You may or may not have ever considered the various reasons why saving money is important. Not only can it be character building, but it can also be very satisfying to watch yourself boss up and meet your goals. Maybe a goal like saving your first $100k. Or maybe saving to have money left over after saving for the down payment of your first home or car purchase.
There’s something awesome about delayed gratification that outweighs any fly by night splurge. Here are the 3 savings tips that you can start today to level up on your saving goals
In All Thy Getting…
The best way to start saving is to start understanding why you’re spending. Especially if you’re spending frivolously. The honest truth is that you’re not spending money simply because you have it in the bank, or worse, on a credit card. There are feelings involved. Yes. Feelings that can be categorized by either pain or pleasure.
Feelings of exhilaration when you splurge or the freedom you feel when you go out with your friends are feelings of pleasure. However, the feelings that we like to avoid are siblings of pain. Such as how you feel when you can’t go out or can’t afford to buy that new iPhone XS Max.
Now, you might expect me to say “get out of your feelings”, but no, I want you to do the exact opposite of that. Not only do I want you to be still in that “feeling” you feel when you’re getting ready to fail…I mean, spend, but I want you to also redirect. I want you to begin redirecting your thoughts on spending which will help get your feelings in check. “How so?”, you might ask. Easy – ask yourself these three poignant questions based on my “WNR System”(Wants, Needs and Rewards):
- Is it trending? Anything trending represents your impulse for immediate gratification of all of your wants. Do you remember when hoverboards first came out? Before the hilariously painful videos of people busting their asses or nearly experiencing death by hoverboard fire? Because they were trending they were more expensive. However, weeks later you could buy a quality hoverboard for half the original price on amazon.com. Basic supply and demand. Therefore, if what you want is trending, more than likely if you wait it out for a few weeks you will likely find a deal worth the wait and save a ton of coins.
- Are my bills paid? Your bills are a representation of the needs in your life. Fiscal responsibility not only reflects in your spending habits, but it also flows into other areas of your life. I’m pretty sure irresponsibility has peeped it’s little, ugly head in other areas of your life as well. So if your bills aren’t paid, then it goes without saying that you shouldn’t spend a dime on anything extra. Not for you and not for your kids and not for your friends. As the saying somewhat goes, the way you do one thing is how you do most things.
- Is it deserved? If your bills are paid and you haven’t been on a spending spree, the next thing to consider is if you have put enough skin in the game to reward yourself for good behavior. If you have, go for it! Sometimes you just simply deserve to eat the cookie and buy the shoes as noted by one of my fav speakers, Joyce Meyers. However, if you feel as if you haven’t really saved as much as you could have for that week or month, go ahead and enjoy a slice of delayed gratification and set a later date to make the purchase.
6 Money Saving Tips For Millennials
Millennials make up approximately 25% of the total population in the United States and they are now larger than the Baby Boomer generation.
This has welcomed a new trend—increased spending. The spending power of Millennials is estimated to reach a whopping $3.39 trillion by the end of 2018. A higher education level and more spending power haven’t yet translated into financial literacy.
As financial literacy is not taught in schools, most individuals grow up having no idea of investing and saving options. Most millennials will soon have to start making life decisions—whether it is to buy a home or start a family.
They need to find a way to overcome mounting student debt, skyrocketing rents, a saturated job market, and stagnant wages, while saving enough for retirement.
Sounds tough? Sure. But you need not worry. Here are six financial tips that will help millennials save a few bucks—all the while maintaining financial discipline.
Getting Plenty Of Financial Advice? 5 Money Rules You Can Ignore
Today’s millennials aren’t big fans of debt. Unlike the baby boomers, young adults today are straddling massive financial pressure – be it heavy student loans or home prices reaching unaffordable highs. While all of this welcomes plenty of financial advice, most of them are wrong. Here are five pieces of money rules you can afford to ignore.
1. Buy A House ASAP (And Not Rent)
With home prices almost doubling and trumping inflation and pay, buying a house could lead to a nightmare if you’re taking out a mortgage before your income allows you to afford one. A better option would be to rent until you have enough funding to put down 20%, while taking care to not make payments that are more than 30% of your total income.
2. Ditch Your Credit Card
While this might be popular financial advice from the older folks, getting a credit card that comes with a low annual fee can help you immensely – if used right. What’s more, it comes packed with perks like reward points, cashback, mileage for travel, and can help you meet a large unexpected cost.
3. Pay Down Debts With The Highest Rates
It might be tempting to tackle the biggest debt of the lot and let the smaller ones slip down your priority list. The trick here is to focus instead on paying off your smallest of debts with every dollar you can afford – once it’s paid off, roll over to paying off the next one, until you’re debt-free.
4. Start Saving For Your Retirement (Right Now)
Despite the upside to saving for your retirement now, millennials might often find money too tight. For folks who are just out of university, a wiser option would be to aggressively pay off your debts instead. Although, here’s a caveat – IF your employer offers a retirement contribution match, invest just enough to get that perk (It’s free money!).
5. Buy Yourself A Car
With the shared economy on overdrive, there are plenty of options ranging from car rentals to ride-hailing services. Pumping your money into buying your car could also demand more of your savings for repairs and maintenance – funds you can use to pay off other expenses with. The opportunity cost isn’t worth it if you haven’t got enough financial cushion to meet your important expenses.
Why You Need To Bag Muni Bonds For High-Yield Tax-Free Returns
With many investors taking to the stock market or making do with scraping a meagre 2% yield off their 10-year Treasury bills, most miss out on including a far better option to their investment portfolio – municipal bonds. What’s exciting about this asset class? They come packed with significant tax advantages, and yield returns that are over 6% to the investor. Here’s a short, somewhat helpful video on how municipal bonds work:
Muni bonds have been the safest bet when investing in bonds – their default rates at 0.2% for years are almost miniscule when compared to the volatility that the equity market flirts with. Earlier this year, a new federal tax law enabled improved tax deductions on federal returns. This drew many to bank on municipal bonds since it fit the tax-free bill. The interest income you receive on muni bonds is not subject to federal taxes, plus it is exempt from local taxes if it was issued within your state. The cascading gains you make can be dramatic.
The best way to tap into muni bonds are through a bond fund. Within a regular bond fund, you get to pick amongst mutual funds, closed-end funds and exchange-traded funds (ETFs). Beyond these classes, you would also have to consider factors such as your investment horizon and cash flow requirements. Here’s a post that explains the calculations that go into muni bonds and other considerations to look at when making the investment. Better yet are the projections – nearly $51 billion in reinvestment demand is expected this month, which would sweeten the deal for municipal bond holders.