Tips on Personal Finance

Updated: Feb 27

Do you want to work for the next four decades? Just for the sake of Money?

Money is not everything, but everything needs Money.

If your answer is No, then you should get your finances in place.

Personal finance is essential because of the compound effect, Compound interest which goes like this:

Final Amount = Principal amount (1 + rate of interest/N)^ (NT)

N is the number of times your Money is being compounded, and T is the investment time.

Here, N and T are in powers, which means N (times compounded) and ‘Time of investment’ is a massive factor in the compounding effect.

To get the benefit of this “eighth wonder,” you should start investing from your first salary.

Some money rules — the most obvious, most essential standbys — will never change. Save for retirement. Stick to a budget. Spend less than you earn to build wealth.

But other pieces of long-held financial wisdom don’t make as much sense as they used to. In today’s post-recession economy and rapidly changing job market, some may not make much sense at all.

Here are some essential steps you can take to make the most of your Money.

Create a Budget

Budgets can help you see and understand where your Money is going, what’s necessary and what can be dropped. The idea behind this is to maximize your disposable income, allowing you to save Money, invest, build a business, or do whatever you want to do.

How much is your budget going to be? Ask yourself how much you want to save every month, relative to your salary (this is often around 10–20% of earnings after-tax).

Set yourself a reasonable limit of Money to spend each day.

Make sure you’re tracking this every week, especially at the start. Go through your bank statement and check everything to understand where you are at with your budget.

Categorize transactions from linked credit and debit cards and track them against a budget you can tweak and tailor to your needs.

Related Article: The Envelope (Budget) System

Increase your Income

Start a side hustle, learn new skills, ask for a raise (ideally every two years), sell courses /services online — with the internet, you can work from anywhere and for anyone - take advantage of currency differences.

Specialization is the only way to get the best job in your industry. Be the best (among the top 10-20%) in your field, and you’ll never have to worry about the job again.

Save at least 10% of Your Income.

Of course, this wouldn’t be a personal financial article if I didn’t say this: Save, save, and save. Aim to put aside at least 10% of your income into a savings account and then sweep the accumulated amount to an investment account approximately say every 3 or 6 months.

Depositing Money into a savings account every month can help you build healthy financial habits.

Set up an arrangement with your bank to automatically transfer your money transfers from your checking account to your savings account.

Set Long-Term Saving Goals

Ask yourself what matters to you? Take into account everything, from the practical to the whimsical, for examination and consideration. What do you want to achieve with your savings, and how long will it take to get there?

In time, your strict, realistic, water-tight budget will save you some additional cash. Whatever that amount is, have it automatically directed into a separate account for savings.

Tackle Debts

Often, these loans will have a compound interest rate that can become very problematic if you’re unable to pay it back in the short-term. You should avoid the use of payday loans to cover temporary financial shortfalls. Eliminate monthly shortages by following a budget and maintaining an emergency fund. Do not borrow and use the funds to buy items such as clothing, vacation, phones as these commodities lose value over time.

Create a Secure ‘Emergency Fund’

As the name implies, this is the Money you set aside in case of an emergency. The fund is intended to help you pay for things that wouldn’t usually be in your budget.

Try to save at least three and six months of living expenses in the bank. You should have enough Money saved at all times to face unforeseen emergencies.

Invest (Judiciously)

When your finances are secure through careful budgeting and saving, you can invest a small percentage of your savings. You should have enough Money saved at all times to face unforeseen emergencies, but if your savings are healthy, you can invest a small percentage of them.

If you’re already investing, you’re on the right track. Now is a great time to inform yourself about investing and start making some changes.

A great place to start is investing in the stock market by buying shares in an individual company or investing in a fund, which consists of various claims in different companies.


While investing, time will come when your interests or passive income can take care of all your expenses; then, you can FIRE (Financial Independence and Retire Early) yourself. Ideally, according to the 4% rule, “Multiply your yearly expenses with 25” — that’s your FIRE amount.

If you don’t want to retire, you can still choose to work without worrying about Money or pursue your hobby of traveling, painting, singing. In this case, Money can buy you freedom and time. I’m not saying you should avoid luxuries, enjoy luxuries only when you can genuinely afford it.

Finally, one piece of traditional personal-finance advice that might be outdated more than any other has to do with frugality: the idea that if you watch the pennies, the dollars will take care of themselves, helping you to get rich, afford a home, and maybe even retire early. It sounds good, but when you have to contend with structural issues like a massive income inequality gap, a student loan crisis, and barely moving wages, frugality isn’t as lucrative as it once was.

Cutting back on your avocado toast habit will not afford you the down payment for a home any time soon. None of this is to say we should abandon frugality — or the rules of personal finance — altogether.

Live below your means, decrease your expenses, increase your income, often invest and invest early (rationally), take most out of government’s retirement schemes. With this approach, you won’t have to work for Money again - Money will work for you!

For more information on having financial independence and retiring early read the book below: