These 5 personal finance tips can meaningfully grow your wealth.
What are the absolute best personal finance tips? Almost everyone could use some personal finance tips to help them on their path to wealth. Maybe (like I did) you feel to disorganized to even get a handle on your finances. Don't worry, I've been there too.
In this post, I will go over the exact personal finance tips that I used to pay off over $150,000 in student loans and start building wealth. They are simple, easy to follow, and if you do use them, becoming rich is guaranteed.
This post is all about the best personal finance tips.
1. Start with a Vision
The first step in any journey to improve any aspect of your life is to identify your destination. This is the number 1 personal finance tip I can give you. You need to know where you're going. We get what we focus on, so if all you're focused on is what's wrong with your current financial situation or what you don't want, that's what you'll keep getting in your life. It's crucial that you have a very clear vision for what you WANT, not just what you don't want. Your vision is your GPS-if you can picture it, you can plan it.
The more vivid and detailed the vision, the more likely you are to succeed. Take 10-15 minutes to write down on a piece of paper what your dream financial life looks like. What's your income? What's your plan for retirement? What do you enjoy spending money on? How generous are you able to be with family, friends, and charity? How do you feel about your career? your relationships? What does it feel like to wake up in this financial position? How does it feel moving through your life with this vision in mind? Close your eyes and get a clear picture of exactly where you're headed. Creating a vision board is a great way to solidify your vision and goals for the future, and it's what I did when I was starting my personal journey to pay off all my student loans.
Reflect on your vision every. single. day. Put yourself into the future where you have accomplished all your financial goals and are really living your dream life! This piece is crucial! It's important that you stay focused on your goals, and daily meditation on where you're headed is a powerful way to stay aligned with them.
2. Remove Negative Associations
The second of my favorite personal finance tips is to identify all your negative associations with wealth. Did your eyebrows just hit the ceiling? You might be thinking- What? I don't have any negative associations with wealth... of course I want more money! Well, think again! If you are currently in a bad financial position, you more than likely have negative associations with building wealth that have been holding you back. If money feels 'bad', your brain will sabotage progress. Name the story, then rewrite it. This isn't to say that you don't also have positive associations with money, as you probably realized while doing the first personal finance tip.
What might those negative associations with money be? Only you can answer that through personal reflection, but there are many common ones. First, you might have a negative feeling towards being wealthy because you think it will take enormous effort and sacrifice to get there. Perhaps you feel that being wealthy is somehow immoral, or that you'd have to take advantage of people in order to become wealthy. Maybe you have worries that people will treat you differently or try and take advantage of you if you become wealthy. This was one of my biggest fears about building wealth. I thought it would negatively impact my relationships with friends and family, and so I felt anxious when I thought about my financial future.
It is essential that you identify all your negative associations with building wealth so that you can eliminate them! They need to be replaced with positive associations with wealth. With personal reflection, you can reframe your negative associations into positive ones. After all, the negative associations you have towards money are untrue! But they are powerful if you hold onto them, and they will cause you to continually sabotage any efforts to become wealthy.
3. Change Your Pain and Pleasure Associations
Next up, another surprising choice for my top personal finance tips. But it shouldn't surprise you. Everything we do in life is to avoid pain or gain pleasure. From what you eat, to snoozing your alarm in the morning, to exercising (or skipping the workout), it's all about avoiding pain. You make choices in the moment that you feel will avoid pain or gain pleasure compared to the alternative. This is why procrastination is my favorite pastime so common.
Now, how does this apply to personal finance? Well if you haven't gotten a proper handle on your personal finances (like most people!), this is a direct result of you associating more pain with properly managing your finances than allowing the current chaos to continue. Perhaps you are in debt, or keep going back into debt. If that is the case, you currently associate more pain with paying off the debt than staying in it. But this is a critical mistake! Staying in debt is far more painful in the long run than paying it off. Perhaps every time you bring up money to your spouse, it devolves into an argument, and you walk away feeling defeated and hurt. You now associate major pain with addressing your joint finances, and so you avoid the conversation altogether. However, as I'm sure you know deep down, this only creates more pain down the line. In an effort to avoid suffering, we create far more suffering by making these decisions.
So, what do we do? We need to reframe these decisions in our mind so that we make the right choices, which happen to be the ones that will actually avoid pain, not the nonsense you've been engaged in so far. The trick is to associate massive pain with continuing to manage your finances the way you have- to continue to stay in debt, to continue to not have a budget, to continue to avoid talking to your spouse about money. You need to make it more painful in your mind to continue to do these things than to do them, and the way to do that is to get real about what these habits are costing you. How are your finances suffering? What about in 5, 10, or 20 years? Will you be able to retire? What does your marriage and career look like if you don't change now? If you have children, how are their lives impacted by your poor financial decisions?
Write two columns: (A) 'If I stay the same for 5-10 years...' (B) 'If I change now...' Re-read weekly.
Once you've really reflected on your ghost of personal finance future, you'll be able to start making decisions that will put you in a good financial position now and in the years to come.
4. Work a Plan
The next personal finance tip is to choose a plan, and to stick to it. I'm almost certain your experience thus far has been searching online to find ways to manage your money, only to be met with buckets of conflicting information. Pay off your debt, leverage your debt! Leverage your debt if the interest rate is low, but otherwise pay it off. Day trade, definitely don't day trade. Invest in an S&P 500, no no you need to invest in individual stocks. It's a bird, it's a plane, it's Bitcoin! Backdoor Roth IRA strategies, tax-advantaged accounts, brokerage accounts (are those for broke people?). Buy 100 rental properties and live off the income!
What is one to do? The surprising truth is that building wealth could not be simpler. If you are in debt, start here!
These are the practical steps I recommend and that you can start today:
1. Create a detailed budget and stick to it. (Hint: Your spouse needs to be on board, too!)
2. Aggressively pay off ALL your consumer debt as fast as possible (this means everything except your house)
3. Make a plan to pay off your house early WHILE SIMULTANEOUSLY investing at least 15% of your income in retirement. If you choose to prepay your mortgage, do so after building a 3-6 month emergency fund
Follow the steps above, and you'll build real momentum toward wealth! These are the steps I follow and swear by.
5. Check Your Limiting Beliefs
The final personal finance tip I'll offer is to identify and replace your personal limiting beliefs. A limiting belief is a belief you hold about yourself and the limits you think exist. You may have many references for this limiting belief including past experiences and failures. The thing is- limiting beliefs create limited people, and your limiting beliefs are NOT TRUE. In order to achieve financial success, financial freedom, and become wealthy, it starts with a belief that you are capable of achieving these things. If you think you'll fail, you will. Take 10-15 minutes to reflect and write down what limiting beliefs you hold in regards to money management and finances. Then, I want you to replace each limiting belief with an empowering belief. I'll give you an example below.
Limiting Belief: "I grew up with parents who were terrible with money. It's all I've ever known. I never got to see how to manage finances well, so I'm at a disadvantage. Even my grandparents were bad with money and always in debt. It's part of my family history, and so it will be part of mine."
Empowering Belief: "I had the good fortune of seeing many examples of poor money management from a young age, along with the very real consequences of poor financial choices. I know exactly what my life will look like if I don't make a change because I saw it first-hand growing up. Because I experienced my parents' suffering at a young age, I am blessed to know exactly how important making good financial decisions is for my life and my marriage. I am at an advantage for these reasons."
There is no "truth" in this life. I'm sure you could convince me that either of the above belief systems is "true" because of (insert tons of examples/references). The reality is: IT DOESN'T MATTER. You can choose what to believe, and so we might as well pick the most empowering belief. Circle one mindset tip + one action tip to implement this week. Small steps compound!
What is your debt free date? Let me know @ShesFinanciallyFree1 !
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