Managing your finances can be a challenging task. One wrong decision can ruin everything you ever worked to build. Knowing one or two personal finance hacks is useful for getting you ahead of your payments, adding up your savings, and making more investments.
While no hack can add money to your wallet or bank account, you can make giant steps towards financial freedom by hacking your finances.
Here are some of the best personal finance hacks you need to know and start practicing:
#1 Make the Budget Your Friend
Most people associate budgeting with lacking the freedom to spend money. The truth is that a budget helps you track how your expenses. You can choose to enjoy the moment without caring about what happens next or create a budget and secure your future.
Other than that, it’s possible to have a little fun while still saving and investing the majority of your earnings. All you have to do is calculate your income and expenditure and then adjust how you spend your cash. It’s quicker to do this when you have a clear vision of where you are and where you want to be.
If you figure out that you’re spending too much, you have two options. The first option is to find a way to earn extra income. The second one is to change your spending habits.
In most cases, it’s easier to reduce your expenses than generate extra income. Do away with non-essential expenses and have more money going toward paying off debt, savings, and investments. For instance, you can replace a habit like buying meals with cooking at home.
#2 Pay off High-Interest Credit Card Debt
It’s not just about settling what you owe. When paying off a credit card or any other kind of debt, always start with the ones with high-interest rates.
Several factors can affect credit card interest rates. They include the type of card, credit score at the time of application, and the economy. If you know all these, it becomes simple to identify the debts that need the most priority.
For any two debts you have, allocate a lump sum of money to one of them while paying the other’s monthly minimum. Your priority here should be to settle the debt with higher interest so that you can be debt-free within a shorter time.
This approach is the best when your high-interest credit card also has a high balance.
#3 Build an Emergency Fund
When it comes to finances, it’s hard to know what the future holds. Losing a job happens more frequently than you may think. Any business can also suffer the same fate. If you only have one income stream, an emergency fund can do you a lot of good.
It’s best if you can keep several months’ worth of fixed expenses in the account. It gives you peace in mind to know that you have everything covered. This way, you become more productive and easily find your way back up when any financial disaster strikes.
You can start building your emergency funds by generating extra cash for that purpose. Another way is slicing some things off your budget.
#4 Spend with Cash
It’s easy to keep track of your daily expenses if you use cash instead of credit cards. You won’t get into bad spending habits if your mind is aware of what you can afford at the moment.
In contrast, carrying a credit card encourages you to go on spending sprees. You may end up purchasing unnecessary things and regret later. The transaction fees of credit cards are also some form of expenses.
The best way to steer clear of debts is by locking all your credit cards away. Get rid of them if you can. You might miss the short-term benefits of using credit cards, but you’ll be happy with your decisions in the long run.
If you’re used to buying things online, it’s a good practice to use debit cards. No one wants to take out any amount of money from their bank account for unnecessary reasons.
#5 Develop New Skills
There are many skills that you can learn to save money. You need no expert to do things for you when you can handle them by yourself.
Let’s say you know how to replace a car tire, fix an electrical outlet, or repair showers. Since such problems occur often, you can save a fair amount of cash.
And it doesn’t end with manual jobs only. Digital skills such as online marketing, creating content, and web development are enough to help you kick-start your online business.
You can learn a lot of things for free using the Internet. But it would help if you also bought things like e-books and e-courses to get first-hand information and enhance your skills.
#6 Time Your Purchases
It might not seem like a big deal at first, but timing your purchases can help you save money. You only need to know the time or season when the prices of different products and services are the lowest.
One trick is to buy new stuff when the seller brings a new stock. They are likely to offer you discounts because they want to get the older items out of their store.
There are certain products whose prices hike up when an event or holiday nears. Making purchases in advance can help you save money in this case. When the demand is still low, you get a chance to enjoy the regular or discounted prices.
If you’re an online shopper, you can take advantage of Black Fridays and anniversaries of different merchants. Some sites even offer you discounts when they notice your item has been in the cart for days.
#7 Change Your Mindset
Having a positive mindset is probably the most important thing when it comes to achieving financial freedom. You can only accomplish your financial goals when your mind believes so. That’s why negative thinking can lead you in the wrong direction.
You should forgive yourself for your past financial mistakes and strive to become better. Always be ready to learn new things about how to make and manage your money.
Nothing can stand in your way if you have positive thoughts and hope to reach where you want to be.
Some of the personal finance hacks on the list sound like something you’ve heard before. However, it’s only through practice that you’ll see their benefits.
Keep your financial affairs at the top of the list if you want to make a killing in life. Grow your money now, and it will help you grow later.