Category: Personal Finance

A Billionaire’s Advice on Personal Finance

People do not often ask billionaires for personal finance tips. After all, not many of us can think about money the same way they do. Regular people are trying to stretch their paycheck every month just to cover all the expenses. However, wealthy people have great advice to share with the rest of us. Here are some of the tips which you too can apply to your financial situation.

Start Now

 

Carlos Slim Helú used to top charts of the wealthiest people in the world. Afterward, Bill Gates took over the title again. Nevertheless, he has a valuable tip for all of us who need a bit of support. Slim maintains that it is better to start early or start immediately. Once you begin managing your savings and income, you will have more time to amass your wealth. In addition, you’ll also make fewer mistakes along the way. He started with a few shares at age 12, and by his teenage years, he was earning 200 pesos per week at his father’s company.

Be passionate about it

 

Changing your financial situation takes time. Furthermore, you also have to believe in yourself. Otherwise, you might end up somewhere where you never wanted to be. Oprah Winfrey is an example of a businesswoman who thought that she could – and then she actually did it. That is the first step towards a better life and wealth – believe in yourself.

Apart from that, you should try to find what makes you passionate about life. It doesn’t matter if it’s sewing, or saving animals.

One person who appreciates what he does is Christopher Paul Gardner. When people ask him to tell them his secret, he has a rather simple answer. He says that a person should do something that he loves. If he is passionate about his job or business, then he will enjoy doing it every day, for the rest of his life.

Don’t make it too complicated

 

Warren Buffett made his fortune by investing in companies that have a stable annual cash flow. He didn’t risk it with businesses that might go down due to technical obsolescence.

It might not be the most interesting method of investing, but it worked for him. Therefore, whatever you have in your bank account, use it well. Stick to the fundamentals because they will eventually pay off.

Keep your life simple

 

This next tip might be similar to the previous one, but it still holds a great amount of value. Warren Buffett is, again, a great example. He still lives in the same house in Omaha which he bought for $31,500. Today, that house is worth just a fraction of the price, but he is comfortable there. The aim is to stop wanting things you don’t need. They will only make you financially unstable, and less successful.

Don’t underestimate public transport

 

Public transportation is an everyday thing for the rest of us. But, even billionaires like John Caudwell, David Cheriton, and Chuck Feeney use it. Not only are they saving their money, but it is also more environmentally friendly. They are not ashamed to ride a bike or walk to work – so why should you be?

You don’t need expensive cars

 

If you love cars and are desperate to buy one you have been eyeing for some time now, then go ahead. But, make sure you are staying within your financial limit. Many billionaires still use their older cars to get from point A to point B. Ikea founder drives a Volvo, while Walmart owner still uses his old pickup truck. Just because you can afford it, it doesn’t mean that it is a necessity. Therefore, keep your needs and wants separate, and save your hard-earned money.

Billionaires are still wealthy because they use these tips. When you have that amount of money, it is rather easy to go on a spending spree and forget about your future.

 

However, you will improve your financial situation if you follow their advice. Many of them started with little to no money at all – and look at them now.

 

Money is there to help you make the rest of your life more enjoyable. Therefore, find and do what you love, invest smartly and make your money work for you.

 

How to Create and Manage a Stress-Free Budget

 

 

When asked what their most important personal finance goal is, most people will simply say that they would like to spend less than they make. This is a very good answer, since it allows people to pay off debt, have savings on hand for emergencies, and put money away for a comfortable retirement.

However, saving money can be very difficult to accomplish, especially in these times. There are two main reasons for the inability to save money. Firstly, people may not have enough income to be able to save at all, and secondly, people may be needlessly overspending. Since there is not much we can do to help the first category of people budget better, in this article, we will offer some quick tips for people who fall into the latter category.

  1. Know what the goal is

 People who are averse to budgeting often think that they would have to keep track of every dollar they spend obsessively. While that approach would definitely work, it is not the primary goal of budgeting. The goal is to become aware of what we’re spending money on, and how much each item in our budget will cost us from month to month, so we can plan our expenditures in advance.

  1. Try tracking your spending

 As previously explained, the goal of budgeting is not to account for every dollar you spend. However, doing so for a limited amount of time can give you an insight into the exact way in which you spend money, so that you can plan your future budgets more easily, without having to keep track of everything. This sort of empirical method is sure to give you lots of data on your spending habits, so you should keep at it for about a week or so. If you are particularly zealous, you may try doing it for a month, in order to get a full picture.

  1. Split your budget into 3 categories

 

If you do decide to track your spending for a month, it is more than likely that you will come to the conclusion that you overspend on only a few categories of expenses. People most commonly overspend on eating out, buying clothes, gadgets, and entertainment. With that being said, decide on three of these categories you can forego, in order to bring up the overall health of your budget up.

  1. Use a card

 While most budgeting experts advise cutting up your credit cards in order to save money on the associated interest rates, other types of cards can actually be pretty useful when budgeting. That is because your purchases are recorded electronically, and are therefore easy to access and categorize. To that end, you can use rewards cards, bank debit cards, or prepaid cards, which charge little in terms of fees.

  1. First save, then spend

 Seeing as though the goal of budgeting is to spend less than we make, it is a good idea to save up first before spending. That means that the first item you put in and account for in your monthly budget will be how much you want to save, and then allocate the remainder of your funds according to priority. That way you make sure that you save a set amount of money each month, instead of whatever is left over at the end.

  1. Make use of th 50/20/30 plan

 This plan was popularized by U.S. Senator Elizabeth Warren in her book All Your Worth. Basically, it splits the overall budget into three categories: the first 50% should be spent on necessities, 20% on long term savings, and 30% to lifestyle items. This is great advice for first time budgeters who need a framework to start them off. 

  1. Use the tools available to you

 

There is a whole world of different tools to help you with budgeting nowadays. While it can’t be said that any budgeting app is the best, as they all have their pros and cons, you will certainly be able to find one that suits your style and your needs best. These are useful for several different reasons.

Firstly, they can connect to your bank account and credit cards, in order to keep track of and categorize all of your purchases, which helps you plan ahead. The second major advantage is the fact that there is some external support to help you keep at it when you waver!

 

Personal Finance Advice for Young Adults

You cannot learn how to manage your own money in college or high school – they just don’t include it in the syllabus. However, to help you out, we’re going to give you the most important tips that will allow you to live a successful life.

Self-Control Is Key

 

You might have heard something about this from your parents. However, if you still don’t know how to delay gratification, then it is time to learn it.

Just because you can buy something with your credit card, it doesn’t mean that you should do it. You would be paying interest for things you could have bought – if only you had saved money for it. Paying your credit card bill at the end of the month is vital, and you do not want to ruin your credit score with unnecessary purchases.

Control Your Financial Future

Many people will offer you advice about your own finances. However, you don’t need to listen to them. Sure, they might have the best intentions, like your grandma who really wants you to purchase a house. But, financial advisers can sometimes ruin you, accidentally or on purpose.

Therefore, your best option is to take matters into your own hands. Read some personal finance books, and understand how it all works. You will be ready for all sorts of unexpected events, and your money will work for you – not the other way around.

Track Your Spendings

 

Maybe you need to buy an expensive cup of morning coffee every day. But, have you actually calculated how much you are spending on it each month? If you want to use your money well, then you ought to start budgeting right away. Budgets will keep your monthly spending sprees to a minimum, and you’ll be able to save a ton of money for long-term goals.

Money For a Rainy Day

 

An emergency fund is vital if you want to sleep well at night. Not only will you stay away from financial troubles, but you will also have some extra cash for other life goals.

Treat it as a non-negotiable expense, and save a part of your salary each month. However, do not just keep it under your mattress. Get yourself a high-interest savings account, or any other account where you can keep it out of your reach.

Retirement Goals

You should start making plans for your retirement. No matter what age you currently are, it is crucial to start early. If you have more time to save, then you can amass more money and, one day, leave work forever.

There are convenient retirement plans that are company-sponsored. Usually, they are a fantastic choice because the contribution limits are higher than with an individual retirement plan.

Learn About Taxes

 

Before you even get your first paycheck, make sure you know how to do your taxes. You’ll need to know how to calculate it so that you could see how much money you take home.

However, many online calculators can help you with that – for example, Paycheck City. Try to stay away from bad tax advice and other false information you can find in real life or online.

Take Care Of Your Health

If you do not have health insurance, you might regret it if you ever end up in the emergency room. Even minor injuries can cost you thousands of dollars, which is a lot more than your monthly insurance premium. Therefore, check the rates and research different providers.

In addition, make sure you are taking care of yourself in the meantime. Avoid smoking, and excessive alcohol, and get your daily exercise every day. You’ll certainly appreciate it in the future.

Protect Your Wealth

You do not want to lose your hard-earned money due to your lack of knowledge. Once you start earning your paycheck, make sure that you are taking all the precautions. If you are renting an apartment, get a renter’s insurance. Moreover, if you want to protect yourself in case of an injury or illness, disability-income insurance is the right choice for you.

Furthermore, when you need help with managing your money, do not seek commission-based advisers. Look for those that are fee-only because they will give you unbiased advice.

You could also protect your money from taxes by keeping your savings in a retirement account. In addition, inflation can seriously mess up your finances. Because of that, try to invest in financial securities that will provide you a better life in the future.

Conclusion

 

You don’t need to be an expert to manage your personal finance. You just need these eight tips and the will to learn more about budgeting, savings accounts, and general management.