Let’s face it, there are some areas of our lives where tradition is just not always applicable. Personal finance is a great example of this fact. The speed of change undoubtedly affects the world of money—how your grandparents handled their cash flow can be great for reference and comparison—but your way needs to be different as things are very different today.
How we handle our finances is very personal and a lot of research is needed to understand different strategies and hacks to maximize both our savings and our overall cashflow. If you are starting to take your finances seriously (yay! adulting!), here are some money saving hacks worth trying:
Needs Now vs Needs Later
Distinguishing between what you need to spend money on now and what you can hold off on is a great hack for allocating your funds into appropriate channels based on your life stage. For example, a college savings account to help your child cover the costs of their education can be both a generous gift as well as an opportunity for a personal tax deduction, but this is only a pro if you have the wiggle room in your budget to dedicate cash each month to this commitment.
Life insurance is another example of a budgetary item that has a flexible timeline. Young adults that are in good health and do not yet have children likely do not feel as much pressure to contribute to a life insurance policy as someone who has certain health issues, or a family to consider. If you already have an existing policy and feel like at this point it is irrelevant, you can sell your life insurance policy and use the money accumulated for something you feel is more applicable to your current position in life.
Analyze Your Debt
Reducing your personal debt is hardly a hack, however there are a lot of people who know they need to make this reduction but have no idea where to begin. Don’t worry, we got you. First, examine your individual debts and become an expert on them. Understanding which debts are costing you the most money and most impacting your overall credit score will help you to identify which ones to pay down first. Once you have made that distinction, it is time to create a plan.
One of the best debt hacks is consolidation. Multiple debts mean multiple everything—terms, interest rates, timelines, and consequences. Taking out a consolidation loan is a good way to lower your overall interest rate and create simplicity regarding repayment. This enables you to pay off debt quicker to instead save money for investments like a mortgage or retirement.
Use Your Rewards
Rewards exist solely to incentivize you to spend your money in certain ways and through certain styles. Using cash back credit cards are a great hack to take advantage of if you are someone who can handle the additional responsibility and consciousness that comes with using credit vs cash for everyday purchases.
Research the best cash back credit cards and apply for the ones that offer the rewards that you will take advantage of and that make sense for your money spending needs and habits. Travel a lot? Maybe a travel rewards credit card is the right one for you.
Personal finance can feel like an uphill battle, but the sooner you take your finances seriously, the sooner you can experience financial freedom.
*Photos by Liza Summer