The Real Deal: Personal Finance Advice That Actually Works

personal finance advice

 Of all the topics discussed incessantly online, personal finance has to be near the top. A host of blogs, forums and podcasts aim to educate and empower people to take control of their economic selves—and many people have. But if there’s one problem with a lot of financial advice, it’s that the recommendations aren’t straightforward and applicable to the average consumer.

Below we’ll cut through the noise with no-nonsense, real-deal personal finance advice that works.

Know How Much You Owe

Between credit cards, student loans, mortgages, auto payments and medical bills, it’s highly unusual to be debt-free in America these days. Many debtors take their situation to unneeded levels by refusing to acknowledge how much they owe. Sit down and write out your various balances and interest rates along with your past six months of payments. With this information, you should be able to tell whether you’re making progress, losing ground, or treading water. Set a date to get out of debt by creating a repayment plan based on either the debt snowball, avalanche or snowflake approach. 

Never Pay the Minimum (If You Can Afford More)

Desperate times aside, the minimum payment is called the ‘minimum’ for a reason; it’s the absolute lowest you can pay on your debt without creditors doubting your ability to pay it back. Only pay the minimum if you’re practicing one of the repayment strategies above, or if it’s all you can afford to pay on a balance. Otherwise, you’re only setting your future self back by incurring unneeded interest rates.

Set Financial Goals

As much as a case can be made for the relation between achieving economic success and making good decisions in the present, long-term financial success starts with planning and forethought. You might be spending modestly. You might be earning an above-average salary. But what kind of life are you trying build with your money? Where do you want your money to take you? Without answers, you don’t have an end goal, and without an end goal, you don’t have a financial compass to work towards the future scenario you desire,

If you feel like goals are only for people who are prone to quitting, guess again. Even entrepreneurs, like Freedom Financial Network CEO Andrew Housser, rely on goals to keep them moving. In an interview with IdeaMensch, Housser recommends setting incremental benchmarks as one thing he does over and over again and recommends anyone do the same if they want to turn their future aspirations into reality.

Pay Yourself

It’s always easier to follow through on anything in life when we streamline the process. If you’re the type to use your money as you need to, you’re probably not left with much for yourself at the end of the month. Decide on a monthly amount you can afford to save after subtracting your living expenses. A good rule of thumb is to save 20 percent of your income, but if you’re starting from scratch, even five to 10 percent is better than nothing.

Learn How to Make Simple Meals That Taste Great

Americans love to spend money eating out. As hard as it is to argue against sharing good company over a tasty meal, what is this habit costing you, and what kind of value are you getting? For example, ordering a drink and a sandwich or salad will quickly set you back $20, but you could probably have a similar experience at home. Unless you crave high-end artisanal concoctions, learning how to meal prep the dishes you love most will save you a ton of money without depriving your taste buds. No time to cook? Get a slow cooker.

Plan Your Tax Refund

Many people use their tax refund (if they get one) on something fun. Maybe they buy a piece of electronics, take a vacation or upgrade their furniture. We need to treat ourselves every now and then, but it doesn’t have to be with something as substantial as a tax refund. Plan how you’ll use your refund ahead of time — whether it’s going into your emergency savings, retirement fund or toward existing debt — to eliminate other decisions when the money comes.

Max Out Your Retirement Contribution

Many people are lucky to have an employer-sponsored 401(k) plan, meaning a certain amount of contributions are matched. For the rest of us, there’s always a traditional IRA or Roth IRA. The fundamental difference between the two is that Roth IRAs are funded with after-tax dollars and traditional IRAs with tax-deductible contributions. Many people prefer Roth IRAs because retirement money (and investment gains) aren’t subject to tax like with a traditional IRA. Compare the benefits of a Roth versus traditional IRA and then max out your $5,500 annual contribution, or however much you can afford.

When it comes to financial advice, there’s no shortage of tips, hacks and best practices. However, a lot of the information out there only pertains to specific situations. When you want to develop smart financial habits, start with the things above and you’ll get there in no time.