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Personal Finance is all about controlling your money and managing various financial risks for future life events!

Everyone starts in a different place. Everyone has a different goal. Start managing your money plan including budgeting, saving, investing, and setting financial goals. It’s never too late.

In this post, you’ll learn how to make smart financial decisions.

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Disclaimer: I’m not a financial expert. All content provided is for informational purposes only. Please read my full disclaimer here for more info.

Tip 1. Set Realistic Budget

Making financial decisions are part of our lives. Every financial decision you make, big or small, impacts your life.

However, studies show that people have a hard time comprehending large numbers. That’s why it’s difficult (at least to me) to spend money wisely when it’s become house hunting.

Set a realistic budget. Calculate carefully especially expensive stuff like a house or car. I pay off my mortgage in 8 years with my freelance income by setting a realistic budget.

Tip 2. Make your money system simple as possible

Diversifying financial assets helps avoid risk, but too many can be difficult to manage. I only manage taxable brokerage, Roth IRA, checking account, saving account, and former employer’s 401(K) plan. Trying to minimize maintenance fees too.

Tip 3. Clarify priorities

For example, my money goes in this order:

Pay for my needs
Invest
Save
Pay for my wants

Cash envelope wallets helped me to prioritize my spending and stick to the budgeting.

Tip 4. Always consider total costs

Most credit cards only require you to make a minimum payment each month. The minimum payment each month looks like not a lot of money, but it can be a lot of money when you consider total costs.

Tip 5. Don’t make big decisions quickly

We bought a timeshare at Hilton a couple of years ago. We were not planning to buy a timeshare. Actually, we didn’t know about the timeshare until that day. However, we bought a timeshare and spent 30K within 2 hours.

I regretted it for three months… And I decided to enjoy and use timeshare as much as I can. Lol

I’m trying to stay positive, but don’t make big decisions quickly. You’ll regret it like me.

Tip 6. Learn risks

It’s okay to take risks, but don’t take unknown risks. Learn risks you’ll face. For example, investing your money in the stock market is a reasonable strategy for your retirement plan. Is it a risk? Yes.

Stock market volatility, interest rate changes, and permanent loss of capital are not avoidable. But how much risk is appropriate? The answer is different for everyone. It really depends on your risk tolerance and your risk capacity. Learn risks and take proper action to the risks.

Tip 7. Pay off debt and stay out of debt

There are two types of debt such as good debt and bad debt. Good debt can be student loans, mortgages, or business loans that can help build wealth or increase income over time. On the other hand, bad debt refers to things like credit cards or other consumer debt that do little to improve your financial outcome.

Pay off good debt, and stay out of bad debt.

Wrapping Up

Decisions are a part of life. And money is a tool to take you anywhere in life, but it all depends on how you use your money. Make the best decision for your family and your life.