A few weeks ago, I asked readers to share their practical tips for personal finance newbies. Here’s a summary of responses -
Spend less than you earn. The granddaddy of them all. All progress begins with this first step. If you want to get out of debt and increase your savings, you must decrease your spending and live below your means. Period.
Don’t be intimidated by personal finance terminology.
Create a plan (live on a budget). I’ve written several articles about living on a budget, including how to create a budget if you have irregular income and how to create a simple budget.
Establish goals. I’m believe in having goals. Here are my financial goals for 2008-2009. I’ve also written about breaking goals down into micro-goals and the process I go through when creating goals.
Automate your savings plan. Have your savings automatically deducted from your checking account to your savings account.
Pay automobile insurance premiums in full, instead of month-to-month. I do this and it has reduced my annual insurance costs.
Learn how compound interest works.
Buy used. We did this when we bought our new-to-us minivan.
Decrease driving costs by checking tire pressure, car pooling, and driving the speed limit.
Plan for annual expenses.
Start saving for retirement when you are young. Check out this chart that details the benefits of saving for retirement when you are young.
Pay off entire credit card balances when due. I don’t use credit cards, but for those who do, this is great advice.
Contribute to your 401K.
Read Dave Ramsey’s Book, The Total Money Makeover. I agree! It’s one of my favorite debt reduction books.
Use compact florescent bulbs, fans, and space heaters to save money on your electric bills.
Read personal finance blogs. Yes! For a huge list, checkout a great resource, PFBlogs.
Get rid of stuff you don’t need.
Avoid day trading.
Cut out smoking. Seriously, if you stop smoking, you’ll save money and your insurance costs will go down – way down!
Find inexpensive hobbies
These are just some of the great tips that readers left. To read all of the tips or to share one of your own, head over to the original post – Practical Tips For Personal Finance Newbies. Remember, once I get 200 comments over at the original post, I’ll donate $200 to charity.