Personal Finance Hacks – Simple Guide!
Today I will be discussing personal finance hacks to help you improve your financial life.
How exactly can you hit major money goals within a year?
Is there any single way out? A cheat code maybe?
When it comes to becoming financially free, focussing only on one thing won’t help in the long run.
The only thing I learned from becoming aware of my personal finances over the past year, is that it isn’t just one thing that you need to do. A lot of things come into play, from saving to growing money.
You might work hard, and play hard to reward yourself in return with nice things to surround yourself with. Or maybe save portions of it in the bank account. That alone won’t be enough.
I often hear advice to skip your morning coffee so that you can save money. OK! Sure!
If you plan to skip coffee of $/£3 every day to save money, that’s almost $/£90 a month. But let’s be honest here, can only saving $/£90 a month can bring a huge impact on your lifestyle?
I’m not saying don’t look at the small aspects (they eventually add up to big things) but there are a few key personal finance hacks you can implement in your life that might get you financial freedom.
Below are some personal finance hacks that I have put together, that I truly believe, if implemented right, will help you achieve a happier financial life.
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Personal Finance Hacks
Check your habits and track your spending
Always track your spending and be aware of their money routes. If you will not track your spending, your budgeting will not be as efficient as it should be. Before budgeting for your next month, when you track your last month’s spending, it becomes easy to create a budget and make any changes you need for your next month.
You might agree with me that every purchase we make seems to be very important to us. We are living in a materialistic culture, where much of the attention is given to owning things, even if we don’t need it. I think you will agree with me on this one that If you want to achieve financial freedom, you have to track your spending and figure out the unnecessary purchases.
It will be easy to figure out your budget when you know, exactly where your money is coming and where it is going. There are a lot of apps to track your expenses but you can do it old school way also. Take your pen and paper, and start writing down your expenses. This is the best habit you can develop to stay debt-free.
Would you like advice on cutting down your monthly expenses, but don’t know where to start? Then see the post below:
Create a monthly budget
Now that you know how much money is coming in, it’s time to see where your money is going. You will need to figure out your expenses in the last 30 days.
In order to do this, you will have to print out bank statements, credit card statements, and PayPal statements if you use one. Next, you will then categorize each expense. It can be food, utilities, mortgage, car, loans, etc.
Now that you know your total income and your total expenses, subtract total expenses from the total income and the difference should be the left-over of your monthly income.
You should always aim for a zero difference, but a positive difference is even better.
Would you like to know how to create a budget, but don’t know where to start? Then see the post below:
Make a list of all your debts
Start with your smallest debt, such as a store credit card, and move to your largest, like your mortgage.
Make a note of which debts can be paid off within months, and which could be paid off in a few years. The small debts with the highest percentage fees are the debts that you will want to focus on the most, so you can cross them off of your list and get closer to living debt free.
Look for debts that you could possibly consolidate to give you one lower monthly payment instead of several different debts to pay off.
Consolidating your bills to pay off multiple debts with a single monthly payment could help you lower your overall monthly bills and reach your savings goals more quickly.
Would you like to learn more about advice on how to pay off debt, but don’t know where to start? Then see our posts below:
Use the cash envelope system
At the beginning of each month, take out the amount of cash you have to spend for the month from the bank.
Using labelled envelopes, budget for all of your spending, including food, clothing, entertainment, and bills. Distribute your cash for the month among your envelopes, and stick to that budget. Once the cash is gone from an envelope, that is it for the month for that spending category.
Use Excel to create a spreadsheet to track your spending each month, and make adjustments as needed. If you find that you are running out of cash for food before the end of the month, consider which envelope you could take some money out of to put into the grocery fund.
This style of budgeting is known as the cash-envelope system and has been popularized by financial guru Dave Ramsey. This method goes back years and was most like used by your parents or grandparents!
If you would like to learn more about the cash envelope system in detail, then see our post below:
Spend less than you earn
One of the most important steps to reach financial freedom is to live below your means. The biggest mistake people make is to inflate their lifestyle based on how much they earn.
Ignore your friends that spend all their money on a bigger house or a new car! By learning to live a more minimalist lifestyle and understand the things you need rather than the things you want, you will increase your chances of building your wealth.
This doesn’t mean you don’t need to enjoy life during your journey to financial freedom and deprive yourself of everything!
If you deprive yourself too much, you risk creating a miserable life. Remember, reaching financial freedom is a long journey: depending on your savings rate, it could take you many years!
Focus on happiness and spending money that will bring joy into your life, instead of thinking about luxury.
You just need to find the right balance and think twice before spending on things you don’t need.
Would you like to know how to complete a no spend month to save money? Then see the post below:
Save save save
This might sound strange but it’s so important to save. If you truly want to achieve financial freedom, then saving must become normal to you.
For a long time, we didn’t save any money, partly because we felt that we weren’t in a financial position to be able to do so but also because we just weren’t used to it.
Saving actually felt like a punishment.
In order to save money, you have to have a positive attitude towards it.
You must habitually, purposefully do it otherwise you won’t do it at all. Believe me, I’ve been there.
In the past, the only time I have successfully managed to save was when there was something that I really wanted and my goal was to reach it.
Like the time we needed a bigger house or the time we needed a second car.
Set yourself saving goals, long term ones as well as short term goals. This will make it so much easier for you to save up your money.
Would you like to know more about how you can save money? but don’t know where to start? Then see the posts below:
- Save Money on Utilities – Simple Guide of 20 Tips
- Reduce Your Expenses – Simple Guide!
- Smart grocery shopping tips – Simple Guide!
- 10 Things to Stop Buying to Save Money – Simple Guide to Save Thousands!
- 9 Tips to Save Money – Simple Guide!
- Frugal Living Lifestyle – 11 Habits of Frugal People
- How to Save Money on Online Shopping – 8 Tried and Tested Tips!
- 10 Tips To Save Money On Groceries – Tried And Tested Guide!
- Is The Honey Extension Legit? – Save Money Online While Shopping!
Pay yourself first
This personal finance tip is another common one that can have a huge impact on your finances. When you pay yourself first, you’re investing in your financial future; you’re investing in future you, and future you will thank present you for doing so.
So, why not just pay yourself at the end of the month? That’s a lot easier, right?
Well, the reason why paying yourself first works so well is that once that money is sent to a savings account, you’re a lot less likely to spend it.
If you wait until the end of the month to pay yourself, you might not have any money left!
Future you will be very sad with no money. Make future you happy by investing in yourself!
Avoid new debt
Don’t get a new loan to pay off your current debt. In addition to paying loan-origination fees, it’s important to note that while your personal loan interest rate could be lower than your credit card rates, you will be locked into a set monthly payment for a specific amount of time, which could be higher than the minimum payments on your credit cards.
This means you could save money in interest, but your monthly payments may be higher, which could reduce your monthly cash flow.
Also, avoid signing up for low-interest credit cards that guarantee cashback. While you may get a little bit of cashback each month, you have to spend money in order to make money.
These cards aren’t worth it in the long run. Instead, pay with cash to avoid racking up credit card debt.
The best new debt to avoid is on a mortgage. Save as much money as you can for a down payment so when you take out a mortgage, the monthly payment will be lower.
Also, you will likely be able to qualify for a lower interest rate on a mortgage if you put down a larger sum of money upfront.
Setting goals is one of the best life hacks you can learn, in my opinion. Setting financial goals will help you achieve what you want most out of life.
One popular goal-setting strategy is the SMART method. I would recommend using this method, your goals should be Specific, Measurable, Attainable, Realistic, and Timely.
You should also consider short-term and long-term goals, and always write down your goals. Finally, your financial goals should be in line with the vision you want for your life.
Would you like to know how to set SMART financial goals, but don’t know where to start? Then see the post below:
Have an emergency fund
Life is full of uncertainties and it’s on us to be prepared for anything that life might throw at us. Do you have a plan in place for the unforeseen circumstances that may arise in future?
How long can you feed your family if you suddenly happen to lose your job?
How much are you prepared if a shutdown were to occur in the company you’re working for?
Well, that’s not me being pessimistic. But everyone wants to have themselves and their family secured at any cost which is why having an emergency fund should be one of your topmost priorities.
Would you like to know how to create a emergency fund, but don’t know where to start? Then see the post below:
Look to increase your income
There are a lot of ways you can increase your income these days.
Many people choose to take on second jobs on their own time, such as freelancing or working in direct sales. Or just a part-time side hustle.
You can also pick up a night job if you typically only work during the day. If your current place of employment could use some more help, talk to your boss about working overtime to get some more hours in.
Another way to increase your monthly cash flow is to consider getting a roommate, or getting on a family plan for your cell phone. You may even consider downsizing your living space if you are paying for a room that you don’t use.
Interested in earning some extra cash through a side hustle? Then see the posts below:
Change payment dates
Using the dates on your budget, you can begin to see when you have money in your account and when you don’t. This is important and it can help you save.
For example, imagine you get paid on the first and your bills aren’t due until the 20th, that leaves you twenty days to spend your money and by the time the 20th rolls around you don’t have enough to cover your bills (sound familiar?).
Change your dates to better match your payday dates. If you get paid on the first, set your bills to be paid on the fifth.
Most companies allow you to set your payment date online or just give them a call. If you can’t change your payment dates, pay the bill ahead of time or set the money aside in a separate account so you don’t spend it.
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Personal finance hacks – Final thought
Follow these hacks to start building a richer tomorrow. All the knowledge in the world will do you no good if you fail to act.
Choose this day to start making small decisions that will lead to big gains financially over time.
To get the most out of these hacks, combine a number of strategies to maximize your results without additional effort.
What are personal finance hacks? I would love to hear them.
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Hello! My name is Adam and welcome to my space on the internet. Here you can find me writing about topics such as lifestyle, self-care, self-development, finance, saving money and making money. Come and join the community!