Money hacks are often perceived to be unbelievable breakthroughs that were only thought of recently where consumers can benefit greatly. This maybe true and there are actually some latest discoveries that can really help you manage your finances better. We all want that extra push to give us an assist in managing our hard-earned money.
Nerdwallet.com explained that the overall American debt stands at $11.74 trillion that covers big ticket items like mortgage loans to student loans all the way to credit card debt and other loan types. This is in part because what we have is a consumer-driven economy and how well the market is doing depends largely on how much the people are spending.
But this economic mechanism pushes people to spend and sometimes, those that are not well versed with financial dos and don’ts fall into debt and unable to climb out. Sure there are ways to fix your debt problems but wouldn’t it be better to just stay away from them in the first place? As most doctors would say, prevention is always better than cure.
In your pursuit of either totally staying out of prohibitive-debt or paying them off and learning from your ways, understanding how to go about it is crucial. It can be how to get your household budget in order or understanding some tips and tricks that will benefit you in your goal of financial freedom. You need to fuel your drive with sensible financial information that will help you with your financial objectives.
If you are learning how to cook, it is not enough that you know what the final meal would look, smell and taste like. You need to know the steps as well as all the ingredients to cook the meal that you want. If you decide that you want to take up a healthy lifestyle and have the body of a popular celebrity, you need to put a program in place to achieve that goal.
Money tips to manage finances better
Money hacks can help guide you as you try and accomplish your goals. it all starts with the desire to be more proactive and take control manage your finances. Here are some tips in making sure that you are on the right track.
- Rolling over credit card balances when you can pay them in full. Bankrate.com shares that the average annual percentage rate or more commonly referred to as APR is 13.02% for fixed rates and those holding variable rates are at 15.76%. You are charged this rate when you roll-over your balance to the next month through minimum payment on your card. It means you are losing money y paying interest rates on your succeeding bills. The rule of thumb for credit card use is to pay off the balance in full every month. This will keep the the interest rates at bay and help you pay only for the items you purchased.
- Not accounting for depreciation. Think of this for a minute, what was the last item you purchased using your credit card? Was it a household equipment or the latest mobile gadget that came out? Or was it that nice red dress that was on sale and you had to buy it only because it was on sale? Chances are the moment you stepped out of the establishment, the price of that item is already starting to depreciate. Focus on things that will help you in your quest to financial independence and not waste money in buying things that will be of no good in the coming weeks
- Buying used versus brand new. One of the money hacks that you might want to look at carefully is being able to decide when to buy a brand new item or if a second hand purchase will suffice. Some of the things that you can consider buying used can range from clothes to as big as cars and even homes. Learn the value of being able to buy second hand items by looking at the value that you will get out of it with the cost of purchase. If you looking for home gym equipments, it will cost you a fortune to put together brand new equipments. That can be a great investment if it is a business venture but if you are buying equipments for yourself, second hand equipments will do. You might need to change a few padding and cables but it will be less expensive that buying brand new ones.
- Impulse buying is a financial disaster waiting to happen. If you are looking for money hacks, smart spending decisions by being on-guard from impulse buys can do wonders for your budget. A small repair at home does not warrant a power tool to finish the job. When going to the buy an item or even if you are going to do the groceries, always have a list of the things you need to buy. This way, you do not deviate away from the list and the budget that you are working around on.
- Be smart with your retirement fund. Your 401(k) is the primary source of your retirement fund especially when you employed. One of the things you might be missing out is the matching program that your company offers for your 401(k). Be sue to understand the mechanics of how to be included in that matching program and try to max out your contributions every year. USNews.com shares that you can contribute a maximum of $18,000 for 2015. This is one of the money hacks that a lot of people will push you to do because the more you are able to put in your 401(k), the more the compound interest can work on.
Guard your budget against debt
Managing and making sure your finances are stable is an endless job. Even when you get to a point where you are already retired, you still need to monitor and ensure that you have enough funds to finance your expenses. Here are some of the things that you want to to look at to help you protect your budget from debt.
- Build up your reserve fund. Reserve funds refer to emergency fund and a rainy day fund that you can use to address unexpected financial needs. These are expenses that are unbudgeted and can impact your budget greatly. The emergency fund is supposed to address the bigger needs like losing a job or getting hospitalized. The rainy day fund are for smaller emergencies like car repairs or replacing a small home equipment. Make sure that you have both to cover various types of financial emergencies in your budget.
- Automatically transfer funds. One of the money hacks that you can look into is automatically transferring funds from your main account, which is usually where your salary is credited to different accounts. One could be your retirement fund and another one for emergency funds. You can also set up a fund for your vacation trip to help you gradually save for a little bit of rest and recreation. Automatically transferring the funds can help you put away and save the amount even before you get ideas on spending it because of a sale event.
- Live below your means. Otherwise known as frugal living, living below your budget is a great way to save your funds and allot them for future need Make use of automatic transfer to save the money instantly.
Money hacks abound and you just need to make sure that you choose the ones that will work around your current situation. Do an honest assessment of your current financial situation first to understand what your financial needs are exactly. This can help you put together a plan the will work specifically for you.