Money Talks, So Should You

6 tips for a solid personal finance life

Mitch Marsden
by Mitch Marsden , NAPFA

In your journey towards personal finance success and whatever that entails to you, you’ll no doubt face a ton of obstacles and setbacks. That is simply the nature of the beast. Still, I believe that these six tips will eventually and inevitably lead you to your desired destination.  
1. Simplicity, Simplicity, Simplicity

Let’s face it: we live in an extremely complex world as it is. There is true power in keeping your personal finances simple. Abiding by the basic truths you’ve already heard from your grandparents like “spend less than you earn,” “keep a budget,” “avoid debt,” etc. are what truly lead to a solid personal finance life. There really is no magic to it, just common sense and personal discipline. I’ve seen too many cases where individuals get caught up in the hype of some complex financial “opportunity” only to find that they had put themselves in a very complicated, stressful, and expensive mess.

Sometimes you’ll be forced to walk through complex financial issues about very important decisions. In those cases, see tip #2 below.

READ: Six steps to a great financial plan

2. Hire a Professional Financial Advisor

When you are faced with very important or unavoidably complex financial decisions, seek help from a professional. Just as you would go to a doctor with a serious health issue, go see an advisor with the serious financial issues. Financial advisors are dealing with this stuff day in and day out – they can help you sift through the complexities and make the right decision.

Don’t try going it alone on the big ones. The cost in fees you pay for the advice is often minimal compared to the benefits, even if the advisor is just helping you avoid the many pitfalls out there waiting to catch you.

Keep in mind, financial advisors are not created equally. Make sure to do some homework and interview several before making a decision. Here is a link to a NAPFA guide that will help you to know what to look for and what to avoid in an advisor.

3. Automate Good Financial Habits

A lot of us know what we need to do to create a strong financial life; it just gets difficult when it comes down to the actual doing. One way you can help yourself with this is to automate the good habits wherever possible.

READ: My 5 tips for building a solid financial life

Some examples of what you might automate include making savings contributions from your payroll check, retirement account contributions, investment allocations, bill pay to ensure bills are paid on time, and paying down debts on an aggressive schedule. Technology today will even essentially keep and track your budget for you automatically if you let it. Yes, some effort is required to set these things up and monitor them periodically, but it is well worth it.

4. Be Honest and Communicate Openly

When it comes to finances, be honest with yourself and with others, especially with your spouse or partner if you have one. If your personal finances walk the line of deceit and secrecy, they will eventually crumble one way or another. The same goes for simple lack of communication. If you have a spouse or partner, you need to be on the same page about money issues. Not only will you have a more peaceful and harmonious relationship, your personal financials will grow stronger and stronger and will have the support needed for you to be successful.

5. Complete Annual Financial Reviews

Take time at least once a year to look over the various financial aspects of your life. A good practice would be to review your net worth, annual cash flow, insurance policies, estate planning documents, retirement and savings accounts, investments and their performance, tax information and any other business or financial information that may apply to you. Taking some time with each of these every year will allow you to monitor your financial progress and make sure that everything keeps running smoothly. You’ll also be able to see when changes need to be made when something no longer applies or becomes problematic.

READ: Three tips for starting a budget

Some people would complete these reviews more often and that is great. For the rest of us, once a year is a good place to start. And before you get too overwhelmed, keep in mind that if you do this regularly, these reviews may take only a few minutes for each topic area.

6. Moderation In All Things

As with most areas of life, there is a balance that needs to be achieved with personal finance. Too much of any one thing is often a bad thing. You frequently hear about the problems of spending too much, but saving too much can also be damaging in a different way. Similarly, focusing too much time and effort on your personal finances may also be just as hurtful as not spending any time on it at all.

Only you can decide what the right mix and balances is, but in all your financial dealings remember that extremes are rarely going to lead you to the solid personal finance life you seek.


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Mitch Marsden is a member of the National Association of Personal Financial Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.