Are you struggling to achieve your financial goals?
Maybe you want to pay off debt, save money for something big, or quit your 9-5 gig and travel the world. Whatever your dreams are, you can make them happen with a few personal finance hacks.
Your financial situation relies on the money decisions you make. That’s why hacking your finances can go a long way toward making you an achiever. And not only a dreamer!
Here are 7 personal finance hacks that you should start practicing today…
1. Be Friends With the Budget
Most people don’t like to budget their money because they think it takes away some freedom from them. Others hold the idea that budgeting is for mathematicians and not an average person.
The reality is that a budget is a tool that tracks your income and expenses. You can cover all your fixed and variable expenses while still having some fun while on a budget.
The first step in preparing a budget that works is setting some budgeting goals. You only have to visualize your financial situation and picture where you want to be after a set period.
Next, determine your income and expenses to know whether you’re overspending. After that, change your spending habits by cutting down monthly expenses such as household maintenance and fuel. You can also get rid of non-essential expenses like dining out or save them for special occasions.
2. Pay off Debts with the Highest Interests
Paying off high-interest debts first is a personal finance hack that can save you lots of money. Credit card interests tend to one of the highest and they only keep rising.
Your credit card type, creditworthiness at time of application, and the economy are some factors that can affect these rates. You can quickly know which debts to eliminate first using such information.
Let’s say you have credit cards A and B. Credit card A has a 22 % interest rate and a $2,500 balance. On the other hand, Credit card B has a 17 % interest rate and a $1,250 balance.
It will take a shorter time to be debt-free if you pay a significant sum on the first card and only hit the minimum on the second one each month. Here, you aren’t considering the balance but the credit card with the highest interest rates.
3. Don’t Use Credit Cards
It’s easier to monitor how you spend your money by leaving your credit cards and carrying cash. Because your mind is aware of all the money you have a hand, you won’t go buying unnecessary stuff.
You might have noticed how spending with credit cards makes you care less about your financial situation. Once something catches your eye while at the stores, you only have to swipe your card and have it. Not to forget that credit cards also have transaction fees!
If you want to steer clear of debts, limit the instances of your credit cards being within your reach. If you look beyond the credit card rewards, you’ll notice that ditching them is the right move for financial freedom.
Keep in mind that you don’t have to do away with all your cards. You can leave one or two for when you “have no other choice.” Also, it can be challenging for some people to completely drop the habit of using credit cards.
For online shopping, use a debit card instead!
4. Start (and Build) Emergency Fund
Everyone knows that the future has many surprises. If you don’t prepare for emergencies, you’ll find it hard to deal with unforeseeable costs.
You might be shocked by how frequently people get fired from their jobs or experience financial difficulties running businesses. By having an emergency fund, you gain what it takes to handle unexpected expenses.
Imagine the level of peace you can have in your mind knowing you can deal with emergencies. It’s easier to become productive and achieve more each day.
You can build your emergency fund by getting a side hustle or cutting down your spending to free up some cash. It’s best to have several months’ worth of basic monthly expenses in the account. This way, you can tackle any financial disaster head-on and have time to recover from it.
5. Develop a New Skill
But how is developing a new skill a personal finance hack? Well, learning to do some things yourself is one of the simplest money-saving ideas.
You no longer have to call the plumber to fix your broken pipes or an electrician to replace your air conditioner when you acquire the skills. If you hate manual jobs, you can learn to do a few digital ones.
Social media marketing, content creation, and advanced Excel skills are some valuable skills in this day and age. You can use them to generate extra income online or save money you’d have spent hiring others.
There are lots of free resources that are accessible through the Internet. If you want to learn things straight from the experts, taking one or two e-courses is the way to go.
6. Time Your Purchases
A simple way to save more money is by timing your purchases. You only have to buy things when they are more affordable and keep any extra cash.
An example here is making purchases when a seller brings in new stock. They’ll want to get rid of the older items. Going to a particular store when new items arrive can get you discounts.
You can also buy new products when the demand is still low. As you know, prices usually hike up when more people want to buy something. In case the prices are supposed to go down during events and festive moments, you can wait to make purchases at that time.
If you’re an online shopper, take advantage of the coupons and discounted prices during Black Fridays. Also, you can get anniversary deals from your favorite merchants and save more cash.
7. Change Your Mindset
Your thoughts and beliefs about money should be positive if you want to get your finances right. You should see money as a resourceful tool for living a good life.
Financial habits like saving and investing can take you closer to your goals. It’s good to learn from your past and open your mind to new ideas.
Once you start spending money wisely and prioritize your dreams, you also pave way for financial freedom.
Wrapping It up
There are high chances that you’ve heard about one or two personal finance hacks in this guide. But have you tried any of them yet?
Practice a few of the tips highlighted here to find out their impact on your finances. Starting early is necessary if you want to see the fruits sooner.
About the Author:
Mike Stuzzi is a personal finance writer who has created content for sites such as Lifehack. He loves watching business shows during his free time. You can find more of his articles on his blog, The Money Galileo.