Our Best Money Advice & a Personal Finance Checklist

Table Of Contents 

1. What Are the Top Five Habits for Successful Money Management?
2. Why Is Creating a Budget Essential for Personal Finance?
3. How Can an Emergency Fund Affect Your Financial Future?
4. How Can Setting Financial Goals Improve Your Savings?
5. What Steps Should You Take to Reduce Debt Effectively?
6. What Are the Benefits of Investing Early in Life?
7. Your Personal Finance Checklist

Managing your money well is an important life skill. In an ideal world, we’d all learn about money management early in life and apply what we learned consistently. But even if you aren’t a personal finance expert, you can learn what to do and put your newfound money knowledge to work.

Here at Addition Financial, we want our members to have the information and tools they need for financial success. In this post, we’ll share our best money advice, explain why it’s important and give you a personal finance checklist to help you take control of your finances now and in the future.

What Are the Top Five Habits for Successful Money Management?

Let’s start with our top five financial habits, and we’ll get into more detail after we reveal them. 

#1: Create and Stick to a Budget

There’s a misconception some people have that budgets are only for people who don’t have a lot of money. That’s not the case. Budgeting is a cornerstone of financial success and everyone should have a household budget that works for them to avoid overspending and put their most important financial goals within reach.

#2: Make Saving a Priority

Saving money is a habit that can and should be fostered from an early age. We all need savings for something, whether it’s buying a house or retiring early. When you pay yourself first, you’ll have the best chance of living a financially comfortable life.

#3: Set Financial Goals

Financial goals may be long- or short-term aspirations. Setting SMART goals (that’s goals that are Specific, Measurable, Attainable, Realistic and Time-Bound) can keep you on track financially and help you achieve important milestones that relate to your money.

S.M.A.R.T. Goals

#4: Invest Your Money

You don’t need to be wealthy to invest your money. In fact, investing money is how you become wealthy–or at least, financially comfortable. The earlier you make investing a financial goal, the more you’ll earn in compound interest. If you're looking for beginner-friendly investments, here are some methods you could try out:

  • Employee Sponsored Retirement Plans
  • Individual Retirement Plans
  • Index Funds
  • Mutual Funds

#5: Keep Debt Under Control

Debt, whether it’s credit card debt, student loan debt or something else, is an issue for many of us. While some debt can be beneficial and can even improve your credit score, too much debt can take a financial toll. Learning how to control your debt is essential for good financial health.

Why Is Creating a Budget Essential for Personal Finance?

As we’ve already noted, budgeting is not just for people who are worried about money. Think of budgeting as your most important money management tool. With the right budget, you can work toward your financial goals and be sure that you’re managing your money well.

There are many options when it comes to budgeting. You can use an app or a Google sheet to track your spending. You can choose from an array of budgeting methods. We like the zero budgeting method because it accounts for every penny that comes in or goes out. A lot of people like the envelope method, which allots a specific amount to each spending category each month. Once you’ve spent the money in your envelope, you’re done with that spending category for the month.

Any budget you create should start with your net income and work from there. Include all necessary expenses, including your mortgage or rent, car payment, insurance, utilities, groceries and so on. Make sure to include your savings goals in your budget as well. We suggest paying yourself first, which means making saving a priority.

How Can an Emergency Fund Affect Your Financial Future?

Creating and maintaining an emergency fund is a financial goal we recommend for everybody. Your emergency fund should have a minimum of six months’ worth of expenses and many people aim to have a year of expenses covered. If you suffer a financial setback, you’ll have the money you need to tide you over until you replace lost income or recuperate from unexpected expenses.

The best savings account for your emergency fund is one with a high interest rate that will allow your money to grow. For example, you might want to consider a high-yield savings account like our Savings Plus account, or a money market account. Both of these are financial products that allow savers to have easy access to their emergency funds while earning a higher-than-average return on their deposits.

Once you’ve created your emergency fund, it’s essential to review it periodically. Whenever your financial circumstances or expenses change, you’ll need to revisit your fund and may need to add to it.

How Can Setting Financial Goals Improve Your Savings?

We’ve already mentioned financial goals, but let’s talk a little about why they’re important and how to set them. Financial goals can be things that take just a few weeks to achieve or they may require years of discipline and saving. Here are some common financial goals to consider:

  • Creating an emergency fund
  • Paying off credit card debt
  • Saving for a down-payment on a home
  • Saving for a family vacation
  • Investing 10% of your income for retirement
  • Teaching your kids about responsible money management
  • Setting up a college fund for your kids

These are just a few examples. When you set goals, you won’t lose track of the things you want to do with your money. You can be working toward multiple goals at the same time. For example, many of our members have multiple savings accounts that they use for different goals. Finding the right financial product for each goal can be helpful in pursuing and achieving your goals.



What Steps Should You Take to Reduce Debt Effectively?

One of the most common financial goals our members talk to us about is reducing their debt. Not all debt is bad. In fact, carrying different types of debt can improve your credit score. Revolving debt might be from a credit card or line of credit. Installment debt refers to things like mortgages, personal loans and car loans.

The best financial advice we have about paying down debt is to choose a debt repayment method and build it into your household budget. Here are three methods to consider: Call Out

  • The avalanche method starts by paying extra each month toward the balance with the highest interest rate. Once that’s paid, you roll the extra payment down to the next highest rate, and so on.
  • The snowball method starts by paying off the smallest balance first and rolling up to the next highest, and so on.
  • The snowflake method involves making extra payments on every balance, every month until all your debt has been paid off.
  • Debt consolidation involves consolidating your debts with a personal loan, second mortgage or a balance transfer credit card. Usually, you’ll end up with a lower interest rate and lower monthly payments.

These methods can work with credit card debt and loans. If you make extra payments on a loan, be sure that your lender will put the extra money toward the principal of your loan and not interest.

What Are the Benefits of Investing Early in Life?

Investing early in life is the best way to make sure you’ve got enough money to retire comfortably. Compound interest allows your investments to grow constantly and over time, that interest can turn into exponential growth. Quote from blog

When you invest at a young age, you can afford to take risks. You may want to work with a financial advisor who can work with you to make smart investment choices that will help you throughout your life.

With the right advice and financial planning, you may be able to retire early and travel the world, buy your dream home and do anything else you want to do without worrying about money.


Your Personal Finance Checklist

Here’s a personal finance checklist to help you form good money and spending habits and achieve your most important financial goals:

  • Pick one or more money tools to use (apps, software, etc.)
  • Total your net monthly income
  • Gather bills and determine your monthly expenses
  • Total your debts
  • Set savings goals
  • Choose a debt repayment method
  • Set SMART financial goals
  • Create a monthly budget
  • Create an emergency fund
  • Pay yourself first (make saving a priority)
  • Open or contribute to a retirement savings plan
  • Diversify your investments
  • Teach your kids about money management
  • Choose the right accounts to help you meet your goals
  • Revisit your budget at least once a year or as often as needed when your financial circumstances or goals change
  • Review your portfolio and rebalance it as needed
  • Work with a financial planner to help you get a handle on your money

You may want to break down some of these items into smaller tasks. For example, your retirement savings line item might be broken down into enrolling in an employer-based plan or opening an IRA for yourself and your spouse.

Get a Handle on Your Finances with Addition Financial

Getting your finances in order might seem like a big job, but it can be easier than you think with the right guidance. The top financial habits and checklist that we’ve provided here can help you get a handle on your money and work toward your biggest and most important money goals.

Do you need a hand with investing and money management? Click here to learn about MEMBERS Financial Services and book an appointment today.

The content provided here is not legal, tax, accounting, financial or investment advice. Please consult with legal, tax, accounting, financial or investment professionals based on your specific needs or questions you may have. We do not make any guarantees as to accuracy or completeness of this information, do not support any third-party companies, products, or services described here, and take no liability or legal obligations for your use of this information.