R Personalfinance (2024)

FAQs

How do you know when you have enough money? ›

It is enough to live comfortably, but not so much that going out to dinner is no longer a treat. The more money you have, the easier it is to buy special treats more often. If you go out to dinner regularly, then it doesn't become a special treat.

r/Frugal

Over 1 million members belong to the frugal living subreddit. Here, you'll find a wide range of discussions about how to save money in your everyday life. There's advice on reducing the costs of necessities like food and utilities as well as nonessentials like electronics and vacations.

Personal finance is a term used to cover the management of your money, including saving and investing. It also entails budgeting, banking, insurance, mortgages, investments, taxes, retirement planning, and estate planning.

The ability to budget effectively and plan for future expenses can reduce anxiety about potential financial uncertainties. People with strong personal finance savvy can bounce back more easily from unexpected financial challenges as they have the financial knowledge to navigate through difficult times.

By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.

Saving aggressively can grow your savings faster and help you achieve future financial goals more quickly. Aggressive saving means saving at least 30% of your monthly income (reference: Financial Best Life). The larger the percentage, the more aggressive you will be in saving money.

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.

Being financially responsible in a nutshell

The core principle of financial responsibility is that you live within your means. That generally means you spend less than you earn, save for the future and emergencies, and pay your bills on time. Financial responsibility isn't always fun, but it has long-term benefits.

What are the five 5 areas of personal finance? ›

As shown below, the main areas of personal finance are income, spending, saving, investing, and protection.

Dave Ramsey is the founder and CEO of the company Ramsey Solutions, where he's helped people take control of their money and their lives since 1992. He's also an eight-time national bestselling author, personal finance expert and host of The Ramsey Show.

If you start telling people how much you make, you're inevitably going to make people feel bad if they make less than you. And when you make people feel bad about their financial situation, you will no longer get their love and support. Some people will inevitability get envious of your higher income.

2) Your monthly living expenses.

(Utilities, phone, cable/WiFi, food, insurance, transportation, clothes, etc.) Calculate how much money you spent over the past year on all your basic living expenses and divide by 12 to determine your monthly average.

Money experts suggest making a budget, maintaining a log of daily expenditures, and setting specific short-term and long-term financial goals to overcome the feeling of cash crunch.

The most common signs of a financially stable person include having little to no debt, being able to make and stick to a budget, having a healthy amount of money in savings, and having a good credit score. Financially stable people tend to see their net worth increase year over year.

You should keep enough money in checking to cover your monthly bills with some wiggle room – about a month of expenses. That's much lower than the three to six months' worth of expenses you should keep in your savings account for emergencies. Read: Best Checking Accounts.