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Personal finance tips that don't require frugality

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%. 

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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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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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Don’t ever let your “future self”...
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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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  • Building an emergency fund: set up an automatic weekly or monthly transfer from your checking account to your savings, then leave the savings alone until an emergency appears.
  • Eliminating high-interest debt: Set up a simple debt repayment plan by organizing your debts by interest rate, then attempt to make a double payment on whatever debt has the highest interest rate.
  • 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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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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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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  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accou...
Budgeting Like a Pro
  • Consider an All-Cash Diet, as limiting yourself to physical currency combats overspending.
  • Set aside 1 minute a day to check on your financial transactions, to identify problems, track goal progress and set your spending tone.
  • Allocate at least 20% of your income to financial priorities like emergency funds, debts and retirement fund.
  • Budget about 30% of your income for nonbasic spendings, like entertainment. Abiding by the 30% rule, you can save and splurge at the same time.
How to Get Money Motivated
  • Draft a Financial Vision Board, it motivates and helps you to stay on track with your financial goals.
  • Set specific financial goals stating the reason, the way, numbers and dates.
  • Adopt a spending mantra, a phrase that serves as a rule of thumb for how you spend.
  • Love yourself. Taking control of your finances is part of that.
  • Make bite-size money goals. Make the bigger ones but also small step goals to get there.
  • Don’t be a financial fatalist, and switch to more positive mantras.
  • Get your finances and body in shape. The discipline associated with regular exercising translates to managing your money well.
  • Appreciate what you have now, instead of being a consumerist.
  • Get a Money Buddy. Studies indicate people pick up good habits from friends with similar traits.

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Investing

... is the trading of your money today for a lot more money in the future. It is a high yield over the long term.

What happens to your money

Banks don’t like to give away their money. That mindset is reflected in the interest rates of checking and savings accounts of 0,5% and 0.9% avg. annual interest respectively.

When you deposit your money in the bank, the bank turns around and invests that money at 7% a year or more. After they collect their profit, they give a tiny shaving of it to you.

Portfolio and Diversification
  • Your portfolio reflects your long-term wealth building investment strategy – not the short term. It includes everything you own. Your retirement accounts, your investment accounts, even your home are types of investments.
  • Diversification is a way to describe owning multiple types of investment assets. Diversification is smart because you both protect yourself from failure and position yourself to take advantage of multiple robust methods for building wealth.

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Basic car maintenance

You do not need a professional mechanic to sort out many of the simpler car problems.

There are all sorts of easy and helpful instruction videos available to repair or maintain your car for cheap.

Shopping when you’re hungry

We are more susceptible to buying stuff we don’t need when we are hungry. The same goes for a leisurely grocery trip. 

Make your shopping trip when you have other errands to do and a limited time to do them. You will be less likely to spend time exploring and picking up items that you did not originally plan to purchase.

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Start Now

The sooner you start managing, saving, and investing your money, however limited, the better off you'll be as long as you avoid mistakes like investing everything into one stock. That’s t...

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“… the secret to success: find something you love to do so much, you can't wait for the sun to rise to do it all over again."

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“Money isn’t making that much difference in how you and I live. We’re both going down to the cafeteria for lunch and working every day and having a good time. So don’t worry about money, because it won’t make much difference in how you live.”