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Personal finance tips that don't require frugality

The Problem With Mutual Funds

When you buy mutual funds, you are charged a purchase fee upfront. This is a one-time payment to the fund management institution. Annually, you will be charged with a percentage of management fees, commonly known as “expense ratio”, which can be expensive.

Beware when advisors at your bank recommend mutual funds to buy. They might be earning a sales commission.

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Personal finance tips that don't require frugality

Personal finance tips that don't require frugality

https://medium.com/swlh/personal-finance-tips-that-dont-require-frugality-199bd7df6994

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Key Ideas

Tony Robbins

Tony Robbins

It’s not about your resources, it’s about your resourcefulness.”

Be Creative To Afford What You Want

By following the conventional path of "school to loan to university to work" you risk running into serious debt. Being creative is a potential way to lessen or eliminate that.

Maybe finding a different and cheaper way of doing the same thing, doing a yard sale or getting a side job… Put your mind to it and you may find ways to get a financial boost. 

The Problem With Mutual Funds

When you buy mutual funds, you are charged a purchase fee upfront. This is a one-time payment to the fund management institution. Annually, you will be charged with a percentage of management fees, commonly known as “expense ratio”, which can be expensive.

Beware when advisors at your bank recommend mutual funds to buy. They might be earning a sales commission.

Common Recurring Expenses

  • Financial fees. Consider negotiating them with your banker or changing banks. 
  • Interest for short-term debt. If you cannot avoid it completely, then use a bank that charges less interest.
  • Stocks brokerage account fees. Usually comes as monthly account fees and trading fees. 
  • Mutual funds management fees or “expense ratio.” Those are charged annually and can go over 2%. 

Reduce Recurring Expenses

One way to save money is to identify and cut down on recurring expenses that don’t add value to your life. A good rule of thumb is to cancel if it is something you might want to use “someday.”

Even if the recurring expense offers you value, you can investigate how you can reduce it without sacrificing comfort in your daily life. 

Automating For Better Personal Finances

  1. Saving: automatically transfer every month from your income into a savings account. 
  2. Investing: do “dollar-cost averaging” if you’re familiar with the cave eats of trading stocks, ETFs, bonds or mutual funds. It consists of a stock trading account set to automatically buy them for a fixed amount of money every month.
  3. Reinvesting: reinvest the yields from your investments by instructing your manager to buy stocks with the money.

Automation Is Easier Than Discipline

You should automate what you can so you don’t have to keep off the discipline to do those things. 

Automating aspects of your personal finance can afford you more time and mental capacity to focus on other aspects of life. 

Saving Through Frugality

Frugality cannot be the sole cornerstone of our personal finance strategy.

Because we can’t save more than what we earn and saving by itself leads to losses, due to inflation devaluing your money.

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Don’t ever let your “future self”...
...take care of your current situation.

Your future self might have more income, but it’s also fairly likely that your future self might have less income and you’ll find yourself in a really bad situation. 

Even if your future self is doing well, there are probably going to be other big expenses that you’ll want to deal with at that time, like buying a house.

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  • Saving for retirement: It will actually end up being a much smaller burden than you expect,  lifted up by the pleasure of knowing that you’re securing your retirement.

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Side Hustle to Make More Money

You don't have to sacrifice all of your free time to start a side hustle, use the time you’re comfortable with and make a little bit of progress every day. 

Take Action

Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.

Communicate With Your Partner

Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.

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You’ll save far more if you don’t buy a car or sell it if you already own one but can go without it.

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Save On Transport While Keeping a Car

Carpool to work if you can to significantly reduce wear and tear on your car, save on gas, and take advantage of carpool lanes that might make it easier to get to work.

Check at least once a month to keep the tires on your vehicle properly inflated. Doing so can improve your gas mileage.

Save On Debts

Refinance your home or automobile at a lower rate to save money over the life of the loan and lower your monthly payment.

If your student loans are locked in at a high-interest rate, figure out whether it makes sense to consolidate all or some of them.

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