The last post I wrote about getting a One Million Dollar Idea sparked a lot of interesting comments about the importance of personal finance.
When it comes to Internet Marketing not many people talk about personal finance. This is generally because a ‘personal fiance’ blog will talk about how to save money and how to spend less, and an ‘internet marketing/entrepreneur’ blog will focus on how to make money.
But personal finance is extremely important when making money online. Personal finance determines what you do with your money and how effective your money is.
You could earn a million dollars a year, but if you waste that money you will be no better off and your life will still be the same. However, if you have good personal finance skills then you can save and invest your money and you can continue to grow wealthier and wealthier without doing any work. Your life will be much better.
Here are some of the top personal finance tips I can offer you
Spend Less Than You Earn
This is the 101 of all personal finance. Without this skill you will continue to get in more and more debt and will become poorer and poorer. By spending less that you earn you will have money left over to invest.
Save and Invest The Rest
There are two ways to make money. You can either work for money or you can get money to work for you. By saving and investing whatever you don’t spend you are getting your money to work for you.
If you put $1,000 into a bank account and leave it for 12 months it will earn $50-$100 and you won’t have had to do anything. Say you have $1,000,000 in the bank, then you could be earning $50,000-$100,000 EVERY YEAR for doing absolutely nothing!!!
This is why you should invest your money.
Enjoy The Power Of Compound Interest
Compound interest is beautiful. Compound interest is when you begin to earn interest on your interest. This is how your wealth grows exponentially. If you start with $1,000,000 after 12 months you earn $50,000. You you then invest that $50,000 you will be earning interest on the full $1,050,000. This number gets bigger and bigger and time goes on and the interest you earn will get bigger and bigger.
Now I know all you guys have LOADS of personal finance tips to share. So please share them in the comments section below. Back to subject on Making Money Online next post.
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January 21st, 2009 at 6:59 am
Investing is good, but business are very risky. The question to me is not investing, but productivity of that business..
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Make $200 a Day On Google (2 comments) Reply:
January 21st, 2009 at 8:47 pm
I agree. They need to start teaching young people about personal finance. Nearly half of them wouldn’t be in debt by the time they turn 22 years old, Like i did. They need to make a personal finance class a part of the highschool circulum. it should be required just like sex education
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January 21st, 2009 at 10:11 am
I agree that business is very much risky but we need to take risk.
Saving from what you earn is really a the best thing to do and that amount which you have saved, think about investing it or something to make it double, triple, or even higher.
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January 21st, 2009 at 10:35 am
The truth is I think doing those things is really hard. I mean everytime I see people losing a lot of money, getting bankrupt and at the end they always say they made mistake. Its always been the case.
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January 21st, 2009 at 2:35 pm
Expanding on your spend less than you make concept, it’s really important to keep track of where your money is going. It’s easy to blow your paycheck and sit there scratching your head at the end of the week wondering where it all went. By keeping track of your finances, you can evaluate unnecessary expenses and figure out where you can gain income.
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January 21st, 2009 at 8:37 pm
Are you completely retarded? Are you aware that interest isn’t “FREE MONEY!!1!1″ but it’s just the depreciation of the value of your money. For the last few years, bank interest has been below the inflation of the dollar in real terms. Think about that…
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January 21st, 2009 at 9:21 pm
your first point is so important. We live in such a instant world where everyone wants everything now. Because of this people are buying things that they cannot afford.
I try to tell all my friends, “Don’t buy anything, unless you have the cash to pay for it.”
Tom – StandOutBlogger.com’s last blog post..Opportunities: 3 Keys To Make Every Opportunity Count!
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R&B Haven (9 comments) Reply:
January 22nd, 2009 at 5:10 pm
It’s all about keeping up with the Joneses
. As soon as one person gets a new iPod or sleek new car, suddenly you’re evaluating yours and feel like it’s not worthy anymore. We need to keep in mind that everything won’t always be new, but that it doesn’t lose value just because of that.
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January 21st, 2009 at 11:53 pm
Short but very informative. I currently am investing money
Its the smart thing to do
Dennis,
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January 22nd, 2009 at 3:55 am
Ah, compund interest. Brings back memories of Algebra 1…. yuck…
Very good post (I need to learn how to save my money…)
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Harish (80 comments) Reply:
January 22nd, 2009 at 2:54 pm
I have been learning the importance of saving money from some of my personal experiences. We must definitely learn to save money.
good post ryan
Harish’s last blog post..Blog Review – Split Stack
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Harish (80 comments) Reply:
January 22nd, 2009 at 2:58 pm
sorry I mistakenly replied to this comment instead of standoutblogger’s comment
Harish’s last blog post..Blog Review – Split Stack
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January 22nd, 2009 at 7:35 am
You could not be any more right about what you said in your post. It’s amazing we don’ t teach investing and money making in our school systems. Sadly, many people do not even have the discipline to save.
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January 22nd, 2009 at 1:13 pm
In this current climate, this is a very appropriate post. Sometimes people are TOO ignorant and tend to think that ‘personal finance’ is a complicated subject and that its for ‘tight arses’. Well, let me tell you this, if you cannot control your personal finances then forget about making money online (or indeed offline).
I would also add to your post the importance of adding multiple streams of income to ones personal finances, especially in this financial climate – you cannot just rely on a 9 to 5 check!
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January 22nd, 2009 at 2:36 pm
Personal finance is an issue many people struggle with at the moment.People get in debt and lose their jobs, this would be the best time to look for additional income from the internet.
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January 22nd, 2009 at 4:20 pm
Spend less than you earn: Golden words indeed! Guiding principle of any sensible person’s life.
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January 22nd, 2009 at 4:57 pm
What a concept, spend LESS then you make! Unbelievable how many don’t realize this.
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January 22nd, 2009 at 7:48 pm
“The most powerful force in the universe is compound interest” — Albert Einstein
There is some dispute over whether or not the quote is really attributable to Einstein, but there is no doubt that compund interest is powerful. Regardless of the crazy economy, it pays to invest and let it sit and earn interest.
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January 23rd, 2009 at 2:17 am
There are a ton of people out there losing their jobs these days. Personal finance will be a huge topic and I’m not sure why I am not seeing more posts/articles about it.
Everyone I know is cutting back, spending less and looking for extra income sources. Perfect time to help this growing market.
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January 23rd, 2009 at 4:31 am
I agree with you, when it comes to personal finance, people must bear in mind that they need to live within their means. Know your wants from your needs and stick to it. Great post, makes everyone wanna think about being frugal now.
Socal Contemporary’s last blog post..Elat Collection Rug
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January 23rd, 2009 at 7:33 am
I think being frugal is a good tactics for hard times,time passes quickly and investing will go a new spiral,personally I am not against it ,and sure it may be considered as developing but just for a short period of time to see the result and to take it under the control.
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January 23rd, 2009 at 1:18 pm
If I’ve known how to manage my finances a couple of years ago I would have saved a LOT of money.
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January 26th, 2009 at 4:06 am
It would be great if they taught financial awareness in high school but the teachers would have to learn it first.
Building a business online isthe best and least expensive way to get ahead. Spend less than you make.
Molly
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January 27th, 2009 at 12:04 am
Man oh man, is this one of the most valuable pieces of advice in the game. As a ‘rookie’ in the money making game, I always had a problem with spending the money I earned and being left in a jam when I had none in the reserves.
Troy – VIPMillionaireLeague’s last blog post..Article Marketing Insight
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January 28th, 2009 at 1:14 am
i want to save money in bank
but i don’t have money
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January 28th, 2009 at 10:46 pm
These are great tips, you should always put money in the bank and let the interest build up, it is like you are making money doing nothing.
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January 31st, 2009 at 3:31 am
Our school offers a personal finance course which I actually took last year and has made me aware of a lot of details that EVERYONE needs to know.
The problem most people face when they make money online is that even though their making money off of advertising they tend to think that they can spend more in return.
If your ever going to make a profit you need to pick a tight budget and stick to it no matter how much money you are making.
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February 6th, 2009 at 11:56 pm
It’s true, youth today need to be more educated about how the financial system works. In addition, government should step in to reduce the excessive “smoke and mirrors” the banks try to sell to uninformed youth. Great movie to watch for everyone is Maxxed Out, Im pretty sure its available on veoh.
, missed my lecture but it was worth it.
I actually had a long discussion about this matter with the guy who came to fix my shower yesterday in my dorm room
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February 17th, 2009 at 5:46 am
It seems great. I am subscribing now. Thanks for sharing a lovely information with us
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February 17th, 2009 at 6:40 pm
Personal finance is the reason why I seek income from blogging
I agree that you should invest the money you earn. Not everything, of course, but a part of it. A bank account is the traditional aproach, it won’t give you as much as other solutions, but it’s safe. For anyone that has the money, buying houses is a great investment if done right. Renting it can bring lots of passive income every month.
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February 17th, 2009 at 7:12 pm
I wouldn’t invest my money right now in banks either, except for a debit account. Interest rates are shot anyways, is it worth it to invest with a measly 2% interest rate? That doesn’t really cover the risk factor.
In addition right now is one of the worst times to buy a house, unless you have an investment horizon of several years. House prices are supposed to keep falling for most of this calendar year, along with interest rates.
If you really want to invest money I would say Forex markets are your best shots. During the next three months the australian dollar (AUD) is expected to appreciate against the USD, and the GBP is supposed to hits its low point. THerefore if you take your USD now, buy AUD, and then in three months use the AUD to buy GBP and then hold the GBP until it the end of the year when it starts to rebound again and then sell it to get dollars.
However right now your best bet is to not invest and see what happens in the next month. Once things start to pick up is a much better time to invest your money.
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March 2nd, 2009 at 6:08 pm
It’s interesting to see that some of the younger guys are thinking about personal finance. I remember when going through school, there was only one guy that was saving for his future. His parents had started an RRSP for him and he’d been contributing since he was in his 20’s.
I’m doing the same with my 6-year old. He gets a small allowance but we’re teaching him how to use his money. Amazingly enough he’s saved $50.00 in about 6 months. He understands that if he spends it all – he is out of luck so before he buys the Legos he loves, he thinks about what else he wants.
Funny thing – the other day he asked me “dad – how can I get more money?” – my response (for a 6-year old) was “study, work hard and start your own business” – to which he replied “hmmm”. I don’t know what he’s thinking but it was an interesting question from a 6-year old.
Mo
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March 2nd, 2009 at 11:04 pm
[...] is a link to a great post about the importance of personal finance over at The University [...]
March 26th, 2009 at 5:42 am
Excellent tips for personal finance. It’s really helpful for recession time and make money.
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April 10th, 2009 at 8:41 am
Very helpful and impressive tips for money making and financing ourselves. Good slice to digest. Keep writing in this way.
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January 18th, 2010 at 9:40 pm
My number one rule is to save! save! save!!! Without the security and cushion of a few extra bucks how will you feel comfortable taking the risks required to make money?
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June 11th, 2010 at 1:57 am
Save is definitely the number one rule.. but I guess it also depends on where you’re from. Some countries’ wages doesn’t balance with their expenses….could barely pay the monthly bills
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