personal finance tipsApparently I’m a millennial.  That I know for sure.  But I’m not so sure about being an expert in personal finance.  Then again – is anyone really an expert?  Personal finance isn’t about making millions.  It’s about making sure you’re not living paycheck to pay check.  Making sure you have enough money in the bank to live a comfortable and happy life.

So while a may not be a personal finance expert, I am living a comfortable life.   But it hasn’t always been this way.  I can remember the stress of looking at my bank account and wondering how on earth I was going to afford to pay my rent.  Luckily things aren’t like that anymore thanks to some changes I made in my life a few years ago.

Create an Emergency Fund

Don’t back yourself into a corner.  Start creating an emergency fund that you can use in a genuine emergency.  Short terms loans are a killer of finances.  They can destroy you.  An emergency fund should help prevent you ever needing to resort to payday or short term loans.

I keep my emergency fund in a HISA (high interest savings account).  The 2.5% interest rate (the standard in Australia), won’t make me a millionaire, but what I do like about this account is the lack of fees.  My money is safe here.

I built this fund by making an automated monthly deposit.  When I had no money this was literally as low as $10 but then during the good times I was able to transfer more across.

Try Microinvesting

I love the idea of investing my spare change.  I’ve recently begun using the app Acorns, which automatically rounds up the spare change from purchases I make and invests it in a fund.  I don’t even notice this process happening.  I’ve only just begun using this app, but I believe this is going to be the future of investing for millennials.  Gone are the days of 10k minimum investments and huge management fees.

Start Making Money instead of just Saving money

Putting money away in a bank account isn’t going to make you a millionaire.  So for true financial freedom you’re going to have to start looking at actually making money.  This may seem like stupid advice.   And I’m not talking about getting a higher salary.  I’m talking about expanding beyond a paycheck and into business.  For example, instead of just enjoying the nice small amount of interest I was getting from $3k I had saved in a bank account, I used this money to buy a website.   This website that I bought makes around $100 per month in revenue.  So it will take me around 3 years for this investment to mature.  But…. I now have an asset worth $3k + a source of monthly passive income.  This is the start of financial freedom.

So there are three of my tips.  If you’ve read this blog in the past, you’ll know I also play around with investing in stocks and using social trading – things I also recommend you try if you’re in a good financial position.