Some people may assume that if they're not making millions, they don't really need to manage their finances or have financial goals. But without better tactics, it's all too easy to waste money on a daily basis. In fact, only 10% of survey respondents in a study conducted by OnePoll said that it was relatively easy to stick to their monthly savings plan. While you've no doubt heard plenty of financial advice in your lifetime, here are our tips on how to keep your finances snowballing into savings rather than a mountain of debt.
It's not just about net worth and interest rates -- it's about true financial planning and money management techniques. Whether or not you have 401ks, IRAs, high yield savings accounts, or cash under your mattress -- managing your money and financial future is important.
Before you truly begin, think about what your goals are, what you would like to have in your future, and what is most important to you and your long term sustainability. It may be hard, but this is crucial as you get into some of these next steps and will help you make decisions down the road to stick to what you come up with. Don't think purely short-term.
Automate Your Bills
There's a reason why this one is first: it's because no one should ever have to pay a late fee if they don't have to. It's one thing if you can't pay your bills, it's quite another if you forget and you're charged for it. While some people may be understandably wary of forking over their financial information, most well-known sites are safe and accurate enough to justify signing up for this service.
Automating your bills ensures that you won't have to keep track of separate deadlines, and the money is consistently deducted from your account on time, every time. The only catch to this one is that automated bills are easy to overlook even if a mistake is made in billing or you don't need the service any longer. Try doing a quick overview of your account at the end of the month to spot these discrepancies so you can take action.
Invest the Time
One of the biggest reasons why people forego financial management is because it can be both time-consuming and emotionally frustrating. Not only are you forced to compare how much you make against how much you spend, but you also have to ask yourself where and how you can cut back. In the OnePoll survey, it was found that Americans are already actively resisting about six items per week for their budget, making it hard to swallow that that's still nowhere near enough.
These major headaches can be enough to make anyone push this task from today until tomorrow, especially if you've invested plenty of capital into starting up a new business or going back to school. But, as cliche as it is, the only way you're going to get ahead is by confronting the problem head-on.
Hone Your Budget
This tip is a little presumptuous because it assumes you have a budget to begin with, but we'll give you the benefit of the doubt. This tip involves actively looking at the budget because even those created a month ago may need to be updated. For example, maybe you picked up a little extra money through a side hustle or your credit score moved up a few points.
These small adjustments can lead to bigger opportunities if you're noticing the trends. It's also a good way to see if you've over- or underbudgeted for certain expenses and to challenge yourself to a reasonable goal. If you're spending 15% of your budget on going out to eat, try knocking it down a percentage point this month. It can be as easy as cutting out your second cocktail.
Tool Recommendations:
Mint
YNAB (You Need a Budget)
Personal Capital
Tiller Money
Honorable mentions for tools goes to:
- Quicken
- BudgetSimple
- MoneyStrands
Stick to Your Budget
Emergencies threaten our budget every single day, even if that emergency is defined as your having a tough day at work. Sticking to a budget can involve endless paper spreadsheets, but it doesn't have to be that complicated. Apps like Mint are designed to pull all of your accounts together, track your spending, and send alerts for when you've gone overboard (or off the deep end entirely).
One strategy that can help you stick to your budget is to have money taken from your paycheck before you even see it. The reality is that you adjust to the money you make, whether it's a lot or a little. That's why people who make hundreds of thousands a year will tell you that it doesn't feel like that much money. If you don't even allow yourself to see a chunk of your paycheck, there's an excellent chance you'll scale back without feeling that overwhelming twinge of temptation.
Develop a Filing System
Your financial records are the key to proving where your money went, which is handy for things like your taxes. Few people really have the time or initiative to dive into federal tax code, but the list of deductible items can be far more than many realize. If you're not keeping track of related expenses, you can end up giving a sizable tip to the government.
Now is also a good time to start looking into state or citywide laws that apply to you. For example, some states will let their residents deduct federal income tax from state taxes, while others may provide financial incentives for investing in sustainable technology (e.g., solar panels for the home, etc.).
Don't let yourself be bogged down by the endless categories and numerical classifications, it all comes down to cashflow in vs. cashflow out. Taking advantage of these programs can plump up your savings account faster than you think.
Look for Deals
There are discounts everywhere when you know where to look. The problem is that good deals take time to find. If time is money, you may not always be better off finding them. One tip to get around this problem is to make a little headway whenever possible and to be reasonably mindful of what's available.
This can be as simple as Googling a coupon code when you're shopping online, or as drastic as reading every article that debuts on The Penny Hoarder. From introductory credit card bonuses to error fares on flights, there are legitimate ways to conserve your budget without having to give up the things you love.
Find Ways to Invest, Even if it's Just a Few Dollars or Cents
It can seem overwhelming to find ways to invest, and you may think you need to have a lot to invest, but the fact is even pennies add up over time, and with automated ways today to get into investing, anyone can do it! And the payoff down the road can actually be impactful.
Here are some options:
Robinhood
Acorns
Other Tips
- Think about consulting with a financial planner or financial advisor through a financial institution that helps people manage their assets, whether you have a lot or a little, they can give you helpful tips. An example is consulting with Fidelity, who offer free consultations with no requirements.
- Evaluate student loans if you have them to understand how they fit into the picture and what you can do with them
- Think about setting aside some money into an emergency fund. While you may not have a lot of money, having a small backup stash can help you weather unforeseen issues that come up in life.
- If you have an investment portfolio with mutual funds, stocks, or bonds, think about your asset allocation and understand what your long-term goals are and how your strategy adds up to that. If you have no idea or need help, companies like Fidelity can help manage it for you at a cost, or give you some guidance to manage things in a self directed fashion helping you ensure your financial security down the road.
- Think about things like life insurance, family members (or children down the road if you haven't yet started a family). How can you set yourself, and your family up for financial success? Sometimes it can be easier to get things going than you may think. And small amounts today add up down the road!
- Pull a free credit report once a year -- or, have it pulled in automatically via tools like Mint.
- Open a high yield savings account through someone like MutualOne Bank, Ally Bank, or others.
- Consider paying down credit card debt, or shifting it to a card with a much lower interest rate.
Get Some Help, and Use a Virtual Assistant
Ever wonder if you could use a virtual assistant? Or maybe you didn't know they could be an option for you. A virtual assistant is someone who can help you:
- Manage your budget
- Scour for available discounts
- Research whether you apply for state programs
- Keep track of your bills
- Compose pro/con lists for different investment opportunities
- Plan for retirement
- Sort out your financial records
Sound ridiculous to spend more money in an effort to save money? It's really not when you consider that you're likely overspending in a serious way.
With a virtual assistant, you hire a professional for as many hours as you need. When you delegate this responsibility, you clear your mind to focus on far more important matters, such as your career, family, and hobbies.
Handing over your finances to a diligent and meticulous assistant doesn't give you a free pass to ignore your finances, but it can save you hours of frustration and thousands of dollars in the long run. After all, there's a reason why you haven't been following the above advice, and it's almost certainly not because this information is brand new to you.
See how it works with Delegated.com, or check pricing.
Recognize the Reality
There's a darker side of savings that isn't always talked about. Constantly depriving yourself of the things you love can be an exercise in stress, something that will almost certainly show up in your healthcare bills down the line. Giving in to temptation every now and again is better off for you then building up years of anger and resentment. The best thing you can do is recognize when the extravagance is worth it and when it's just eating into your retirement plan.
The state of your finances come down to your everyday decisions. Solid lifelong financial habits are difficult to develop and even more difficult to successfully implement, but thankfully, they're not impossible. As you determine the best path for you, keep in mind that it really is as much about the destination as it is the journey.
