While the internet is not short on advice on how to invest or park your money – these presume that you are already financially literate. The fact is that financial literacy remains shockingly low. For example, in the United States only about 65% of graduates possess basic financial skills and knowledge. Worse still, only 19% of high-school grads have that basic level of financial literacy. It is not uncommon to hear, anecdotally, from friends and family how they are already in debt and find it difficult to rein in their spending.

This is very troubling and being in debt can be one of the most de-motivating life experiences ever. Thankfully, a few simple basic financial principles (while it may not necessarily make you rich) can help you steer your financial life into order.

Financial Tip 1: Don’t spend more than what you earn

This sounds like no-brainer but many people are spending more than they earn and not realizing it. For example, a Huffington Post report in 2012 notes that more than 50% of Americans spend more than they earn and don’t actually realize it! Take a close hard look at your spending habits and assess if you are spending more than you can afford. Of course one simple and accurate way to keep track of your earnings/spending is to track it which leads me to point 2…

Financial Tip 2: Track all your ins and outs

Track every single cent. You need to bean-count for this particular tip but it is absolutely crucial that you do it because you’ll than be able to be shocked by how much you actually spend! With free smart phone apps, there’s no reason and no excuse for you not to track your ins and outs. I’ve used quite a few apps to track my ins/outs but the best I’ve found so far is MH Riley’s spending tracker. It is absolutely free and I like it because it is dead-simple and nothing too fanciful.

Keeping your ins and outs is a critical first step towards ensuring you don’t spend more than what you can afford!

Financial Tip 3: Prioritize debt reduction but always save

If you’ve debts to clear – you should prioritize that because, generally, debts snowballs and gets more expensive as you delay paying it off. But that does not mean that you can’t save! In fact, it is good practice to both save and reduce your debt. For example, instead of allocating $300 to service a monthly car loan; you could cut it down to $250 and save that $50 every month. Not only are you taking the first step of building a small sum of money that you can use subsequently but you’re also cultivating the saving habit.

Financial Tip 4: Open at least two bank accounts

This is an administrative/psychological tip that I found most useful. (I actually have more than 2 bank accounts). What I found was that it is helpful to use one bank account as the designated ‘spending’ account and the other as your ‘saving’ account. So all that you save goes into your ‘saving’ account and you can keep seeing the money pile up and all that you need to spend comes out from your ‘spending’ account. I found it useful organizationally as well and makes things crystal clear.

Psychologically, it helps to see that untouched saving account grow bigger and makes me even more committed to growing it larger.

Financial Tip 5: Set specific financial goals

For goals to be effective – they need to be time bound, specific and action oriented. Stating, ‘I want to be rich’ is fine but unhelpful. Stating ‘I want $3000’ is slightly better but still not very useful. Stating ‘I want $3,000 in 12 months through saving $250 each month starting this month‘ is good and has all the elements mentioned above. Obviously your goals can also be about debt reduction and spending reduction although setting saving goals are central in the set-up of any financial goals.

Financial Tip 6: Watch your financial thoughts

Do you catch yourself saying ‘I can’t save $X in X months’ or ‘I won’t be able to pay off my debt’? If you do that, start changing your negative thoughts. While it may be true that you’re unable to save $x months in x months but saying ‘I can’t do this’ will not help change your reality. A better way would be to reframe and ask ‘how can I save $x?’ and ‘ what can I do to save $x?’. While you may not have the immediate answer, thinking of it that way will make your subconscious brain work feverishly towards giving some plausible answers and propel you into taking action.

Financial Tip 7: Ditch the credit cards

Just ditch them. Not only are they insidious, they can bring you unnecessary headaches and stress. Hidden fees here and there, annual fees, overdraft charges, late interest charges, etc. You can do without that. Stick to cash and debit card. Unless it is absolutely necessary, spend only what you have.

Financial Tip 8: Educate yourself

Read up on investing, savings and how to think abundantly. One of the best books I’ve ever read (like ever ever!) is ‘Think Rich, Grow Rich‘. It shifted my entire perspective on how I see money and the relationship I have with money in a very positive way. I am much richer thanks to that book. I continue to read widely on financial books. Go to libraries and book stores, borrow, buy and read widely. Also, tune into news programs from time to time and keep yourself abreast on what is happening around the financial world.

You may not particularly like reading or knowing financial stuff but it is an inescapable fact of our lives!

Financial Tip 9: Kill recurring vampire fees

Are there some add on services to your mobile phone bill that you don’t really need? Is there some fee in your cable bill that you could do without? Perhaps there’s some magazine subscription that you’re subscribed to that you don’t really need? Do a brutal appraisal of these ‘vampire fees’ and keep only what you think is really necessary.

Think also of your spending habits. Are you having 3 cups of coffee a day? Can you make do with 2 instead?

These blood sucking fees adds up to quite a fair bit in the long run.

Financial Tip 10: Learn to grow your wealth

Once you’ve got the basics done, it is time to explore how you can grow your wealth. You are never too young or too old to start learning how you can grow your money. One simple way would be to speak to people around you that have had successes or experience with managing their money. It could be your parents, your friends or even your partner. Find out what is the best way to invest and grow your wealth – it could be starting a business, taking on extra jobs or investing. It is up to you to find out what modality is best but you should not be ‘comfortable’ with just an earned income because ‘comfortable’ is a risky strategy!

(Usual disclaimer applies – this does not purport be any financial product/advice and you should always seek professional help for your financial needs!)