Bad personal financial planning advice can ruin your long-term plans and potentially rob you of the future you had hoped for.
However, the right financial information (when applied) blossoms and continues to flourish in all areas of your life, even improving the lives of others along the way.
We all know that we are to be financially savvy, but sometimes it can be hard to be right every time.
Instead, you end up putting your head down, making a promise to yourself that you’ll settle it one day when getting out your credit cards to cheer yourself up with the cute gown you saw on sale that other day.
If it’s difficult to figure out the best way to get your money working for you, don’t worry. I’ve put together a list of the 15 best personal financial planning advice I’ve ever received or heard.
1. Invest in Yourself
The smartest move to make is to invest in yourself, and this is a piece of advice that will pay dividends across all areas of your life, not just financial. It’s so easy to prioritize all other things before your own needs.
Instead, you need to acknowledge that you value yourself as much as all your other commitments.
What’s more, if you’re a solopreneur or a business owner, nobody will invest in you if you don’t take the lead.
Make a promise to yourself today to invest in yourself, whether that be doing a course to further your career, taking time out to plan a budget or hiring a life coach. Always remember investing in yourself pays the best interest.
2. Save Before You Spend
This is, by far, one of the best personal financial planning tips I have ever received. Typically, people tend to save what is left of our salary. In other words, we tend to spend first before saving. This is typical and not out of the ordinary.
When we have the money, we pay our bills first. We, then, spend on something we love and save what is left. What this pattern is doing is that it prioritizes spending over saving.
I learned a long time ago from a mentor to build your retirement savings or just savings, you need to make savings as your top priority when it comes to finances.
It’s easier said than done when you have a lot of bills and not a ton of money to play around.
But when you are bombarded with a ton of bills and not enough money to save, you should always set up a budget. Frankly, even when you have more money than bills, you still need to have a budget.
The best thing about a budget is that you see where you are also overspending and where you can cut to save some more money.
3. Invest Before You Spend
The next on my list of personal financial planning tips is investing. The first thing you always need to do is save for an emergency, for daily needs, etc. What I mean by this is save enough so you can start investing.
It’s nice to see when your bank accounts are growing month by month or day by day because you save more than you spend. Kudos to you. But at a certain point, you need and should invest.
The interest on your bank accounts is so low that it won’t keep up with inflation. You need to invest so you can potentially grow your money. I say potentially because there are risks and rewards associated with investing.
But if you look at historical data, there is excellent potential in the stock market. The reason that my wife and I’s net worth has ballooned is primarily due to our investments in the stock market.
Over three years, our investment portfolio has increased by more than 50%. You can’t get that rate of return or interest with the banks.
4. Pay Yourself
We all have bills to settle, and there will be a period where there are too many months and less money.
However, if you pay yourself before your other obligations, you’ll soon find it’s easy to manage on slightly less while you build up a nest egg for a rainy day.
A great way to pay yourself first is through automatic savings. Set up a standing order to put 10 to 15 percent of your pay into a savings account as soon as you get it. You can now forget it there then watch it accrues interest for you.
5. Spend Less Than You Earn
Why? So you can save and also invest the rest. When you are sorting out your finances, it’s not how much money you make that’s important, but how much money you keep.
Learn to live under your means. Be brutal when listing out your expenses. Is there any way you can cut costs or save money? For example, subscription on Netflix comes cheaper than hitting the cinema,
If you think cutting costs is not an option for you, then you need to look out for how to earn more so as to invest and save.
6. Find Extra Income Routes
True, being complacent is easy when you earn from a regular daily job.
The truth is most people are satisfied with their earning, and that’s cool. A good, steady income is gazillion times better than no income at all.
Instead of spending too much time doing meaningless things, it is better to figure out other side hustles to make money from simply doing what you love. My mentor told me this a long time ago.
Since I like to stay home, I need to start a side hustle that can generate massive income for the family. Apart from blogging, I refinish furniture and sell them profit, I also bookkeep, and partake in surveys.
These side hustles help me make an additional $12,000 every month, which is way more than what I make every month. If you ever want to try taking surveys and make money out of them, click on this link to see the full post.
Almost everything can be negotiated. This is what my mentor told me a long time ago. In everything I do, I make sure that I consult (when it’s appropriate).
When my wife and I started paying off our bills, we negotiated with our bill collectors. We told them that we could only spend this much and that much every month.
What did we get? We got into a payment arrangement, and our interest and penalties were waived. When you are trying to save money, try to negotiate as much as possible. The worse thing somebody can tell is ‘No’.
Some of us don’t like to get into a negotiation but still want to save money. Some of us have tried over and over and failed to negotiate our bills.
If this is you, then, I highly recommend you try BillShark, a company that’s been featured on Today, The Washington Post, Fox News, NBC News with Lester Holt, and Dave Ramsey. BillShark will negotiate on your behalf.
BillShark gets 40% of the savings. If it doesn’t save you anything, then, it doesn’t get paid. My wife and I recently tried BillShark to cut down our phone bill. It managed to keep us $120 for one year.
8. Wears Are Not Assets
Coming up with justifications on why you should buy that outfit is easy, but if you try kidding yourself that a dress is an investment, think again.
If you’re using something, it depreciates, no matter who designed it. So if you want to take clothing as an investment, be ready to have it hanging in your closets, carefully placed and stored so as to preserve the outfit’s condition.
Does thinking about that depresses you? Perhaps you should just avoid labels altogether, even in the sale.
9. Build An Emergency Fund
The next best personal financial planning advice I have heard is to create an emergency fund.
Are you with savings that can last you 3-6 months if you lose your job? That’s how much experts advise that you should always have aside.
If you don’t have an emergency fund, you might not be able to cope in an emergency. That’s why it’s essential to make saving a habit – today!
10. Set Clear Financial Goals
If you are not sure of where you want your finances to be, how are you going to get there? If you wish to travel around the world, buy your property, or stack some dollars in the bank, the first thing to do is to set clear and achievable goals.
Use these to make a financial plan and then implement it. Create some spare time to regularly examine your finance and ensure that you are on the track.
11. Diversify into Different Things
Change is the only certain thing. What seems like a great investment today could be a lousy one tomorrow. Although something looks like a sure thing, there are always chances for nasty surprises later.
Protect yourself against such by spreading your savings across a variety of investments and assets. With that, you have financial security, regardless of what happens.
12. Take Responsibility for Your Finances
How? Gain the financial literacy required in making informed and smart business decisions.
I know terms like ‘dividends’, ‘depreciation’, ‘liability’ and ‘net vs gross’ can leave your head swimming. Yet, it’s worth taking the time to develop your financial literacy so you can understand exactly what you’re signing up to when you scribble on that dotted line.
There are varieties of free information available online to help you navigate the world of finance and make sound decisions. Try checking our site to get you started!
13. Patience Can Make You Rich
In this digital age, we all want free and perfect things now. Immediate gratification makes it more difficult for us to calm down for the things we want. However, when it comes to personal finance, the best financial plans always pay off in the long run.
Investments can go down as well as up, but if you’ve chosen your finances wisely, in the long term, you’ll always see the benefit of being patient.
14. Start A Retirement Fund
The amount you need to set aside for retirement depends on your personal circumstances, but as a rough guide, the older get, the more you’ll have to keep to have a pension of that amount.
If your saving towards your pension starts in your 20s, 12% of your income might get you a good pension. However, if you are waiting till you get to your 40s, you might need to save 20% just to get that same amount. Don’t procrastinate – sort your pension out today.
There are several financial benefits to having a pension scheme that goes far beyond knowing that you’ll be taken care of when you retire. The right scheme can act as a tax shelter, making every penny go further.
With government cutbacks affecting all sectors of society, it’s well worth making sure that you have enough set aside so you can enjoy your retirement instead of worrying about making ends meet.
15. Be Content With What You Have or Not
The next on the list of my best personal financial planning advice is staying happy with what you’ve got and the ones you lack. In recent times, wanting more is easier. The spirit to want what others have keeps flying around.
I often tell myself that I don’t need to stay in touch with what is current. Bearing that in my, there is no need to change my gadgets, patronize new services, products, etc.
What my parents taught me was to be satisfied with what I have and don’t have. I believe what they said. Time changes, and it turns so fast.
What‘s on the market right now may not be considered ‘in’ a couple of years later. This is especially true with technology.
I have some friends who always buy new gadgets every year. I don’t know what they do with their old stuff, but they do have new ones all the time. I think it’s a waste of money. But that’s just me.
My mother taught me to be happy with the things I have, and that’s what I stick too always. We satisfy our needs and splurge on some other things, and that’s about it. We don’t overspend or buy things because everyone else we know has those things.
Are we happy not buying those ‘in’ stuff? Yes. Do you miss out on anything this personal financial planning advice? Absolutely, not.
There is my list of the best personal financial planning advice. Make sure to think about them and make changes in the areas where they come in handy.
I wish you a full financial life!