Personal Finance 101: 5 Personal Finance Tips You Need to Know!

With Two Additional Bonus Tips!

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Hello everyone!

Welcome back to my publication.

Today, I am sharing a very short post on Personal Finance as I want to start with the important things that everyone should know about. Hence, I want to keep it short and straight. The reason I am keeping it short is also because at this moment, it’s not necessary to bombard you with lots of information and it will be better if we move forward with baby steps.

Additionally, I will explain every detail in my future blogs, so there is no need to confine everything to one post. So, keep an eye on my future blogs to learn Personal Finance in detail. Remember, it’s a marathon, not a sprint.

So, without any further ado, let’s start!

Personal finance, as the name suggests, is personal. A one-size-fits-all approach would not work here as the life circumstances are different for everyone. Although, some basic rules can be beneficial for everyone however, you can learn them first and then tweak them as per your situation.

Here are the top 5 most important things to know about personal finance:

1. Track Your Expenses and Don’t Overspend: Although it’s obvious that the basic rule for Financial Health is “Don’t spend more than you earn”, many people struggle with it as they do not track their expenses. There are multiple apps available these days, use them to track your income and expenses. It will help you in making informed decisions and identify areas to improve.
2. Build an Emergency Fund & Save Regularly: Save 3–6 months (ideally 6, mandatory 3) of your living expenses as a safety net. Transfer a percentage of your salary to a different savings account to build this fund consistently. Make it a habit as even saving a small amount regularly can add up significantly over time.
3. Manage Your Debts Strategically: Learn to prioritize your debts and loans. The focus should be on paying off high-interest loans first (like credit cards). If possible, transfer high-interest loans to low interest and if you have an option to reduce the duration, do it instead of reducing the monthly EMI amounts.
4. Invest for the Future, Even with Small Amounts: Compounding with Time is a beast. Utilize it by starting early (without compromising your life), even with small amounts you can afford. Also, remember to diversify your investments across different asset classes (stocks, bonds, etc.) to minimize risk.
5. Protect Yourself with Insurance: Safety first! Choose proper life, health, car, and home insurance to safeguard yourself and your family members from unexpected events. The level of coverage should align with your current circumstances and future goals.

These principles are essential for everyone, regardless of financial background. By prioritizing them you can make sound financial decisions and achieve your long-term goals.

Along with these, I believe I can add two more points that are very important in these times. I call them “bonus tips” as they are not mandatory but highly recommended.

Here are those bonus tips:

• Educate Yourself: I can’t emphasize it enough. Regardless of background, everyone must learn about personal finance. Read books, listen to podcasts, or take online courses to stay informed.
• Beware of Frauds: If it’s too good to be true, it’s certainly not true. Don’t fall victim to golden schemes. Protect yourself from financial scams, be wary of unsolicited investment offers, and do your research before making any financial commitments.

I hope you understand that we have to build a foundation before creating a skyscraper. With this short post, I am aiming for the same. I will post another blog next week where I will discuss the steps in detail. You can use it as a stepwise guide to understand Personal Finance. Stay tuned for it, and we will meet next week.

I believe this blog will be helpful to you to understand the basics of Personal Finance.

If not, read it like any other story, and we will meet on my next post.

Till then;

Shreesh, Signing off!

Originally published at https://theterran.substack.com.

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