Sunday, October 11, 2009

4 Tips to Improve Your Finances

For the past two weeks I have been on a binge of learning more about personal finances. Currently, I am reading Ramit Sethi’s I Will Teach You To Be Rich. Yes the title is blatantly over the top, but the ideas expounded in it are not. Sethi gives practical advice for how to improve your finances.

Here are some tips that I have taken from Sethi and other research on personal finance:
  • Improve your credit score. This can be done in a couple different ways but the easiest is getting a credit card and then paying the full amount off every month. Having a good credit score will save you thousands down the road.
  • Keep track of your expenses. This can be done any way that works for you. But beware, if your method of budgeting is not easy you will not do it. A website that I just discovered and am in love with right now is The site tracks all expenses from your debit or credit card and automatically sorts them into categories. Then you can see exactly where all of your money is going. The site lets you set budgets, gives you warning and even lets you track any loans, all income and pretty much anything else. Check it out.
  • Invest early. You have heard it before. I’ve heard it before. Even if you do not have a lot of money, do a little. If your employer matches your 401(k) invest what you can, otherwise you are losing free money. When figuring out your budget, try to take out a portion right off the top for investing.
  • Spend money on what you love. If you do not spend on the things you really enjoy you will not stick with your spending plan. Try to cut money from things you do not really care about and spend money on things you do. For me, I do not really care about the car I drive, the clothes I wear or the restaurants I go to eat. So (when not taking the bus) I drive a ’97 Bonneville, wear clothes I’ve had since high school and eat a lot of soup. I do care about my education, my future wedding and watching football games. So I spend thousands on going to school, a lot on wedding reception sites and DJs and on an HD cable package.
Personal finance is often made overly complicated with too much data and too many options. It does not have to be that hard.

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