company’s stock because you think their profits and cash flows will be significantly higher in the years to come. Not just because you believe stocks always go up. Because, unfortunately, they don’t. And many hard lessons have been learned in times like this.
Tom – Dividends Diversify
It’s never too late to start investing
For me, one of the biggest things I could stress is the fact that you’re never too late to start investing. Many new investors missed the market crash in early 2020, and now that the markets have recovered, they figure they’ll sit on the sidelines for a better opportunity. It’s is a losing proposition in almost all cases, as it is genuinely impossible to time the market. As the famous saying goes, “The best time to start investing was yesterday, the second-best time is today, and the worst time is tomorrow.”
Dan Kent – stocktrades.ca
Think of investing like renting
There is only one way to make money: rent something. The decision you make on what to rent will determine whether you are poor, middle class, or wealthy.
The vast majority of people make money by renting their time. These are hourly workers. Salaried workers rent their knowledge and expertise, which is also a time-consuming enterprise.
On the other hand, wealthy people rent neither their time or knowledge. They rent their money, their ideas, their inventions, or any number of things.
Renting the bank’s money
When you take out a mortgage or use a credit card, you are renting the bank’s money. When you buy stock in a company, the company is renting your money. Value stocks pay rent through dividends, while growth stocks pay rent through price increases. When you open a savings account, you rent your money to the bank (at abysmal rates). Checking accounts allow you to rent your money to the bank in exchange for convenience and safety but usually not with interest.
When an author writes a book, he rents out that story to everyone who buys the book. Actors rent their performances, which is why stage actors (who must perform each time) make considerably less than television and movie actors (who earn royalties and huge paychecks for their recorded performances). Musicians are the same.
The sooner you start to consider what you are renting to earn your money, and whether you want to continue on that path, will determine where you end up financially. If you decide to rent homes, you are only renting your money (usually while also renting money from a bank) to exchange monthly rent payments. As long as the rent payments you collect exceed the rental cost from the bank, this can be very profitable.
Renting employees
Employers know they are renting their employees, and they view employees as landlords. It’s why employers try to keep labor (rental) costs down in the same way they keep their physical space rents down. You aren’t a partner in the business, sharing in the business’s success (or failure). You are merely renting your time or expertise. Microsoft realized this difference when they switched from selling software (actually, they only leased it to customers) to monthly subscription services.
In the end, everyone has the same number of hours in the day. It’s why only poor people rent their time. Some people are smarter and more educated, though. Those people that rent their knowledge or expertise tend to do better financially than people renting time (e.g., doctors, lawyers, accountants, plumbers, electricians)—the rich and the wealthy rent neither their time nor their knowledge.
Anthony Babbitt, MS, MCSE
Insurance
The importance of insurance
When many people think about financial planning, investments, use of credit, and saving are some of the first things that come to mind. However, don’t leave out insurance and the critical role it can play in securing your future. Make it a priority to reach out to your financial advisors and centers of influence to learn more about the insurances that best fit you and your family’s needs.
There are different forms and uses of life insurance and a wide range of choices: a Term Policy or mortgage protection? A customized policy to maximize pension planning, or a Universal Life policy wrapped in a trust? You can also shield your assets with a simple insurance policy, a long-term care instrument, or both to give you and your family peace of mind during retirement. Plan early.
When a crisis moment happens in your life, it may be too late to utilize an insurance plan’s true benefits that can provide supplemental income for you and your loved ones.
Sandra Scanni – Financial Advisor at The Barnum Financial Group
Ask about return of premiums
When looking for life, disability or critical illness insurance, consider the possibility of a return of premium. Return of premium contracts generally say that if you don’t “use” the policy by the end of the term, the insurance company gives you all your money back. In general, the cost of a return of premium policy is about double that of a policy without it. However, you can think of it like a savings account, that builds cash value. And, if you don’t end up using the policy, the premiums get returned to you. Sure, you could make more money investing in other things, but, in my view, the return of premium becomes a cheaper insurance option.
Rick Orford, Personal Finance Expert, and Author of The Financially Independent Millennial
Think about term insurance
January is a great time to check on all your financial areas. For those with a spouse or children who depend on your income, having life insurance is essential. It can be relatively inexpensive for younger individuals to get a term life policy (think $20 or less per month). Spend a few minutes getting various quotes, which you can do 100% online. You should also ensure that you have an updated will and trust to ensure that your family is protected if anything happens to you. Sadly, at this time of Covid, it’s essential to ensure that your family is protected. A will can help ensure that your children are taken care of, and a trust can take care of your assets.
Finally, ensure that all of your accounts have proper beneficiaries setup. Like a 401k or IRA, your retirement accounts all have designated beneficiaries to pass the account to when you pass away. If you fail to name a beneficiary, your assets will be stuck for a long period of time while the courts decide how to split them up. It could harm your family financially in the delay. It’s a simple process – you can typically log in to your accounts and designate a beneficiary online.
Robert Farrington – TheCollegeInvestor.com
Don’t forget the other insurances
Take the time to review your insurance coverage each year and make updates as needed for changes that have taken place. Home/Rental, Auto, Life, and Disability insurance are all essential for protecting yourself and your loved ones in a time of crisis. Without insurance, an unfortunate event could ruin all of the financial progress you have made.
Samantha Hawrylack – How To FIRE
Personal Finance Tips I’d Tell My Younger Self
One small step for your future financial benefit
Put a recurring reminder in your calendar for Sunday evening EVERY week to commit to one very small financial thing you can do to take a step in the right direction. For example, if you’ve been meaning to set up an investment account but are afraid of getting it wrong, just commit to setting it up with the bare minimum balance they will allow. Or, if you felt like this year was the year to get your Wills drafted but don’t have the name of an estate planning attorney, just email a friend asking for a recommendation or even post that request on social media. Doing something beats doing nothing. Think small….take a small step once per week.
Thomas J. Henske, CFP®, CTS, ChFC, CFS, CLU, CLTC, CES and Partner, Lenox Advisors
Wake up early and move
personal finance tips shouldn’t just be about budgeting and increasing your income with a side hustle. And although excellent advice, I am going to tell you a different secret. I have seen this work on countless colleagues and clients as they grew their wealth and dramatically changed their financial picture. The real secret is to WAKE UP EARLY and MOVE!
That’s seriously it! It sounds simple, but to wake up early and exercise, you need first to get rid of bad habits. For example, if you drink a bottle of wine and eat junk every night, you won’t exercise effectively or wake up early. Waking early and exercising is part of a process that will force you to change your habits, good and bad. What changes next is your luck and your connection to a better future. Best of all, it costs zero dollars.
In return, you will be more focused, more energetic, more confident, have less/no anxiety, have stronger will power, and execute better on your ideas and dreams. And it doesn’t need to be a two-hour workout. Thirty minutes of exercise is plenty. Move to get your energy, strength, and creativity strong. You will have the drive to execute on ideas you never thought possible.
The taboo needs to change
Money has always been a taboo subject, rarely talked about, and that needs to change. The only way to better manage your money, and therefore have more in the future is to talk about it with other people and learn about it.
For example, many people spend hours looking at which mobile phone to buy, and instead, when they have to grow their money, they go to the bank and blindly trust what they get told. That is undoubtedly a mistake.
Just as you wouldn’t try to cook soup without first learning how to make it, either by searching or asking, the same should apply to money. Don’t try to grow your money without asking and doing your research, as that’s the recipe for failure.
Read a book, some blogs, and even take a course. Please share what you learn with your friends and family, and ask how they treat their money. What works for them and what doesn’t, what they do with their savings, and how they manage their income, for example, are some of the things you might ask. I assure you that you will learn, and the more you talk about it, the more money you will have in the long run.
Marc Frau
Resist the urge to keep up with the Jones’es
Comparison can be helpful if it inspires and motivates you to improve your own life. It can also help you identify areas of strength and weaknesses to determine reasonable goals for you.
However, more often than not, comparison leads to negative self-reflection, poor financial decisions, and steals joy.
- First, not everything is as it seems. In today’s world, particularly, social media amps up the comparison trap and often paints a skewed picture of reality. A family with an Instagram-perfect lifestyle may have made financial sacrifices to achieve it or maybe deep in debt. As you will typically not have the complete picture, do not let comparison rule your financial life.
- Second, everyone has unique circumstances and individual strengths. There will always be people further ahead of you and some who are behind you by social comparisons. It is a losing game to constantly measure yourself against others since personal circumstances are not (and will never be) precisely the same.
The best comparison to make is your current self against your former self. Create financial goals that align with your values and aim to be a better version of yourself each day. As for the Jones’es, we already know their grass is not greener.
Nikki Kirimi Founder, Money World Basics
How to FIRE faster
I’ve lived the life of FIRE for over 11 years now and have a deep appreciation for the personal finance money moves it took. If I could go back in time to do anything differently at a far younger age than I did, it would be this:
- Clear non-mortgage debt and then vow to avoid it. Becoming debt-free is financially liberating, and everything else comes easier.
- Youth and time is your ally. Start saving/investing something/anything as soon as you can. Then ramp up savings as time passes. Saving anything beats saving nothing.
- Change your career-mindset. Think of yourself as a contractor. Everyone is expendable, and a job can end at any time. Leverage your most rewarding skills for the highest earnings possible. Always be on the lookout for new opportunities. Don’t settle for the allure of job comfort or false notions of loyalty at the expense of your future financial freedom.
- Don’t compare finances, career, or anything you own to others. Figure out what makes your life happy. It isn’t stuff, title, or a big salary if everything that comes in goes out.
- Live a financially disciplined life, and financial freedom will come. It doesn’t require anything extreme.
LeisureFreak Tommy
Hold yourself accountable
Use cash instead of credit cards if you must to hold yourself accountable financially. The act of exchanging cash in-person may make you question and become more rational with your money than a routine credit card swipe. Even if you are giving up cashback points, holding yourself accountable and limiting yourself from going over budget is more important than a measly 1% or 2% credit card cashback in the long run.
Remember, budgeting is as much as a mental battle as a financial problem. If you have a poor track record on saving money, limit yourself by carrying cash only and no credit cards in your wallet to hold yourself accountable to remain vigilant, financially.
Recognize that there are many applications to using your knowledge to save even more money. Realize, living a frugal lifestyle is a mental battle that can be won, but requires being strategic and ultimately, self-discipline. Remember, be rational with your money and just think before spending.
Albert – FangWallet
Hire a Financial Coach
Hiring a financial coach could very well be my best money saving tip. Working with a financial coach like me accomplishes a few things:
- Step by step action plan to follow
- Accountability to reach your goals
- Unbiased 3rd party opinion with no selling
- Another set of eyes to look at your finances
- Budget, paying off debt, and saving money expert on your side
- Personalized money saving tips
Results could include having the freedom to travel more, peace of mind with your money, down payment for a new house or car or RV, or the ability to spend more money on what you really value. The possibilities are endless.
Steven Donovan -Financial Coach at Even Steven Money
Watch out for the curveballs
Upon turning 40 years old in the crazy year of 2020, I’ve spent a lot of time reflecting on my life decisions to date. If I had to go back and give my younger self (let’s say, my 25-year-old self) financial advice, I would say one thing. That is – as you get older, life will throw you an ever-increasing amount of curveballs.
What you thought was a significant issue at 25 wouldn’t compare to what you see at 40. Life is HEAVY at times. If you do nothing else, the best thing you can do when you’re younger is to save up as much money as possible in liquid investments because there WILL be times when you absolutely cannot work for reasons out of your control (job loss, the tragic death of someone close to you, illness, etc). Those are times when you will get forced to step away from your income-generating job and take care of LIFE.
If you have a big financial cushion, you will be able to get through those tough personal times without having to make decisions based on financial constraints. The term “rainy day fund” means so much more to me at 40 than it did at 25. Fill up that rainy day fund way beyond anything you could ever expect to need, and you will be on a great path.
Lena Gott – WhatMommyDoes.com
Plan not to plan
In a year where nothing went to plan, the only way to outmaneuver this crazy world turned out to be to plan as little as possible.
My husband and I retired in our 30’s, and since then, we’ve lived nomadically all over the world. Our lives are continually changing by their very nature, but even then, we’re usually pretty meticulous planners. At any given time, we have at least the next few months figured out.
Not in 2020. Whenever we tried to make a plan, it would get blown up by a new lock-down a few weeks later, and we’d have to scramble to re-plan. Eventually, we discovered that the less we planned in a pandemic and the more flexibility we built into our lives, the smoother things went. By keeping our possessions at a minimum and our living situation fluid, we found we could jump on deals and negotiate with landlords who were desperately trying to fill a last-minute cancellation. Because of this, we were able to ride the rental market down as prices plummeted and ended up spending $4,000 less in 2020 than we budgeted for!
2020 was the year where the best plan was to have no plan at all!
Kristy – Millennial Revolution
Stop wasting time on things that don’t matter.
Stupid budgets, foo-foo spending envelopes, exotic to-do lists, and deciding if you should buy the $7 coffee or make one at home don’t matter.
To make lasting changes this year and for a lifetime, first, decide why you need to change. Then everything else you already know will fall into place. Everyone knows there are 13,852 calories in a bag of Doritos. Just like most people know, “we should save money.” Until someone decides they don’t want to die from a Dorito overdose, knowledge is irrelevant. Start with behavior. Start with why.
Scott Alan Turner, CFP – Founder of BEST Money Academy for kids
Remember to focus on what’s truly impactful
Often, we begin a new year by making resolutions, which can include financial ones. However, while it’s great to decide to spend less money on coffee or to cancel that unused subscription of yours, it’s also important to remember the basics when creating a financial plan.
The media loves to harp on Millennials for their Starbucks coffees and avocado toast. These small daily expenses add up, but it’s tackling challenges like high-interest debt, learning to invest, and sticking to a monthly budget that makes the greatest difference. If you want to truly build wealth, focus most of your attention on getting the basics down. Once you have a solid financial foundation, you can spend more time digging deeper into your finances and going above and beyond in your efforts to save money.
Tom Blake – This Online World
Personal Finance Tips: Final Thoughts
If you made it this far, give yourself a big pat on the back. You now, probably know more personal finance tips than anyone. Which one was your favorite? Did I miss any? Leave me a comment below. Thanks again for reading!
-Rick
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