10 Amazing Money Tips to Try Right Now!
When it comes to money, everyone could use a few tips to provide a jumpstart to their financial situation. I currently employ all of these tips because they are the best practices, and they actually work! It would be wise to follow these tips if you want to be successful in accumulating savings. Most importantly, these tips help you avoid following the herd of aimlessly wandering broke people. Get out of the rat race and focus your thoughts, philosophy, and actions on mastering the following practices.
Tip #1: Follow the 50/30/20 Budgeting Ratio
This ratio tells you to spend no more than 50% of your take home pay on necessary expenses (housing, car payments, etc.), 30% on lifestyle expenses (groceries, cell phone, cable, etc.), and 20% on savings goals. So if you are planning to move into a new apartment, you need to cap your necessary expenses (rent, utilities, car payment, car insurance) at 50% of your take home pay. Not honoring this ratio is why most Americans are struggling with money.
Tip #2: Automate Savings.
If you rely on yourself to click a button that transfers your savings from your checking account to the correct account, it will never happen. Instant gratification, loss aversion, and consumer spending will always subconsciously take priority. Take your feeble discipline out of the equation. Setup a transfer that triggers every month, no exception. Set the amount at half of what you believe you can save, we tend to overestimate our abilities for future events.
Tip #3: Verify your W4’s are correct.
Most people I consult have no idea what the W4 forms are or how to fill them out. If you are single and have one job you should be claiming 2 federal exemptions (1 because no one can claim you, and 1 because your single and have only one job.) An easy sign that reveals you need an adjustment is a large tax refund. Use this calculator to reveal what you should be claiming.
Tip #4: Intentional Spending.
The easiest way to control your money is to plan your spending the month before. Intention spending doesn’t restrict you from spending, it gives you permission to spend without regret. An example of being intentional is the refusal to “freestyle” and impulse items that were not a part of the original plan. You should also set attainable goals, the more realistic the plan, the better your chances are at adherence.
Tip #5: Budget. This topic is also very similar to tip #4. A budget allows us to plan where our money goes. Budgets give you permission to spend and keep you on your planned path. How else will you know that you’ve spent too much on shoes, restaurants, and personal care? A budget is like the out-of-bounds line in sports, the goal is to stay within the lines or the offender will be subjected penalties.
Tip #6: Ignore Advice and Actions of the Non-Wealthy. The only advice you should implement is the wise advice of experienced successful peers, coaches, or fiduciary. Most people get advice from broke friends, family, and neighbors. If you want to win with money, seek the advice of “winners”, they are always happy to share exactly how they came to be a successful person.
Tip #7: Use a Cash Envelope System. Cash envelope systems work! The major reason they work is because they use loss aversion against you. Credit card swipes have very little emotional stimuli attached to the process of spending. However, cash has tons of emotional stimuli attached. The smell of money alone brings us back to our childhood allowances visits to the local grocery store to buy snacks. As we see dollars being broken down into smaller amounts, there is a pain associated that spending. In addition, there are several studies that have proven consumers overspend greatly when using plastic, vs. cash.
Tip #8: Put an Emergency Fund in Place. An emergency fund is the first step to building wealth and protection from deviation from your plan. If you are saving towards goals an emergency fund takes care of the small financial hiccups of life. Imagine paying cash for college and experiencing a major car repair of $1000. Not having an emergency would result in missing an entire semester! An emergency fund is an insurance policy for unexpected events. The question is not “If an event will happen”, the question is “When will the event happen”.
Tip #9: Make Use of Financial Mobile Apps. There are hundreds of apps that are useful for money management. A few of my favorites (Free) are Mint (overall financial position), Qapital(visual savings), EveryDollar (long-term budgeting), Credit Karma (Free Credit Scores), and Acorns (round-up change investing).
Tip #10: Track Your Spending. There are dozens of ways to track where your money is going. However, I believe Mint is the simplest solution. It tracks you debit and credit card swipes and actually shows you what percentage of your money is being spent, and where. It also gives you overspending warnings, tells your net worth, and lists your credit score.
Hope these tips help you earn more money, please subscribe and leave a comment!