Although the economy is finally starting to pick back up, it’s still more important than ever to learn and practice healthy habits when it comes to how you handle your money. With so many way to spend, save, and invest, make sure that you’re taking the right advice from a trustworthy source. With that said, here are eight monetary tips you shouldn’t ignore.
Rebalance Your Portfolio Annually
If you have a diverse investment portfolio, like a 401k that has bonds and stocks, then buying and holding these investments changes the ratio of them throughout the years because riskier investments usually grow faster. Because this can increase the risk of your long-term investments, which isn’t what you want as you get older, it’s important to set up your 401k to rebalance automatically annually, which is a standard option with most plans.
Smile if You Owe the IRS
While a hefty government check can seem like the right way to pay you back for surviving the torturous task of filing taxes, it actually means that you’ve been overpaying your taxes. When you overpay your taxes throughout the year, you essentially loan the government an average of about $3,000 to $4,000 per year. Instead, it’s better to make that money work for you in an interest-making account. Use tax software or talk with a professional to get the amount of taxes you pay closer to what you owe.
Pay Off Your Low Balance Cards
If you want to get yourself out of debt with the psychological boost of noticing results quickly, then opt to pay off your low-balance cards first before you pay off your highest interest cards. Allowing more of your payment to go toward paying off more of the principal balance won’t only keep you motivated to retire your debt, but it’ll actually help in lowering it as you set priorities and stick to them.
Take Care of Yourself
Protecting your job at all costs may seem like the naturally thing to do in an unstable economy, but taking care of yourself is more important and has more financial impacts than you might think. The leading reason people in the U.S. file for bankruptcy is medical debt, not losing a job. Medical debt means you don’t have the insurance or the reserve funding to cover your expenses. Well, if you eat right, exercise, and protect your health, it’s likely that you can avoid this issue altogether.
Invest in Yourself
Many people opt to use the money they’ve earned to invest in their home to protect its value. But how much does that expensive bathroom renovation actually add to your home’s overall value? The amount you earn in your life, after taking inflation into consideration, tops $1 million. It’s unlikely you have a million-dollar home, so be sure to invest in things like education and training so you can increase your chances of earning more money in your lifetime.
Stop Lending Out Money
Although lending money out to family members and friends who need help is thoughtful, it could lead to harmful consequences that leave your relationship in shambles. Not only will you damage your bond with the person you lend money out to, if he or she decides to never pay you back, but you’ll never get that money back either. As far as saving and investing goes, this isn’t a worthwhile way to do it.
Only Buy What You Need
It’s tempting to buy in bulk. After all, each tube of toothpaste in a six-pack costs less than a tube bought by itself. No matter how much you think it does, buying in bulk doesn’t actually save you a lot of money. Not only do you usually not have the funds in your pocket to support large-scale bulk purchases, but chances are you won’t even use the what you bought before it’s not usable or expires.
Save for Retirement
Saving for retirement is the least likely of people’s worries when they’re so busy paying other bills and expenses, but it’s an investment they should pay more attention to. The earlier you save for and invest in your retirement, the more money you’ll have when you’re ready to call it quits. If you put it off for too long, you may not be able to retire at all. Before investing, make sure to read up on annuity fundamentals so you’re fully aware of what to expect.
Worrying about money is a common stress among people, but it doesn’t have to be if you know how to manage. Try these tips to help you out. Have any more tips? Leave a comment below.