All You Need To Know In Personal Finance

Whether you’re a young professional starting to earn for the first time or whether you’ve been working for over a decade, sometimes managing your finances can be confusing and overwhelming. I mean there are so many things to look into, and so many confusing buzzwords such as high-interest savings accounts, investing, reward credit cards, nectar points, liabilities, and assets. What even is a nectar point and a liability?! Stop panicking! Personal finance is not confusing at all, and ultimately you only need to know four things about personal finance. The vast majority of content creators just love to ramble on to gain viewers’ attention. Let me tell you all you need to know about personal finance so that you can define clear goals and reach them.

1. Spend less than you make

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Basic maths here really, trying to spend more than you make can put you at risk and force you to borrow money, which can get you stuck in the debt spiral. Or even worse you may not have enough money for an emergency. Therefore it’s crucial to track your spending and spend less than you make.  Understandably, some people may not be in a position to spend less than they make and have to take on debt to survive or stretch their budget. If you’re feeling tight financially, you should make increasing your income your top priority.

2. Create a budget and stick to it

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The best way to spend less than you make is to track your spending, create a strict budget, and stick to it. Every time you get paid, sit down for 30 minutes to an hour and plan the next financial period, what you need to buy, what you might be able to wait for, etc. There are many budgeting software available to help you get used to budgeting and improve your finances. Once you’ve worked out a budget you’ll see how much disposable income you have left after necessary expenses and decide what to do with it!

3. Save and Invest

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Brilliant, so now that you’ve worked out a budget, you can start saving towards your financial goals. Before doing so though, you must pay yourself first every time you get paid, which means that you save the amount you have worked out in your budget in your savings account before anything else, then forget about the account until the next time you get paid. This will allow you to be stricter with your budget and build up your savings much faster. You also need to have an emergency fund before saving up for anything else. Then you can start comfortably saving towards any short-term or long-term goals you may have such as a house deposit, a retirement fund, a car, or a wedding.

4. Buy assets and avoid liabilities

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This is one of the most important concepts in personal finance. Assets vs liabilities. Knowing the difference between the two plays a key role in your personal finance journey.

A liability is anything that takes money out of your pocket. Here are some examples of liabilities: personal loans, and an expensive phone you’re paying back. A car if you don’t need it to commute to work, a residential mortgage (yes it still is a liability, even if the house is an asset). Ultimately, anything that’s going to cost you money in the long run is a liability, and you need to stay away from liabilities as they are going to slow down your financial growth.

  • Personal loans
  • An expensive phone you’re paying back.
  • A car if you have other means of commuting to work, or don’t need to commute at all.
  • A mortgage (yes it still is a liability, even if the house is an asset).
  • Expensive subscriptions.
  • Credit cards.

An asset on the other hand is something that puts money into your pocket. Although certain assets can feel like liabilities, if utilised efficiently those can become assets that will help you grow your finances. Here are some examples of assets:

  • A car you use to drive to work.
  • Stocks
  • Index funds
  • A House
  • Credit used wisely- Debt is not always bad, if you utilise it to build wealth such as to start a business or to buy rental properties, you can turn it into a wealth-building tool.
  • Yourself: You are the most important asset you can invest in, which is the most significant way to increase your income which is your primary wealth-building tool. Don’t be afraid to learn new things and step out of your comfort zone.


To summarise, personal finance is not complicated at all, it only boils down to those four important principles. As you start earning more and having better control over your finances you can look into other strategies to build wealth and refer back to those fundamental principles. Most importantly, remember to always have an emergency fund, have a goal in mind and that the most important asset is yourself.

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