10 personal finance tips for the new year
It's another year, and you have made a promise to yourself to be more financially responsible than previous years.
The thing now is that it does not stop at just wishing. You have to put in the required efforts to make your finances much better.
There's a popular saying "doing the same thing over and over again and expecting a different result is synonymous to madness."
This means that if you keep using the methods you used last year for your finances, you won't get new results that will help you grow financially.
Also, with a good personal finance life, you are not only securing your expenses for the present, you are also securing your financial future.
In this article, you'll be learning 10 tips that will help your personal finance this year.
They will help you lead a healthier financial life as an individual. Anyone who can do well with personal finance, likely has higher chances to do well in business/management finance.
As opposed to someone who cannot even manage their personal finance. Self-leadership is key.
Briefly, we'll look at a simple rule you can apply in your personal finance. This is the 50/30/20 budget rule, and it really does work.
How the 50/30/20 budget rule helps your personal finance
The 50/30/20 budget rule simply states that when you have gotten your post-tax income, you split it into three parts— 50%, 30%, and 20%. This will help you manage your personal finance really well.
50% of this income goes to needs/necessities. These are things that you must have or do. You cannot escape them. Examples are food, rent, utilities, health care, etc.
The next 30% of this post-tax income goes into your wants. You don't necessarily need these things, but you want them. Examples are: new gadgets, tickets to shows, vacations, etc.
The last part which is the 20%, is out in savings. The importance of saving cannot be spoken about enough. For this reason, 20% of your income should go into savings, and sometimes, (worthy) investments.
10 personal finance tips for the new year
The following are tips you can follow to improve your personal finance this year (and beyond):
Grow financial knowledge
Knowledge is power, and your personal finance is one area that this power is needed.
If you know one million and one tips in the world, but do not have some financial literacy, there would be a problem.
Therefore, gain financial literacy. Read books, articles, blog posts, watch videos, subscribe to newsletters, listen to podcasts, attend webinars on financial literacy.
This will help you make informed financial decisions. This way, you can even apply of the personal finance tips you know, properly.
Increase your savings amount
Saving is so vital for you to have good personal finance. Saving will help sort your financial problems when it looks like all your hope is lost. Your savings show up and save the day!
If you follow the 50/30/20 budget rule, then you should save 20% of your income post-tax.
You can save on your own, with your bank, or use FinTechs like PiggyVest or Cowrywise to help make it easier.
Create a personal finance budget/calendar
A popular saying talks about how, if you fail to plan, you plan to fail. The same applies here.
You may want to get a personal finance calendar that helps you plan, share funds, know how to disburse money, and just generally keep you on track regarding finances.
You can do this manually or check your app store if there are apps that can help you with this.
Get an extra job/side job if possible
With the ever-changing global economy, having more than one job has become the new norm for many seeking a comfortable life. If your primary job comfortably covers your needs and allows you to save, you might not need a side hustle.
However, if your earnings fall short or you begin to reduce the amount you save monthly rather than increase, it’s wise to consider a side hustle to boost your finances.
That said, if juggling multiple responsibilities feels overwhelming, it’s perfectly okay to focus on what you can manage.
Improve your credit score
This one will help you gain some financial benefits like loans when you need them. Your credit history and score will determine if lenders will give you loans or not.
A higher credit score indicates to lenders and financial institutions that you are a responsible borrower, which can lead to numerous benefits. Helping you save money and achieve your financial goals more efficiently.
So, you want to have a good one.
Learn to say “No”
If you must have a healthy personal finance, you must learn to say “No”. It is not every party or outing you are invited to, that you attend. For readers in Nigeria, for instance, it is not every ‘Asoebi’ that comes to your doorstep that you welcome.
Ultimately, know when to refuse to spend money on certain things. You also need to learn to say “No” to yourself when necessary.
Be disciplined!!
Review your bank statement monthly
This might seem like a funny tip, but you'd be surprised how effective this is.
As humans who earn money, it is easy to just spend without keeping track of how much you spend per season.
This is why it is important that you request for, and check your bank statement every now and then. If you are being a wasteful spender, you see it in your statement and can adjust your spending habit.
Always look through the data!!
Pay off credit card debt
Paying off credit card debt is a powerful step toward achieving your personal finance goals. Credit card debt often comes with high-interest rates, which can quickly go down hill, making it harder to save or invest in your future.
Without monthly debt payments, you’ll have more money to allocate toward savings, investments, or other financial goals.
Tackling credit card debt is not just about paying off what you owe—it’s about paving the way for a more secure and stress-free financial future.
Beware of frauds
We are in a world where fraudulent activities are everywhere. Both online and offline, people want to defraud people of their hard-earned money.
Be cautious and avoid falling victim to scams or unclear opportunities, including Ponzi schemes. When considering any investment, take the time to thoroughly review the terms, understand the risks involved, and evaluate the potential returns.
If an investment carries high risk, it’s wise to limit the amount of money you commit. Always prioritize clarity and informed decision-making to protect your finances.
Increase your emergency fund
Emergencies can happen at any time. Nobody prays for emergencies, but they can happen at any time.
Emergencies could be health issues, loss of job, necessary relocation, etc. In order to protect yourself from being stranded, therefore, you have to keep increasing your emergency fund.
It is better to have the emergency fund and not run into any emergencies, than to run into emergencies and not have funds for them.
Taking charge of your personal finance is something that everyone should do. It secures your Now and your future. Financial literacy, planning well, saving, getting more ways to earn, are some of the ways you can go about this.
Follow the tips that have been listed on this article, and you are well on your way to having an improved personal financial life.
