This is a post on behalf of Bullion Vault, written by Paige Mitchell, who has written numerous articles on the subject of personal finance.
Personal finance is an extremely broad and tricky topic, particularly for young people who are just figuring out how to go about earning and using money in an effective way. Until you have personal experience, it often seems as if finance is quite simple: you make a certain amount of money, and you divide that money in a strategic way to benefit yourself. While this is not necessarily a false or incorrect way to look at things, it is extremely simplistic. There are actually a number of different complex aspects to personal finance that you need to consider if you are to lead a strategic economic lifestyle. Here are a few basic tips.
• It may seem like an extremely obvious tip, but particularly if you are young and just starting to work, you need to consciously remember to spend less than you make. Of course, spending more than you make lands you in debt, but it may be easier to do than you think. Just remember that it can take a good deal of time, effort, and luck to start making more money than you are currently making – but it’s usually easy to find ways to cut costs, even just a little bit.
• Record Keeping: Keep your own financial records. Particularly these days, when it is so easy to simply go online and check your bank statements to see what you’ve been spending and what you have available in your account, many people do not keep close track of financial transactions. However, if you organize and design your own budget, and keep careful records of everything you make and everything you spend, you will be far less likely to land in financial trouble.
• Start some manner of retirement plan as early as you possibly can. Sometimes this is possible through your employer and a 401(k) plan, and sometimes it is up to you to set up an IRA. Whatever the case, there are substantial benefits from starting such a plan early. Retirement plans work by applying compounding interest to what money you are able to put away, which means that your money will grow more substantially and for a longer period of time if you start it off sooner. It’s never too early to start a financial retirement plan.
• Don’t forget about other investment opportunities. This is a broad concept, but if you have money to invest, you may as well give it a shot. If you take some time to educate yourself on different investment opportunities and you are selective about your own investments, this is actually a great way to apply your finances, as it can easily expand your wealth over time. Never be careless or reckless about investments, but be certain to consider them if you have the money to do so.