6 Simple Personal Finance Tips That Lead to a Big Payoff
Let's face it: A lot of personal finance advice seems to be incredibly repetitive and common sense — like paying off your debt ASAP and watching your discretionary spending when money is tight. Much money-saving advice also tends to be geared toward people who already have money and those more concerned about avoiding the taxman than bill collectors.
These personal finance tips only require some mindfulness and fairly simple action, but they can have a pretty big payoff down the road. Here's how you can get started.
1. Get rid of your auto-saved credit card numbers.
It may seem convenient when a store or web browser keeps your credit card information on file. But it can also lead to mindless spending if you're bored and cannot carefully think through your purchase.
However, suppose you have to inconvenience yourself by manually entering your credit card number every time you make a purchase. In that case, it forces you to become more conscientious about whether you really need what you're ordering — and how much you're spending. You'll save money and also reduce your chances of your credit card information being stolen.
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2. "Match" your nonessential spending.
You don't have to live like a Tibetan monk, as most personal finance articles seem to believe. You ARE allowed to have fun. But for every nonessential purchase, put that same amount in your savings account. $15 for a movie ticket? Put another $15 aside in your savings. While you can still have fun and not spend your Friday nights hunkered down with a spreadsheet, you'll also become more cognizant of where your money is being spent on nonessentials so you won't be cash-strapped to pay for your needs like food and rent.
3. Be careful with one-time windfalls.
Maybe you got an inheritance, a big tax refund, or that junk around your bedroom winds up being worth a fortune on eBay. It can be tempting to take that vacation you always dreamed of, but you should be prudent when a major one-time gift shows up. Consider your overall financial goals and priorities, such as saving for a home or paying off student debt. Depending on how much you received and what is relative to your goal, a good rule of thumb is to put 20 - 50% of the windfall toward enjoying your flights of fancy but put the rest toward building your savings and/or eradicating debt.