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Personal Finance for Beginners by Honeygain

Updated: Feb 2

For most people, the new year comes with new personal finance goals. 2021 is no exception. Whether you are making an investment, creating a budget, or working on your finances, you need a lot of information. Personal finance is a sore subject for many people. Not because they lack money, but because they lack the financial literacy to handle their money. If you find yourself overspending, living above your means, or neck-deep in debt, something has to change.

Formal education will make you a living; self-education will make you a fortune.

-Jim Rohn

As of October 2020, the personal savings rate (percentage of income left after paying taxes and spending money) in U.S households was 13.6%. Additionally, most households live from paycheck to paycheck. Learning the basics of how money works will increase your savings rate and ensure financial independence. To help you reach your financial goals, we have put together a short guide to personal finance for beginners. Have a look.

What is Personal finance?

Personal finance refers to your ability to manage, save, and invest your money. It is about your financial goals and how you plan to achieve them. It also focuses on:

  • Spending

  • Saving

  • Taxes

  • Investing

  • Insurance

  • Retirement

  • Budgeting

  • Loans and credit facilities.

  • Estate planning.

For most people, all the above actions are associated with the rich and famous. However, learning how to manage your money is a skill set that each one of us should have. Here is why.

Why is personal finance important?

Financial literacy creates a clear path towards financial independence but so does winning the lottery, right?


Winning the lottery makes you instantly rich; it does not guarantee that the free money will last. However, learning how to manage your money can guarantee long-term financial growth and sustainable financial habits. Personal finance for beginners can help you:

  • Reduce the burden of debt

  • Increase your net worth.

  • Increase your chances of financial freedom

  • Improve your quality of life.

Clearly, getting a good grasp on your finances does more than increasing your bank balance. But how exactly can you improve your finances?

How to improve your personal finance

1. Budgeting: Live within your means.

A lot has been said about living within your means. However, nothing says it better than this quote by Calvin Coolidge:

There is no dignity quite so impressive and no independence quite so important as living within your means.

Living within your means does not necessarily mean giving up necessities. Instead, it encourages you to create a sustainable lifestyle. One that allows you to cater to all your needs within your current financial capabilities. Look at it this way. If you earn $800 a month but spend $1,000 a month due to frivolous spending, you will accrue a lot of debt. However, if you keep your expenses low, you will meet your needs and avoid the debt trap. Luckily if you need extra money for your lifestyle, you can make money online by using Honeygain.

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2. Pay down high-interest debts

Debt can be crippling if not when mishandled. Taking a loan or delaying your credit card payments often comes with additional charges and interest payments. In fact, your debt can grow even if you do not spend any more money.

Our advice is to ensure that you confirm interest rates with loan providers or credit card companies. This way, you know what you are getting into. Remember, a little goes a long way, so keep your loan repayments regular. Consider channeling some of your smart passive income into debt repayment to quicken your repayment process.

3. Create an emergency fund and take up an insurance policy

Emergency funds and insurance covers have one thing in common. They offer financial protection against disasters. Ideally, your emergency fund should cover up to 3 or so months of basic living expenses. If you lose your job, experience business failure, or a medical emergency, you have something to fall back on.

Insurance is more complicated. Taking up an unnecessary and expensive insurance policy is detrimental to your finances. Consult your peers and different insurance firms before making a decision. Additionally, you can ask yourself:

  • Do I need it?

  • Are the terms favorable?

  • Can I afford the premiums?

  • Does it provide adequate coverage?

4. Create a smart passive income stream

Passive income is a great way to develop your financial independence. You can use apps to make money online or earn money with your smartphone. As our app Honeygain.

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Honeygain allows you to make money online by sharing your internet connection. It offers you numerous benefits, including earning free money. By generating passive income, you can meet all your financial needs and goals without stressing about it.

5. Make investments

One sure way of increasing your net worth is to make your money work for you. No millionaire or billionaire worth their salt ever made money by keeping their earnings in a savings account.

Don’t let your money sit around doing anything. If you have a stash of money that you don't need to use immediately, you can:

  • Put it into stocks

  • Invest in real estate,

  • Invest in a high-interest CD,

  • Invest in money market funds,

  • Start a business.

6. Save for retirement

For most people, financial independence tends to wither after retirement. Without stable income or pensions, most retirees are forced to depend on their families. This often results in decreased quality of life and financial strain on households.

A great way to overcome this is by saving for your retirement. You can do this by:

  • Making regular contributions to your 401(K);

  • Matching your employer's contributions to your 401(K) and taking advantage of this free money;

  • Establishing an individual retirement account (IRA);

  • Reducing your expenses;

  • Automating your savings.

Ready to start planning your Personal finance?

Personal finance is a journey. Like any other journey, you may stumble and fall. The trick is to keep our eye on the goal by creating clear, specific, and attainable financial goals. Remember, financial independence doesn’t rely on your level of income or the lottery. It relies on your financial habits.

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