How to get rich from nothing – or at least starting form a “normal” financial situation?
I have been asked so many personal finance questions over the past few months that today I would like to introduce a new column on this blog, dedicated to personal finance.
After the interest and success of a couple of videos published on my Youtube channel, in fact, I realized that this is an important topic for us women as well.
It’s in fact the basis of our well-being and long-term stability – and there’s still too little talk about it online, especially from a female perspective!
Yet, we women are often the pillars of our families – on a human level, but increasingly on a material and financial level as well.
In today’s post, therefore, I would like to introduce ten personal finance tips that, if applied systematically, can really make a huge difference in giving us peace of mind and well-being.
1 – NEVER DESPITE
When it comes to personal finance and specifically savings, the #1 mistake I see people make most often is to tell themselves “it’s not worth saving and investing these small amounts, I might as well spend it all.”
Nothing could be more wrong! Even small amounts, saved and invested month after month, can make a big difference, especially if we start as early as possible to set aside a portion of our earnings and invest it.
In fact, the time factor plays a key role in making our investments grow: if it’s bonds or other interest-generating instruments, this can be regularly reinvested, making our savings grow much faster.
Even in the case of stocks, time plays in our favor: stocks may fluctuate in the short term, but they tend to gain value over time. In addition, they generate an annual dividend that can be reinvested, as in the case of interest, thus multiplying the growth of our capital.
So, never tell yourself that it’s not worth saving and investing small amounts, just do it!
2 – HOW TO GET RICH FROM NOTHING: RULE N. 1, PAY YOURSELF FIRST
When you receive your paycheck, or your income if you are self-employed, don’t wait until the end of the month to set aside the amount for savings, but do it now.
In short, pay yourself first. If you wait until the end of the month, in fact, there will often be almost nothing left.
Instead, try this: assess your recurring income and expenses and establish an amount you can reasonably set aside each month, and then deposit it immediately into a separate account.
This way, you won’t be tempted to spend it and it will be easier and more comfortable to invest it quickly.
Also because, if we don’t, we risk inexorably spending the entire amount available. It’s a sort of law of nature!
3 – USE CREDIT CARDS LIKE AN ATM
Credit cards can be very useful in certain situations, such as travel and vacations.
Used wrongly, however, they become a tool that can put us in debt – and on very expensive terms! The interest rates on negative credit card balances are particularly high.
And, if we’re not in the habit of paying them off at the end of each month, we risk sinking into a particularly expensive and therefore dangerous form of debt.
So, we use cash whenever we can and credit cards only when we really need them, relentlessly paying off the negative balance at the end of each month, to avoid interest or dragging on a debt that is likely to get bigger and bigger.
4 – MORE QUALITY, LESS QUANTITY = A HIGHER STANDARD OF LIVING
Accomplice also to the Internet and certain ugly “shopping hauls,” in which people buy bad quality things by the dozen and brag about it publicly, there could arise the (very wrong) idea that our quality of life depends on how much we consume.
Nothing could be more wrong.
What really makes us live well, in fact, is having only what we love, appreciate and use in our lives – and all of it in the best quality we can afford.
This is true quality of life.
So before we indulge in buying 20 “rags” imported from some obscure online shop in the East, let’s try to make a list, tell ourselves what we really need and like, and try to buy just 3 things instead, but beautiful ones.
I gave the example of clothing, but it applies to anything. Let’s bring more care and quality into our lives, and we won’t need to overdo the quantities anymore.
5 – NEVER SPEND TO PROVE SOMETHING OR MAKE A “GOOD IMPRESSION”
If we’re saving money, perhaps to quickly pay off a debt or reach an important financial goal, we certainly don’t have to justify it. In fact, it does us credit!
So, never spend more just to “keep up appearances” or “look good,” in short, because we care what others may think.
If someone corners us or tries to get us to spend more, we calmly state that we have other financial goals.
And that’s not all: good financial balance is a hallmark of all elegant, chic and even affluent people, while mindless spending and showing off are far from elegant traits.
Let’s always remember that!
6 – KEEP YOUR FINANCES ORGANIZED
There are many ways to do this and almost all of them are free.
Often all that is needed is one or more sheets of Excel, but also trivially pen and paper.
For recurring expenses, a formidable tool is the Kakebo, a special “book” to note down how much we spend in various categories, in a simple and enlightening way. You learn a lot!
If possible, keep all of our accounts, deposits, etc. at the same bank to avoid bank fees for various transfers and complications of keeping everything together.
Of course evaluate the chosen bank first: always choose those who give you the most confidence, but also those who have reasonable bank charges!
7 – PAY ATTENTION TO SMALL EXPENSES
Let’s start with the small ones because they’re often the ones we notice the least: paid apps and services that charge us small amounts each month, duplicate insurance contracts or ones we no longer need.
Attention also to telephone or pay TV contracts: it is often possible, if not to cancel them, at least to replace them with cheaper alternatives, even with the same operator.
Of course, as we train ourselves to periodically review small expenses, we will also become more careful with larger ones. We will learn to examine them and find the margins to optimize them and spend less and less.
An important exercise that can free up resources without impacting our standard of living. These are, in fact, the best savings!
8 – TAKE CARE OF YOUR TAX SITUATION
Clearly, taxes must be strictly paid and there is no question about that. Moreover, there are situations where there is little to improve.
For example, someone who lives alone and has a salaried job and no property is probably already “optimized” from a tax perspective.
But, in many cases, getting advice from a good professional can improve your tax situation instead.
And, since taxes are often the single heaviest expense item for many individuals and families, even a small change can have a major long-term impact on our financial situation.
If you are a freelancer, freelancer or work for yourself, managing the tax and administrative aspects of your business well is even more important. Sometimes, it can be complicated, tiring and distract you from your profession.
Therefore, it is important to simplify your life by relying on accredited accountants and tax consultants.
9 – START INVESTING AS SOON AS POSSIBLE
The days when it might have been reasonable to keep money in a checking account are truly over.
Not only do they make us nothing, they don’t even allow us to offset inflation. In fact, they are losing more and more value.
Therefore, investing today is more important than ever. And doing it sooner, rather than postponing this decision, can make all the difference.
The reason why it is important to invest as early as possible I explained it well to you in point 1 of this list.
Therefore, once accumulated a small emergency fund (experts recommend to keep in cash a sum that allows us to live reasonably at least 3, better 6 or 9 months in case of unforeseen events), invest everything else, of course relying only on institutions and online platforms of confidence and expert hands.
10 – AVOID SPENDING DUE TO LACK OF ORGANIZATION OR PLANNING
This last piece of advice is more practical than financial, but it can make a big difference.
Various behaviors fall into this category, but they lead us to spend unnecessarily:
- Going on vacation forgetting things that we later have to buy back on the spot
- Forgetting important deadlines for investing, asking for refunds, etc.
- Not systematically returning products ordered online that do not go well
- Not renegotiating contracts for your cellphone, payTV, but also for banking, insurance, health, etc.. (it is often possible to spend much less for the same services doing so)
- Dining out often not for the pleasure of it, but because we forgot to do the grocery shopping etc.
In the long run, these small and often large savings add up and can help us realize our financial goals much sooner.
Want more practical personal finance tips? Watch this video (turn on English subtitles)!
I hope these 10 tips have been useful to you.
Believe me, by systematically applying them to our lives we will find ourselves being “natural” savers and investors, almost without realizing it.
And, even after only a few years, we will have made a decisive step forward in creating and improving our economic and financial situation!
If these subjects interest you, subscribe my YouTube channel dedicated to personal finance and how to earn money online!
There you can already find another video dedicated to these topics:
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