How many times have you clicked on that article online that started with “Top 5 Ways..” or “Quick tips to..”? Probably a lot. We work hard on many things in our lives, but sometimes we all want a shortcut. Just like there is no miracle juice drink or 5 minute workout that will get you in shape for the summer in a week, there is no quick fix to make sure your financial life is in shape as well. But that doesn’t mean I won’t at least try to give you a few ideas to get you started and help you progress a little quicker! If you haven’t taken a look at my Personal Finance Cheat Sheet or Financial Planning Launchpad make sure to download those as well. Parts are briefly touched on below, but they are a great starting point. So, here are some ways to “hack” your finances:
Identify, Quantify and Prioritize Your Goals
If you have read any of my other blog posts before, you will notice a theme. Setting goals is always in there when talking about financial planning. It’s essential. Start by having an honest conversation with yourself. What great things in life do you want? Identify those goals then quantify and prioritize them. Be realistic and specific about what you want.
Master Cash Flow
This is another really important piece. It’s the foundation to every other area of personal finance. How are you going to know how much you can save without knowing what your budget looks like? Short answer: you can’t. You can try, but I promise something won’t work out quite the way you thought eventually. Figure out what is coming in versus what is going out. There are plenty of online tools to help with this like Mint and Quicken or just a good old-fashioned Excel spreadsheet. It doesn’t matter what you use, just spend the time to understand your budget and get a handle on cash flow.
Savings
Savings can be difficult. If you have a handle on your goals and cash flow, then you should know what you can save each month towards those goals. However, what you want to save may be easier said then done. Here are some creative ways you can work towards saving more for your goals:
- Make a game out of savings. Set a time period of 6 months and see how each family member can save. The winner gets to pick a reward such as deciding where the next family vacation should be.
- Automate your savings. Have money move from checking to savings automatically.
- Save at the beginning of the month. It’s easy to say “Let’s save at the end of the month” but life gets in the way. Automate your 401k or IRA contributions for the beginning of the month so they happen automatically. Then the money is already put away and you can’t spend it.
- Save half your raise. Be aware of lifestyle creep, where expenses rise in line with your new income. Don’t get in the mindset of I got a raise, I can spend that money. Try to save half your raise to lock in your expenses.
- Create a side-hustle. Creating that side income is hugely valuable. People tend to think of earning more money as linear, but in today’s sharing economy there’s a lot of opportunities to create a side hustle to compliment your current income. Make sure it’s something you love to do.
- Brown bag your lunch. Bring in instead of buying can save a large amount over the course of the year.
- Delete the retirement app from your phone. You may feel like you need to constant check your balances, but if that money is for retirement it is for the long term. Seeing the day-to-day changes may make you more prone to making emotional decisions based on short term fluctuations.
- Be cognizant of fees. Understand what you pay for your investments and how. Knowledge is power.
Related Articles
[U.S. News & World Report] 13 Money Hacks to Turbocharge Your Investments (slides 4,10,11,13)
[Bloomberg] Ten Ways to Get a Good Return on Your Cash (Stocks Not Included)