Everyone has their own favorite ways of chopping a few dollars out of monthly budgets. The following seven strategies might not be the most obvious, but they work well and have the advantage of being painlessly simple. The overall goal, if you employ all the ideas, is to not only slice expenses but to increase net worth. The techniques work best when done together, as a sort of step-by-step financial renovation project. Some are short-term and other longer-term approaches. See which ones work best for you, remembering that they reinforce each other and deliver the best results as a group.
Buy Precious Metals
Many working adults view precious metals, like gold and silver, as something of a mystery. They’re not at all. In fact, you can strengthen your portfolio by keeping about five percent of it in precious metals. As a general rule, all your extra money, after paying bills, should go toward investments, retirement accounts, an emergency fund kept in a savings account, and representing about three-months’ income, and paying down debt like credit cards, car loans, and mortgages.
When you purchase metals, there are several ways to go about it. ETFs, exchange-traded funds, are a simple way to buy shares that directly track the value of one or more metals. Other investors prefer to take on indirect exposure to gold and silver with mining stocks. But you won’t always get a similar price move advantage with mines because they don’t track metal prices in real-time. Finally, you can buy bullion coins in just about any size and weight of your choice. By far, the most popular are one-ounce silver or gold coins minted by the U.S. government. Consider storing them in a safe deposit box or home safe.
Refinance Student Loans
If you have any education debt, refinancing can be a major plus for your budget. When you work with a private lender like this site on refinancing your student loans, your benefits are three-fold: you instantly chop monthly bills, there’s a chance for a better interest rate, and your repayment period is more manageable. One reason you can get a better rate is that your credit is likely much better now than when you took out the original loan. After several years of working, owning a home, and establishing yourself, it’s probable that you can snag a lower interest rate on student debt via a refinancing agreement. The online application is simple and quick, so there’s a big incentive to check out your options.
Contribute the Maximum to Retirement Accounts
Aim toward contributing the maximum to retirement accounts. However, if you have a 401k, that might not be possible due to the much higher limits. So, use IRA guidelines as your cutoff point for funding. And remember, each member of a married couple can contribute the max per person every year. Retirement funds represent solid, net-worth assets. Unfortunately, too many people neglect to fund their IRA or don’t put in the max while they’re young.
If possible, use a payroll automatic-deposit plan to place a percentage of each check into your IRA. That way, you never see the money and won’t have to worry about moving it from a bank account into a separate retirement account. Under-funded IRAs are more common than people think. Too many younger folks figure they can do it later, but never get around to paying the proper attention to their golden years.
Record Every Dollar You Spend
Someone once said that knowledge is power. Equally true is the fact that self-knowledge is super-power. When you take the time to track every dollar you spend for a month or two, you’ll gain important insights into your spending habits. In fact, the single best way to rein in excess spending is to first do a self-audit. Use credit card receipts, bank statements, and other records to keep tabs on where every dollar goes. Once you know that, it’s much easier to slice and dice the monthly budget and cut out the fat.
Break the Savings Account Habit
It seems counter-intuitive to say savings accounts are not important, but they are. Except for the limited purpose of storing your emergency fund, savings accounts are not where you should stash your extra money. Your hard-earned cash should be working for you in an investment account, money market fund, or in hard assets that appreciate (like precious metals or works of art). Savings accounts were designed for banks to meet legal requirements and to make money. They were not designed for individuals, so use them as little as possible. You can even keep your emergency fund in a short-term money market rather than a savings account.
Sell Every Unneeded Thing You Own
Your garage, attic, basement, and storage cube hold several hundred dollars, perhaps thousands, in untapped wealth. If you’re like most people, you assume it’s too difficult to sell or just not worth the hassle. On the contrary, it’s easy to leverage the power of a digital camera, the internet, and local sales or consignment outlets. For the really big, hard to ship stuff like used cars, bed stands, and furniture, hold a yard sale. For smaller items, use one of the larger online sellers with a big reach. Whatever doesn’t sell can go to charity, a friend, or a local church.
Work with a Financial Pro to Set Savings Goals
There’s no substitute for professional help when it comes to long-term money goals. Plus, buying an hour or two of a CPA’s or licensed financial counselor’s time won’t set you back more than a couple of hundred dollars, at most. It’s money well spent. To get ready for the session, bring a copy of your detailed budget and a list of all your assets, even the ones you think are unimportant or too small. Experts do one thing very well in that they understand averages and financial capabilities because they’re seen it all. Their objective eyes can give you a realistic range for what your savings goals should be, and their opinions are backed by the evidence in front of them as well as their own experience with other clients.