Finance

15 Steps to Stop Living Paycheck to Paycheck

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice
Stop Living Paycheck to Paycheck

Living paycheck to paycheck is a reality for many individuals and families worldwide. The stress of financial insecurity can affect every aspect of life, from mental and physical health to relationships and overall well-being. Breaking free from this cycle is essential for long-term financial stability and peace of mind.

Assess Your Financial Situation

  • Start by evaluating your current financial situation. Calculate your income, expenses, debts, and savings.
  • Create a detailed budget outlining all sources of income and every expense, including necessities and discretionary spending.
  • Identify areas where you can reduce expenses or eliminate unnecessary spending which can be hurtful during times of inflation.

Prioritize Debt Repayment

  • Develop a strategy for paying off debts, focusing on high-interest debts first while making minimum payments on others.
  • Explore debt consolidation options or negotiate with creditors to lower interest rates or create more manageable repayment plans.
  • Once high-interest debts are paid off, reallocate the funds towards other debts or savings goals.

Find Ways to Increase Income

  • Explore opportunities to increase your income, such as asking for a raise, seeking higher-paying employment, or starting a side hustle.
  • Invest in improving your skills or education to qualify for better-paying jobs or freelance opportunities.
  • Monetize hobbies or talents by offering services or selling products online or in your community.

Live Below Your Means

  • Adopt a frugal lifestyle by prioritizing needs over wants and avoiding unnecessary expenses.
  • Look for ways to save money on everyday purchases, such as shopping sales, using coupons, or buying generic brands.
  • Practice mindful spending by distinguishing between essential and discretionary expenses and cutting back on non-essential purchases which can undermine your goals when gas and food costs are so high.

Build an Emergency Fund

  • Establishing an emergency fund is crucial for financial resilience. Aim to save at least three to six months’ worth of living expenses.
  • Start small if necessary, but make regular contributions to your emergency fund until it reaches the desired amount.
  • Consider automating your savings by setting up automatic transfers from your paycheck to your emergency fund account.

Track and Monitor Expenses

  • Keep track of every expense, no matter how small, to gain insight into your spending habits and identify areas where you can cut back.
  • Use budgeting apps or spreadsheets to categorize expenses and analyze trends over time.
  • Regularly review your spending patterns and adjust your budget accordingly to stay on track with your financial goals.

Create Multiple Income Streams

  • Diversify your income sources to reduce reliance on a single paycheck. Explore opportunities for passive income, such as investing in stocks, bonds, or real estate.
  • Consider renting out a room in your home, starting a small business, or freelancing in your spare time.
  • Invest in income-generating assets that can provide a steady stream of passive income over time.

Negotiate Recurring Bills

  • Don’t be afraid to negotiate with service providers, such as cable companies, insurance providers, or credit card companies, to lower your bills.
  • Research competitive rates and leverage offers from other providers as bargaining power when negotiating with your current providers.
  • Consider bundling services or switching to more affordable alternatives to reduce monthly expenses without sacrificing quality.

Embrace a Lifestyle of Minimalism

  • Simplify your lifestyle by decluttering your living space and letting go of unnecessary possessions.
  • Adopt a minimalist mindset by focusing on experiences and relationships rather than material possessions.
  • Reduce consumption by practicing mindful spending and avoiding impulse purchases, which can help you save money and lead a more fulfilling life.

Invest in Yourself

  • Invest in your personal and professional development to increase your earning potential and career opportunities.
  • Take courses, attend workshops, or pursue certifications that can enhance your skills and qualifications.
  • Invest in your health and well-being by prioritizing self-care, exercise, and mental wellness, which can improve your overall quality of life and productivity.

Participate in the Gig Economy

  • Take advantage of the flexibility and earning potential offered by the gig economy to supplement your primary income.
  • Explore gig economy platforms such as Uber, Lyft, TaskRabbit, or Upwork to find opportunities that match your skills and schedule.
  • Use your talents and expertise to offer freelance services in areas such as writing, graphic design, photography, or consulting, allowing you to earn extra income on your own terms.

Automate Savings and Investments

  • Take advantage of automation tools to make saving and investing effortless.
  • Set up automatic transfers from your checking account to your savings or investment accounts each payday.
  • Consider enrolling in employer-sponsored retirement plans, such as 401(k) or IRA accounts, and contribute enough to maximize employer matching contributions, if available.

Practice Delayed Gratification

  • Avoid instant gratification by delaying non-essential purchases and saving up for larger expenses instead.
  • Implement a waiting period before making significant purchases to determine whether they are truly necessary or simply impulse buys.
  • Focus on long-term satisfaction and fulfillment rather than short-term impulses, which can help you make more mindful spending decisions and avoid unnecessary debt.

Seek Support and Accountability

  • Surround yourself with supportive individuals who share your financial goals and values.
  • Join online communities or local groups focused on financial literacy and frugality to learn from others’ experiences and gain encouragement.
  • Consider partnering with an accountability buddy or hiring a financial coach to help you stay accountable and motivated on your journey towards financial freedom.

Plan for the Future

  • Set realistic financial goals for the short, medium, and long term. Whether it’s saving for a vacation, buying a home, or retiring comfortably, having clear goals can help you stay motivated and focused.
  • Review and adjust your financial plan regularly as your circumstances and priorities change.
  • Consider seeking professional financial advice or counseling to help you develop a comprehensive financial plan tailored to your needs and goals.

Escaping the paycheck-to-paycheck cycle requires a combination of discipline, resourcefulness, and strategic planning. You can gradually take meaningful steps towards financial stability and independence. Remember that financial freedom is certainly achievable with patience, perseverance, and a commitment to making positive changes in your financial habits and mindset. 

Finance, Money

4 Financial Milestones You Must Accomplish by Age 30

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Financial Milestones

A popular perception amongst millennials is that they stand a fair chance of becoming millionaires at some point in their lives. The American dream is still alive even despite the problems this country is facing now. Most believe that they will retire by the time they reach the age of 60 or thereabouts. However, for accomplishing these ambitious and admittedly optimistic goals, it is crucial that you first attain specific financial milestones grounded in reality.

In this post, we will discuss 4 realistic milestones that you need to accomplish by the time you reach the age of 30, so that you are set for a strong and growth-oriented financial future. 

Goal 1: Strengthen Your Skill Set

Compared to all the other goals, you might find this one the most enjoyable. Your 20s are meant to invest in yourself, whether that involves saving up for further education, traveling or experiencing the myriad facets of life. You have fewer commitments at this stage and can easily pursue activities that interest you the most.

Start by listing your goals, whether you are considering a trip to an exotic destination, attending an upcoming music festival, or gaining admission to a top university. With that done, you need to start saving. The importance of developing the discipline to keep some money aside from each paycheck that you receive cannot be emphasized enough. Living within your means is critically important.

You might even consider an arrangement in which your savings are directly taken out of your paycheck, which deters you from overspending. Whenever you receive a raise, increase the amount of your savings until you reach a point where about 15% of your income is kept away for your financial security. 

Goal 2: Keep Your Debt Under Control

On an average, personal debt has scaled new heights in recent times. More than 50% of Americans admit that debt reduction is a top financial priority for them today. 

Interestingly, a study found that there was a much higher probability of people accumulating from $5,000 to $25,000 as debt rather than personal savings. This can be because of college loans which can be paid off with dedication. 

Considering all this, it is vital to start early in managing your debt, whether it is for car loans, student loans or credit card debt. Keeping your debt under control gives you a better grip on life and helps you focus on achieving greater success in every aspect of your life and career.

Goal 3: Begin Saving For Your Retirement

Even if you aren’t able to do anything else before reaching the age of 30, this one counts as one of the key goals. Don’t fall short of contributing enough to your employer’s 403(b) or 401(k) for maximizing the employer match. 

While 66% of millennials are engaged in jobs that include a retirement plan, just 55% of them (in contrast to 80% of Boomers) are qualified for participating in an employer’s plan, a study has found. Workers may fail to be eligible for such a plan due to not having been employed long enough or not working enough hours to be able to qualify.

Taking advantage of your employer’s plan makes for good financial sense. When you’re in your golden years of life, these efforts at frugality will stand you in good stead. The earlier you begin saving, the longer your money will compound, resulting in a comfortable retirement saving. 

Goal 4: Acquire the Knowledge and Habit of Investing

You’ll get an idea of the power of investing when you open your first employer-sponsored savings plan like 401(k). However, there are other opportunities available to invest as well for those in their 20s and 30s. 

Although it may be somewhat premature to start consulting with a financial advisor, there are quite a few robo-advisors that specifically focus on millennials with less demanding fees and minimums. For a small monthly fee, you can start investing in good retirement products through reliable investment apps. 

These apps and robo-advisors can help you open an IRA and select a low-cost portfolio for you in accordance with your risk appetite and investment goals. You can begin investing with very small amounts in a Traditional IRA, Roth IRA or SEP IRA. 

Another option for low cost investing is the Robinhood platform – which has a mobile as well as web app. Robinhood allows you to trade in stocks for free and offers a Gold service as well, which comes for a small monthly fee. Robinhood has also launched Robinhood Crypto, which allows users to trade in Bitcoin and other virtual currencies – for which no commission is charged.

Money

8 Pragmatic Ways to Invest $10,000

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Invest $10,000

If you go out seeking financial guidance, the one piece of advice you will receive from everyone without fail is going to be about the significance of investments. But, does the word ‘investment’ evoke pictures of men in suits, stock tickers, and million-dollar deals in your mind? Does it make you wonder how and where to begin investing when you do not have a lot of money to spare?

So here we go – here are some useful tips on how you can start investing in a practical manner with a reasonable amount, say, $10,000.

Reduce Your Debt

If you are carrying a high-interest consumer debt, one of the most pragmatic investments would be to use the $10,000 to pay off or reduce that debt. Consumer debt or credit card debt, carrying a high interest rate, is the scourge of sensible wealth creation. If you are making minimum payments on your credit card outstanding bills, you will end up paying a staggering amount of money in compounded interest.

Savings Account

You can open a high-yield savings account that will earn you a significantly higher rate of interest than a regular savings account. An online bank that does not require a minimum balance in a savings account, would be the pragmatic and safe choice. You can start generating interest on your entire balance without taking any undue risk with your investment. With that said, these banks have a provision for insuring your account with FDIC insurance up to $250,000.  

Certificate of Deposit (CD)

If you can commit your funds for a specific period of time, a Certificate of Deposit (CD) may be a more practical investment for your $10,000, with a higher yield in terms of the interest which is ideal when energy costs are increasing as they are now. You must be aware that any premature withdrawals might attract a penalty, and you will need to stay invested for the precise number of months you agreed to, while making the deposit. You can choose the tenure for a term CD, which could be a few months and up to five years.

Real Estate

Investments in real estate are popular with investors because of their immense potential for wealth gain which is fantastic during periods of inflation which is the case in 2021. Although it might seem that investing in real estate requires a great deal of money and may not be feasible with just $10,000 in your pocket, there are new and affordable ways like crowdfunding to invest in real estate. With crowdfunded real estate investments, you can generate a passive income without worrying about property maintenance, tenant management, or litigation issues. Experienced real estate investment teams handle all the nitty-gritty like screening potential borrowers, managing renters, and repairing or upgrading the properties.

401k Plans

With 401k plans, you enjoy tax benefits as you pay taxes only when you contribute, thus reducing your taxable income. This is a Godsend to hear for many because taxes may be increasing on Americans who are already dealing with higher gas prices and higher costs of goods. With that said, it’s one of the easiest options to begin investing in a small or moderate way, and if your employer offers to make a contribution to match your first investment, you can start with an adequate amount that they are willing to match. Most 401k plans offer stocks, index funds, and retirement plans. 

Index Funds

The prices for individual shares, especially the blue-chip ones, may seem too high for you when you are thinking of investing just $10,000. To begin with, and with a moderate sum to invest, one of the better ways to invest is with an index fund. The funds keep costs low as they work in tandem with the market benchmarks, thus avoiding any speculative practices. The minimum threshold to invest in some of these funds is quite low, making $10,000 an adequate amount of money to begin investing with. The low costs, simplicity, and diversified portfolios make index funds a safe and pragmatic investment choice.

Robo-Advisors

There are fully automated Robo-advisor platforms that take into account your investment goals and your risk appetite to select a mix of funds for investing your money. If you want to invest your money without putting in the effort and time needed to ensure a balanced investment portfolio, this might be the pragmatic choice for you. Most of these platforms charge an advisory fee of around 0.25 percent per annum, and you can open an account for very little, sometimes as low as $1. 

Business Bonds

You can begin investments from as little as $10 in some of the small business bonds, which also yield a return that is higher than investments in most other brands. The lure of a higher yield also entails higher risk, so you must be clear about the extent of exposure you are willing to accept in pursuit of your pragmatic investment goals. Look for business bond investment propositions backed by collateral to cut down on the risk factor.

Money

9 Ways to Spend Your Money Wisely

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
spending money

Are you expecting to receive some money? What are your plans for it? You can always splurge these surplus funds on a luxury trip or buy an expensive gadget. But there are smarter ways to spend your money which will give you both peace and happiness. These are a few options for you to consider.

1. Get Rid of that Pesky Debt

One of the best ways to employ money you didn’t expect is to use it to pay off your debts. This can be student loans, regular bills, or credit cards. Debt repayment is really the best return on money. Typical credit cards carry a 15% interest annually. You could save that amount and make your wealth grow by paying off the cards.

2. Spend it On Job Training or Education

You are the greatest asset to invest in. Job training and education are more often than not required for personal and professional growth. You may finally get that promotion you were eyeing by completing that certification. People that love their jobs and are satisfied with their career growth tend to be happier.

3. Build Your Emergency Nest

It can be a true nightmare to have to pay for a major expense when you least expect it. But, there is nothing you can do to prevent emergency situations. If you have a medical bill or a car repair, you will have to pay for them. You can use your additional money to create an emergency fund.

You should also think about making monthly contributions to the emergency fund. Tax refunds are the best way to jump start savings funds. Think about your emergency funds as buffers. You can also earn some interest by parking the rainy-day fund in a savings account.

4. Spend Freely on Hobbies

When was the last time you entertained yourself actively without looking at a screen or doing something where content was shoved down your throat? There are times when you want to Netflix and Chill, but you should consider using the extra money to pick up a hobby.

Think about whatever you like and invest in it. It could be purchasing a new music instrument, enrolling into language class, buying tools to finally build that tree house or new utensils for baking.

5. Plan a Vacation

You should have at least one decent holiday in a year. This is to keep you healthy and happy, both physically and mentally. Holidays are expensive. But, you don’t have to mess up your financial goals. You can utilize a little bit of the surplus fund or use the entire amount to pamper yourself and your loved ones.

6. Make the Money Work

You may consider investing in financial markets. You can create a comfortable retirement fund by starting right away. It is never too late to start planning for the future. Here’s a tip – never place all your money in individual stocks if you are not a diligent investor. Instead, you may want to play around using exchange traded funds and mutual funds to spread the risk a bit because in this violent world with crime going up – we are all already taking enough risk.

7. Buy Those Healthy Meals

Healthy food costs money. If you have the cash, you should consider taking a step in the healthy direction. Go organic. While you are at it, you may want to buy a gym membership as well. You will automatically start feeling better when you eat healthy. Health is something nobody really appreciates until they lose it. Using your money towards taking care of your health is a poignant way to spend it even when food costs are going up.

8. Go Have Fun

Live a little with your windfall. You are allowed to have fun. But, before you think about spending it on stuff, ask yourself whether you really need more stuff. Won’t you rather spend the money on experiences? Maybe take a rollercoaster ride at the local fun park or throw a party for your friends. You could also just use it at a spa to give yourself a memorable experience.

9. Visit Friends and Family

Satisfying relationships and happiness are correlated. But, it is expensive maintaining good relationships with family and friends. We all have family members or friends that moved away and never visited again. You still love them. You are still in touch with them through digital mediums. Why don’t you go visit them?