17 money tips everyone should know 🏆

Financial knowledge is one of the critical skills to succeed in life, even though it often doesn’t get much attention as part of formal education. Here are 17 money tips to get started.

#1 – Pay yourself first. 🙌

Put money into savings as soon as you get paid. Even better, automate this with recurring payments.

#2 – Keep a 6-month emergency fund. 🚨

An emergency fund helps you to weather unexpected financial setbacks and reduce stress.If you have multiple streams of income, you can go as low as 3-months. If you are starting out on your own, you could need as much as 12 months of savings.

#3 – Budget using the 50/30/20 rule. 💸

50% for needs. 30% for wants. 20% towards saving & investing.

#4 – Divide your bonus/extra income into thirds. ✂️

1/3 for fun
1/3 for savings
1/3 for debt paydown (if you have no debt or only low-interest debt like a mortgage, add this part to savings)

#5 – Save or invest a significant share of your salary raise. 👏

This helps avoid lifestyle inflation, helps you to save more without having to cut your expenses and eventually moves up your retirement date.

#6 – Avoid high-interest debt. ⛔️

If you already have it, make paying it back your first priority. Popular ways for debt payback are avalanche and snowball methods.

#7 – Your mortgage repayment should be less than 25% of your monthly income. 🏡

This includes mortgage, interest, and insurance payments.

#8 – When buying a car, use the 20/4/10 rule. 🚗

Pay 20% down, take out a 4-year loan, and make sure the monthly payment is less than 10% of your income.

#9 – Save at least 15% of your income for retirement. 🧓

That is in addition to mandatory pension payments.

#10 – Balance your portfolio by subtracting your age from 100. 💼

Your age subtracted from 100 represents the percentage of stocks vs bonds you should have in your portfolio. As a general principle, it makes sense to take more financial risks when you are younger and reduce the share of stocks in your portfolio over time.

#11 – The stock market has a long-term average return of 10% per year. 📈

To calculate average returns adjusted for inflation, it’s common to use 6-8%.

#12 – The rule of 72 tells how long it will take your investments to double. 🧐

Example: The stock market returns 10%, so 72/10 = 7.2 years to double your money.

#13 – The 4-percent withdrawal rule. 🔁

As a rough calculation: You can safely withdraw 4% of your starting investment balance each year (adjust for inflation in subsequent years) and never run out of money on the investment account.

#14 – Rule of thumb to help calculate your ideal net worth. 🫢

Every situation and lifestyle is different, so the actual number may vary widely. That being said, your net worth should ideally be equal to your age x pre-tax income / 10.

Example: If you are 35 years old and earn €35,000 in annual income, then your net worth should be €122,500 (35 x 35,000 / 10).

#15 – Wait 3 days before big-ticket purchases. 🥲

Before spending money, wait 3 days and ask: Do I still want it? If you do, go ahead and buy it. If not, you have saved yourself from an impulse purchase.

#16 – Value time over money and experiences over things. 🌅

Time is not a renewable resource, while money is. Often, the same applies to experiences.

#17 – Track your spending. 🤑

Track your expenses periodically to see if you are on track towards your money goals.

Ready to save more?

Bilance is an app that automatically tracks expenses, making personal finance easy and understandable.

Try it free for 30 days.