Admit it, even though you’ve been an adult for a long time, own a car and a house—and maybe even have a Roth 401k and regularly contribute to a savings account—you still have no clear idea on how to manage your money to its fullest. We’re here to change that right now.
The key to getting better with money is to realize something crucial: It’s not a mystical science that’s unfathomable to the average joe. It just takes diligence and a willingness to learn. Hopefully this expansive list of all-things-financial will get you motivate to buckle down and get your money matters under control and working for you. And for more great financial advice, check out 5 Millionaire Money Strategies You Can Use.
Automate Your Savings
Simply set up a preset amount to go to your savings each month (most experts suggest about 20 percent of your monthly income) or use a service or an app like Digit or Qaptial to make saving a painless endeavor. Apps will automatically deduct small amounts from your account and tuck them away into a savings account for you.
Set a Savings Goal
You’re more likely to hit small, short-term goals than larger, long-term goals, so create a timeline that works for what you want in two years or so. Automatic transfers to saving can help with this and also look for a savings account that offers a high rate of return like a credit union or money market account. And for more great money-saving advice, here’s the best way to buy real estate.
Invest in a 529 Plan
If you have kids and are assuming they will want to go to college, set up a 529, which is also called a “qualified tuition plan.” This savings plan is sponsored by a state or state agency and you can contribute up to $70,000 ($140k for married couples) per beneficiary without being subject to the federal gift tax. And remember: You can save money every day with these 18 secrets salespeople don’t want you to know.
Make a Budget
Pick a budgeting system and stick to it. We recommend the solid 50/30/20 budget, which translates to 50 percent for necessities, 30 percent for luxuries or wants, and then 20 percent back into savings or paying off debts. But take it easy: There’s no need to get into the nitty-gritty—looking after every penny spent—as long as you live within your means and are on track to make your goals.
Buy Cars with Cash
Unless you can get a really good loan with a great interest rate (like near zero), than you should consider paying for cars with cash. It will for one, lower your expectations a bit and keep you from splurging on more car than you need, and you won’t be paying more than the car’s worth in the long run. And if you’re looking for a new ride that won’t break the bank, these are the 10 Best New Cars Under $30,000.
Live Below Your Means
This one is simple in theory, but can be tough to make happen in practice. Basically you just need to track your finances for a month and then adjust your spending to what’s coming in. It’s not rocket surgery, to be sure, but hard to stick to when holidays, vacations, or emergencies pop up. And for more great career advice, read about the 15 savvy ways to turn bad business ideas into good ones.
Scale Down Subscriptions
In the age of digital everything, it’s a good time to reevaluate your media consumption fees. Are you even reading those monthly magazines anymore or just recycling them every few weeks? Compare your media subscriptions—print and digital—and cancel the ones you stopped reading. Pro tip: If the news outlet you like has a paywall, you can usually still read the content if you click on the outlet’s official Twitter account.
Reevaluate Subscription Services
On same tip, do the same subscription auditing for any video services you use. Do you really need subscriptions to Netflix, Hulu, Amazon Video, Showtime, and HBO? Track your watching habits for a month—including how much you consume from cable TV—and get rid of the losers. And to change your thought patterns too, consider the 5 Ways Billionaires Think Differently Than Most People.
Automate Bill Payments
You can easily avoid any late fees from bills while removing the monthly stress of paying bills by automating everything. You can simply set it up through your bank and whomever is charging you fees, but make sure to check back in every now and then for hidden costs that sometimes pop up. Bonus: You’ll cut the stress of getting the mailers out of your life immediately.
Ignore the Joneses
Try to release yourself from material envy and buy what you value, and don’t covet your neighbor’s latest big purchase. You don’t know their finances and how (or if) they are able to afford that new BMW, so stick with your budget and plan.
Make One Extra Mortgage Payment
Set aside one extra monthly payment every year on your mortgage or car loan to shorten the length of your note by years. If you have a $200,000 loan for 30 years with a 5 percent interest rate it would cost you $186,512 in interest over 12 annual payments, but add on an extra one each year and the loan will be paid off four years early and you will save $32,699 in interest.
Pay More than the Minimum
If you carry credit card debt, don’t just pay the minimum each month, as even carrying just a grand could take years to pay off if you only submit the rock bottom amount due each month. If you have multiple cards, pay the minimum on the lowest, but put all you can toward the highest until that’s cleared.
Maximize Your Credit Score
To keep a strong score, your credit utilization ratio, or debt versus the amount you have available for credit, below 20 percent and not higher than 30 percent. The lower the better for your credit score, but don’t have it at 0 percent.
Space Out Credit Card Applications
Wait at at least six months between applications for credit to increase your chances of approval. If you have a great score, make lots of money, and always pay on time though, you can apply for more cards more frequently because the companies want your business.
Keep Good Debt
There is such a thing as “good debt,” and it includes taking out a mortgage to buy a house or taking out student loans to pay for college. A car payment may be good debt if the vehicle is used for your business, but it’s generally not as they lose value so quickly. It’s basically a loan that pays for things that will increase in value or increase your earnings potential in the future.
Match Employer 401(k)
Get the most out of your 401(k) retirement fund if your employer offers matching funds by fully contributing to the fund. This is basically free money from your employer and can help maximize your retirement funds.
Contribute the Max
Don’t just match what your employer gives you. Or if you are self-employed, make sure that you try to put in the maximum you can depending on your age. For those under 50, you can put in $18,000 a year; if you’re older than 50, you can put in up to $24,000.
Manage Lifestyle Inflation
Be aware that if you start making more money, you will probably start spending more—unless you are financially aware. By going for the bigger and more expensive apartment just because you are making more money, you end up losing out on your ability to build wealth.
Shop Around for Better Savings Accounts
Don’t just park all of your money in an account at your local bank with it’s paltry 0.06% interest rate, look for an online savings account that can pay up to 1 percent. Online banks like Ally (1.25%), Synchrony (
It’s easy to bemoan not starting your retirement fund or setting up an automated savings account when you were young, but you can still get some benefits in the future if you start right now. As investing guru Warren Buffet once said: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
Buy Low, Sell High
This would seem to be a basic rule of good investing and finance, but a lot of people ignore this advice every day. In the moment it can be very hard to tell if a price is actually low or high, but a good rule of thumb for the stock market is to buy when fear is high—a recession—and sell when greed is high—when expansion is happening.
Ignore the Chatter
Another gem from Buffet: “Ignore the chatter, keep your costs minimal and invest in stocks as you would in a farm.” This simply states that you should treat the stock market like real estate and keep thinking about the long-term potential for profits, not irrational behavior of other stock owners that makes for volatile fluctuations.
Invest in What You Know…
… and nothing more—more timeless advice from Warren Buffet (he’s only the third richest man in America, so maybe he knows what’s up). Use caution when thinking about investing in complex industries or companies that you know nothing about; try to stick with areas that you understand or can grasp after researching.
Invest in Quality
Don’t invest in companies who compromise on quality—the integrity of the product generally reflects the organization and priorities of the company. Successful, well-made, and thought-out products often mean the company will have an advantage in the marketplace that you should pay attention to.
Aim for the Long-Term
One final gem from Buffet: “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” Change your stock buying perspective from “owning stock” to “investing in a company,” as all good things take time. So plan to keep your investments for a long time.
Make a Financial Calendar
All throughout the year there are important financial obligations that pop up, like income taxes, property taxes, or checking your credit report, so make a calendar that just has all of your big financial events on it. Here’s a good template to start from.
Conquer Small Debts First
When you have a mountain of debt that is confronting you, sometimes it’s best to start small and first eliminate the lowest amounts first. This way you can show yourself that it’s possible and moving on to the big debts won’t seem as daunting.
Set Achievable Goals
Don’t just limit your goals to filling up a savings account, you should also set some goals for all of your finances. When would you like to eliminate your debt? How long until your retirement goals are met? When should your emergency fund be completed?
Check Your Transactions Daily
Don’t obsess over your finances, but for some people just taking one minute a day (that’s all!) to check over what’s going in and coming out can keep you on top of things and help you notice any inconsistencies or hinky transactions.
Keep Track of Interest Rates
It’s also good to check in on your credit card interest rates every now and then. You may have been on an introductory percentage rate that you forgot switched over to a higher amount, or it may be time to try and negotiate with your credit card company for a lower rate. It’s also a good time to think about apply for a new one at a low rate and nixing the higher cards.
Check Up on Hidden Fees
Credit card companies are notorious for slipping in fees for certain “perks” like overdraft or identity protection, so check back over your statements to see what kinds of things they are nickel and diming you for. Keep the ones you think are valuable, but cancel the worthless costs.
Here are two tips to follow that will make your mortgage go by smoothly: set up recurring payments and, when you’re paying extra—whether for just that one month or you want to make a yearly extra payment—make it clear to your lender what the payment is for.
Check Your Credit Score More Often
If you are planning on taking out a loan or buying a house, it’s important to make sure you have an acceptable credit score. There are three credit bureaus that keep information on about you and your debt—Equifax, TransUnion, and Experian—and their info builds your FICO credit score, which is a profile of your credit risk. There are lots of free services online now, like Credit Karma, so make sure you keep up with yours.
When you do decide to spend your money on big purchases, studies have shown that buying fancy cars or expensive jewelry won’t give you much satisfaction besides in the moment. But when you shell out for an amazing vacation or an adventure like sky diving, you savor the experience much more over time.
Make Paying Off Debt a Priority
Debt can be crippling, because the interest payments mount over time, overshadowing the initial amount of money you spent. So make paying down any debt a top priority. This gives you a better credit report (just don’t pay it all off; remember, it’s good to carry some debt) and more attractive to lenders.
Don’t Save in Checking
Your checking account should just be filled with the money you need to pay off your monthly bills and day-to-day purchases, anything more should be parked in your savings account since they offer higher interest rates overall. Try to just keep an amount that’s equal to one month’s pay in your checking account at all times to give yourself a decent cushion to pay for any expenses.
Delete Overdraft Protection
If you have already made up a solid budget, then you don’t need overdraft protection. Banks love it because they can ding you with silly fees, but for the financially savvy, it’s just another way for them to take your money.
Eliminate Bad Habits
Seems like an easy and obvious tip, but it takes some self-awareness to be able to step back and analyze your bad spending habits that break the budget. Try eliminating them by only spending with cash, learning what triggers you to spend, taking a step back before making a purchase, and sticking to a list when grocery shopping.
Start Emergency Savings
You should allocate enough highly liquid money—like funds available from a savings or checking account—to help out whenever an emergency, like sudden health problem or unexpected tax bill, pops up. Most experts say to have around three to six months of your yearly income stashed away.
Start Emergency Savings
Few people understand how a credit union is different (and better) than a bank, so here’s the lowdown. A credit union is owned by the customers; a bank is owned by investors. So credit unions can often offer better deals because they aren’t focused on profit as much as a bank is. But, as with all things, that’s not always true, so check around and see if a switch is right for you.
Sign Up for a FSA
To maximize medical expenses, it’s good to sign up for a Flexible Spending Account (FSA) because the money you put in here won’t be taxed. You can put in up to $2,600 a year per employer that can help pay for medical expenses for you and your spouse or dependents.
If you’ve been saving and budgeting and keeping close tabs on all of your finances, it’s good to take a bit of that money and spurge on yourself. Now, you shouldn’t go out and drop thousands on a new car; it’s more like going out for a fancy dinner or buying a new gadget.
Don’t Add to Your Debt
It probably goes without saying, but if you are trying to pay off a big pile of debt, don’t keep adding to it. That pile isn’t going to go away if you are constantly, or even once or twice, buying more things on that card. Cut up the card or keep it at home and only accessible for true emergencies.
Give Yourself an Assignment
If there’s some financial burden looming over you, don’t keep sweeping it under the rug. Give yourself a financial assignment to deal with the problem or task, and make a due date. Take some time one night and break it all down and start chipping away at it.
Every year things happen that may affect the financial strategies you’ve already laid down—a marriage, new job, or investments—so it’s important to set aside a period where you go over everything to make sure it’s still on track and can identify points you need to tweak.
Go for an 80/20 Budget
The 50/30/20 budget is a solid choice, but if you aren’t into keeping track of expenses, try out the 80/20. This budget simplifies and says you put minimum of 20 percent into savings and then use the other 80 percent for everything else—no need for micromanagement. If that works for you, try to push it further, to 70/30 or even 60/40.
Invest in Preventative Care
Studies have shown that putting time and money into preventative care—joining a gym, getting regular physicals, going to the dentist twice a year—can give you a 5-to-1 return on investment. You stay healthier, which helps you, society at large, and your employer.
Make a Will
If you don’t have a family or any dependents, you don’t really need to make a will. But if you care about where your money and assets will go after you die, you should get one worked up around when you hit 50 years old.
All Cash, All the Time
To really keep out of the clutches of debts and loans, just spend cash for everything. This may be prohibitive if you aren’t wealthy and are trying to buy a house or new car, but for every other purchase it’s an ironclad way to definitely keep you out of debt.
Once a year, at least, or whenever a major change happens in the economy, you should go back and check over your investments. Inflation, volatility, interest rates, and other shifting factors mean you should always reexamine your investment approach.
Talk About Finance
Not many households hold family discussions about finance, and it’s not taught in many grade schools, so be sure to pass on your knowledge. It’s important to start early when dealing with finances and saving and investing, so make sure your loved ones have a good financial base.
Don’t Save Too Much
You can save too much, say financial advisers. For one, you could die early and not have the time to enjoy your money, but more seriously, most people who are diligent savers don’t realize that once you retire, expenses like paying taxes and saving for retirement go away. So check with a financial adviser and plot out a safe but also fun way to use your money. Once you decide to splurge on a getaway, this Secret Will Save You On Airfare.
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