Updated on 09.17.14

10 Important Personal Finance Tips I Have Learned

Trent Hamm

Over the past three years, I’ve had countless opportunities to reflect not only on my own personal finance and life journey, but that of thousands of readers who have contacted me over the years with questions and stories.

Along the way, quite a few principles for personal and financial success began to appear. These same features pop up again and again in people’s stories and comments – and I find them to be deeply true in my own life as well.

The single most important part of personal finance is truly knowing yourself.
Why do you buy the things that you do? Why are you worried about this situation? Why do you feel this way about this product? Why do you respond to guilt in this way?

The answer to all of these questions lies with introspection. The answer to all of these questions is also a tremendous boost when it comes to personal finance. If you understand fully the internal reasons why you desire something, you can work through those reasons, validate them or throw them aside, and then make a clear, enlightened, and rational decision about whether to acquire it.

The more introspection you do, the more naturally the true answers to those questions become and the easier it becomes to recognize your more dangerous and frivolous impulses for what they are. This leads not only to tremendous financial success, but great personal success as well.

The second most important part of personal finance is setting clear, concrete goals.
This covers everything from daily to-do lists to a lifetime plan – and everything in between.

You can’t go anywhere if you don’t know where you are headed. The more specific and clear your goal, the easier it is to head in that direction. The more concrete your goal – in other words, a goal that has clear and realistic steps to get there and has a clear definition of achievement – the easier it is to achieve it.

I spend some time every week defining and re-defining my own goals. Doing this helps me keep in mind where I want to go and what I need to be doing today to get to that point. Over the last few years, this process really has served me very well.

The most valuable resource in the world isn’t money, it’s time.
Money is an infinite resource – you can always acquire more money. Time is a finite resource – you can never acquire more time.

We earn money through how we use our time. The more money we can earn in a given amount of time, the better off we are. Of course, the contrary is true – we spend our money making the remaining time we have more pleasurable.

The question that often entangles people is defining what exactly pleasurable time is. The definition is different for everyone, but I can say for certain that one thing is true: there are many people and marketers out there attempting to muddy the water for you. Advertising tries to make it seem as though using their product will make the time you have more pleasurable, even when it often won’t.

Again, it comes back to knowing yourself. What is your idea of pleasurable time? For me, my time isn’t made more enjoyable by having a name-brand household product. My time is made more enjoyable by having a product that gets the job done well at the lowest possible cost, freeing up my money to create more pleasure in other areas that matter to me.

Money is just a mechanism to improve the quality of our time. The question is whether or not we understand ourselves well enough to do that.

The more supportive people you have in your life, the better off you are.
Supportive people in your life make countless good things possible. They provide connections. They open doors. They provide advice. They provide help for your challenges. They support you in whatever you choose to do. They help build your self-esteem. They’re not necessarily just yes-men, though – a good supportive person can provide fierce criticism when it’s warranted.

The more you migrate towards supportive people in your life, the better you’ll feel about yourself and the more capable you will be to handle the challenges that life throws at you.

The fewer unsupportive people you have in your life, the better off you are.
On the flip side of that coin, removing unsupportive people from your life also improves the quality of your life.

Unsupportive people criticize you and damage your self-esteem. They take from you without replenishing. They aren’t there for you when you need them, but they expect you to be there for them when they need you.

These relationships devour the energy and passion and resources from your life without providing anything of value in return. Ending such relationships – and, ideally, replacing them with more positive ones – is a net positive in your life.

Blaming others for your problems is a dead-end road.
It’s incredibly easy to blame others when something goes wrong. It’s someone else’s fault that you lost your job. It’s the fault of the marketers that you’re in debt. It’s the fault of the lender that you can’t make your mortgage payment.

In each case, though, the blame often falls much closer to home. The willingness to accept that you’re often at fault when things go wrong is a major step towards being in control of your finances and your life. Analyzing those faults and figuring out what you can do differently so you’re not susceptible to such problems is vital.

Yes, sometimes it really isn’t your fault. Yet you did put yourself in the position so that you could be damaged by the ineptitude of others. Was there not actions you could have taken to prevent such things from happening? What can you learn from that the next time you try?

The more time you spend improving and educating yourself, the better your personal and financial life will be.
Virtually every successful person I know has a hobby that improves them in some way. They’re either passionate about reading and learning or some other area of specific interest. Quite often, they have a variety of interests, each of which leads to some degree of personal improvement.

What do you do in your spare time that also improves you? Are you exercising your body? Are you exercising your mind? Are you exercising your soul? Are you exercising your skills and talents?

Time spent engaged in activities that don’t push us to grow leads to one thing: atrophy. Falling behind.

Karma always comes around.
People who act in negative ways have negative things happen to them. People who act in positive ways have positive things happen to them.

It happens over and over again. Why? I think it’s because humans are better at reading each other than many people think. On a very basic level, people can sense what kind of person you are. Are you the kind of person who is constructive and seeks to help and support others? Or are you destructive – one who seeks to attack and bring down others? Which side of the coin do you enjoy – the success story or the failure story?

Your actions define you, even the ones that you think are hidden from everyone around you. Those choices affect your personality – they alter who you are. Choose good acts and you become a better person, one others are more likely to help. Choose negative acts and you become a worse person, one that drives others away. It’s up to you, with every little action you take.

There are very few aspects of your life that cannot be changed.
Most aspects of who you are – your financial situation, your skill set, your appearance, your social circle, even your personality – can change and improve with focused work in those areas. Don’t accept the things about yourself that you don’t like – work to change them.

Yes, some aspects cannot be changed. Some people have medical conditions that are difficult to overcome. Others may struggle with psychological issues. However, these are often burdens to fight through that can make you stronger as you overcome them, like ankle weights on a figure skater.

You don’t have to be content with your lot in life. Recognize that the place you’re at can merely be a stepping stone, and strive to step above it.

Reliability and functionality worth a premium.
Whenever I choose to make a purchase, I expect that the item I buy will be able to do the job I want it to do with minimum effort and fuss. I purchase items with a particular task in mind – chopping vegetables, keeping my food cold, keeping track of my exercise routine. When I use the item, I expect that it will accomplish that task as easily as possible – or else I wasted my hard-earned money on it.

Thus, I tend to gravitate towards spending more on well-made items that are reliable and do the job I want them to do. I want a trash bag that I can fill to the brim without worrying about breakage, so I don’t buy the cheap ones – I buy the ones recommended in Consumer Reports. I want a knife that will stay sharp through all of the chopping needed for vegetarian chili, so I invest in a high-quality chef’s knife that will last forever.

Time is the one truly finite resource we have and I don’t want to waste it trying to make do with a poorly-made product. I’m far better off owning fewer things, but being sure that the things I do own work well and do what they’re supposed to do.

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  1. Baker @ ManVsDebt says:

    And because of your three years of hard work hundreds of thousands of people can shave time off there own learning curve in these areas.

    Great work, man.

  2. jon says:

    Karma? really? More like just consequences to your actions.
    People can do positive things and still have negative things happen to them, or just the opposite.

  3. IRG says:

    Trent, pretty much agree with all you noted.

    But, Karma. Ah, if only. As Jon noted, “good” things happen to “bad/undeserving” people while “good/deserving” folks often get royally “s_ _ _ _ ed.” That’s just life. It’s even more upsetting if you believe that karma is in effect (look around any big company and it’s clear that it isn’t)cause then you are expecting it to be in action–and it often is not.

    that old cliche–virtue is its own reward–is still valid.

    You do the “right thing” because that’s your choice about who you are.

    We’ve all seen plenty of mean, self-serving, selfish, nasty, thoughtless, cruel, hateful folks get ahead n life and stay there. And it can make you crazy if you let it, or worse, harden you or change your own personality.

    Over the years, we’ve all seen people do hateful things in our private and professional lives. However, rarely, if ever, does it catch up with these folks.

    Yea, I used to believe in karma. But you live long enough, you realize that even though it may exist, way too many folks don’t seem to be subject to it.

  4. Marsha says:

    This is a really nice list, Trent. Interesting how the principles are about money and life both.

    Had I written this list, I might have emphasized the importance of delayed gratification, which you do treat with the topic of having goals – but I think it’s more important than knowing oneself. But we differ very little.

  5. John says:

    Seems like these would be applicable in all areas of self improvement.

  6. steve says:

    @ jon & IRG

    Karma? really? More like just consequences to your actions.
    People can do positive things and still have negative things happen to them, or just the opposite.
    Karma. Ah, if only. As Jon noted, “good” things happen to “bad/undeserving” people while “good/deserving” folks often get royally “s_ _ _ _ ed.” That’s just life. It’s even more upsetting if you believe that karma is in effect (look around any big company and it’s clear that it isn’t)cause then you are expecting it to be in action–and it often is not.

    Take a GOOD look at the nasty, mean people who “get ahead”. Haven’t you noticed that they may have wealth but are still unhappy? A thief, or even a greedy person, is always too busy worrying about what they have to truly enjoy it. karma isn’t about the material .. it’s about happiness and peace of mind.

  7. Jen says:

    I call those unsupportive people, who occasionally enter my life, “energy vampires”. They will suck you dry (I’m not talking money)… especially if you’re good hearted and tend to believe the best about people. Once I recognize them for what they are, I gently distance myself, and remove them from my life. I have a lot of good to give, but not to people who wear a mask and take, take, take, without giving anything in return. I am a sucker for underdogs, and this fact has brought some interesting people into my life. :) I think everyone who comes into my life serves a purpose, but not everyone will be in my life forever.

    I also agree with Steve regarding karma. It isn’t material! It’s usually served cold, so even though you may not see it, I believe people who put out really negative and ugly things will suffer the consequences in time. Perhaps long after they are out of your life.

  8. deRuiter says:

    “The harder I work, the luckier I get” said a very successful friend who worked two jobs for several decades, “and the more resentful grow the people who screw up their financial lives with bad decisions!” Speaking as a landlord who has tried 163 cases in landlord tenant court and evicted more than 150 tenants over the years for non payment, IT’S NOT THE LACK OF MONEY, IT’S THE INABILITY TO PRIORITIZE AND SPEND WISELY that causes financial failure. I’ve tossed out a family of four with both parents working. This outfit smoked constantly, kept the fridge stocked with beer, had FIVE TVs and all were running every day 24/7, amid a house FULL of toys, clothes, adult toys, fresh tattoos, new things arriving daily, but the rent not being paid. At my suggestion that these folks hold a yard sale and sell 75% of their stuff to raise money to pay their rent, they became highly indignant. The constable locked them out and they abandonded everything. I held the sale to clear out the place by letting others pay me to remove the clutter. And the then ex tenants rented a new place and continued the cycle. Aside from catastrophic illness (lung cancer for a lifetime smoker is an expected result, not a surprise) most financial screw ups are self inflicted. “Insanity is doing the same thing over and over and expecting a diferent result!” Change bad habits to become a success. For instance, accumulating $80,000 in student loan debt to enter a profession paying $30,000 a year is pretty foolish, yet people do it all the time and then complain that they have crushing student debt. WHAT DID THEY EXPECT WOULD HAPPEN FINANCIALLY?

  9. Kyle says:


    Speaking for them, we weren’t thinking that far ahead. We came from poor backgrounds with parents who had no idea how to handle money and told us that college was the answer no matter what.

    Lesson learned though, I have no one to blame but myself and it’s not too late to turn things around.

  10. Susan says:

    It is my experience that ‘common sense’ is far from being common. Just because a family does not earn a lot of money does not excuse failure to plan ahead. Lots of people in past generations had little education and made little money yet with planning and perseverence they were successful. I am in my early 40’s and I truly believe that a lot of young people (those who may be only 10 years younger than me) expect to start out in life as president of the company. Few people in life have that option.

  11. chacha1 says:

    Susan, you are so right: “a lot of young people … expect to start out in life as president of the company.”

    People just starting their working life need to understand that it’s very likely they will be working for forty or more years. The “twenty years in & collect a pension” days applied to very few people, for a very short period of time. What’s more, the average person will hold at least four long-term jobs (5 to 10 years) in their working lifetime.

    Trent – reliability and functionality are where it’s at, for people as well as things! And as you also said: use it or lose it. Applies to everything, from physical strength to sexual health to mental agility to financial well-being.

  12. #8 deRuiter This is the cycle that persons who were brought up to neglected responsibilities will continue to do. Parents need to teach their children about money management and being responsible then they will bring it in adulthood. Personal Finance is looking at yourself by setting goals and achieving them. Yes one will owed $80,000 and collecting $30,000 for salary but this doesn’t stop you from paying off your debts. What we need to do is work gain the experience and move on. No one is employing persons who has no experience and give them $120,000 per month. Experience goes with salary. If you are at a company and has the experience and still not getting the salary then seek another place of employment. There are times we underestimate our true value which we need to stop doing.

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