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25 Personal Finance Habits Everyone Should Know - featured image

25 Personal Finance Habits Everyone Should Know

Do you want more money?

Most Australians do.

Insurance Money

But for most their problem is not earning more money, it’s keeping the money they’ve earned.

What are they doing wrong?

Well… usually it’s their bad money habits that let them down, so here are 25 personal finance tips you should follow:

1. Start by paying better attention to your finances

Many people ignore their spending and just hope it will work out. Hope is not a good budgeting strategy. Instead, choose a system that works for you. Whether it is an app, spreadsheet, or something else, find a system to track your spending and budget. It is amazing what you will discover about your spending when you keep track of every dollar going out the door!

2. Faithfully following your budget

It’s one thing to create a budget, but if you don’t have the discipline to put it into action, why bother?

3. Keep track of your net worth

Your net worth is what is left after you calculate your assets and your debts.

4. Set your financial goals and write them down

How much do you want to pay off? When? You can say you want to make plans all you want, but, until you do it, you are living in a fantasy. Make a plan and take action.

5. Pay off your debts as quickly as you can

Debt takes away your options and your financial freedom. The sooner you can get rid of it, the sooner you can start pursuing your dreams and living life on your own terms. Create a list of each debt, how much it is, and its current interest rate. Once you have your list completed, you can figure out a plan to pay off your debts — or drastically reduce them.


6. Spend less than you earn and start saving the rest

Start small. Start saving a little bit of money each week. Do you have a bill that needs to be paid? Pay the bill, buy the item, and keep the rest in your account. You don’t need a lot. $15 each week is still $15. The money will begin to add up over time.

7. Never buy anything on impulse

One of the best ways to help prevent this is to make a shopping list and then stick to it.

8. Do your research

Do your research before purchasing extended warranties on items you buy — these are often a waste of money.

9. Pay attention to mortgage interest rates

Pay attention to mortgage interest rates — even after you buy your home or investment. Banks will often drop their fees or lower interest rates if you ask.

10. Review your credit card statements

Review your credit card statements for errors, signs of fraud or identity theft.

11. Pay your bills on time

By doing so you’ll avoid spending money on needless late fees.

Young Man With Bills And Calculator

12. Don't expect that past results will always repeat

Never assume past performance guarantees future results.

13. Read all contracts

Read all contracts and make sure you know what you’re getting yourself into before signing on the dotted line.

14. Pay more (much more) than the minimum on your credit card bills each month

Here’s a fact: making minimum payments each month will ensure you pay the maximum interest.

15. Use your credit card if you can pay off debt during a month

Only use your credit card to buy things if you can pay them off in full at the end of each month.

16. Leverage a “good debt”

Leveraging “good debt” to purchase appreciating assets like investment-grade real estate is a path to a higher income in the future.

17. Avoid the lottery

Lottery is really a tax for people who can’t do maths

18. Avoid cigarettes

Apart from the obvious health reasons, it is a huge expense that burdens many people.

19. Ignore the temptation to keep up with the Joneses

Learn to be happy with what you have. We tend to become obsessed with the idea of “acquiring stuff.” We need to learn how to appreciate what we have now. Take a look around you. You will see that you have a lot to be thankful for.

20. Avoid frugality as a means to achieve prosperity

You can only free up so much money by cutting expenses.

21. Reward yourself

Occasionally reward yourself by splurging.

22. Maintaining an emergency fund

Everyone should have between three and six months of living expenses in the bank or in an offset account.

Coins In Glass Container With Emergency Label On Wooden Surface

23. Don't use emergency fund for non-emergencies

Resist the urge to tap your emergency fund for non-emergencies.

24. Create a file for tax deductions

Get organised using a program such as Evernote to keep track of all your tax information it’s in one place at tax time.

25. Treat your household like a business

By taking an active role in managing your personal finances — and looking at ways to maximize your income — you’ll ensure a brighter financial future for you and your family.

About Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.
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