8 shortcuts to getting richer this year
'Hacks' are clever solutions to tricky problems. Here are some of my favorites to help you save more or spend less in 2012.
This post comes from Stacy Johnson at partner site Money Talks News.
Over the next two weeks, I'll be covering topics to help you meet financial resolutions, like learning to budget and getting out of debt. But whether your resolutions revolve around getting in better shape, dropping bad habits, or improving your finances, odds are they're about changing your behavior -- no walk in the park. One thing that will help? Using simple shortcuts that remove some of the pain from the process.
In the digital age, shortcuts to solutions are often called "hacks." In the video below, I'll share a few of my money-related favorites. Check it out, then read on for more.
Now let's look at these money-making and money-saving hacks in more detail and add a couple more.
Problem: You want and should be able to save more, but it never seems to happen.
Hack: Take your discipline (or lack thereof) completely out of the equation by automating your savings. Save before you see the money by transferring it automatically from every paycheck into savings, either regular or retirement. If your employer can't make it happen, talk to your bank, broker or mutual fund and schedule regular transfers to savings or investment accounts. Instead of trying to find money to save every month, this hack lets you set it and forget it.
Not only is this more efficient, it's more effective. If you take the traditional approach -- waiting until you've paid all your bills before saving what's left -- there's often nothing left to save. There's a reason "pay yourself first" has been the mantra of the money-enlightened for decades: It works.
Problem:Forgetfulness leads to late bills, which leads to fees and potential damage to your credit scores.
Hack:Most banks and credit unions offer automated bill payment you can set up online. Utilities and other companies offer this service too, and might waive convenience fees or offer discounts for the ability to suck money directly from your checking account.
If your monthly bills include debt payments, automatically pay more than the minimum to eliminate debt faster. Remember what I said in the video above: Minimum payments are for losers.
One caveat: Make sure you maintain a sufficient checking account balance to auto-pay all your bills without overdrawing your account. If there's even a chance you might, set up an auto-transfer from savings or a credit line to cover any conceivable shortfall.
Problem:You see the advantage of budgeting, but feel overwhelmed by the idea of creating spreadsheets, then tracking, recording and analyzing where your money's going.
Hack: Traditional budget worksheets are so 2011. It's time to throw out the paper and pencil and let your computer or smartphone do the heavy lifting. Use a free service like Mint.com to establish goals, automatically track your spending, and give you a complete picture of exactly where you are 24/7. For even more convenience, look to the dozens of apps -- many free -- that can put your computerized budget into the palm of your hand. This app review article from Moolanomy is a good place to start looking.
Problem:You'd like to invest part of your retirement or other long-term savings into stocks or other risk-based investments, but have no idea how much to put where.
Hack: Subtract your age from 100. What's left is the percent of your long-term savings to at least consider investing in stocks. So if you're 25 years old, you'd put up to 75% in stocks. If you're 60, your stock percentage should be about 40%. (For more on beginning investing, see "How do I get started investing?")
Caveat: This hack isn't a rule, but rather a rule of thumb. Don't put money into any fluctuating investment if you'll need it within five years, and don't ever risk so much that you lie awake at night. There's no return worth your peace of mind.
Problem:You pay more than you have to because you don't check online before leaving home and don't want to waste time and gas comparing prices all over town.
Hack:Smartphone apps such as Google Shopper, RedLaser and Amazon Price Check let you scan barcodes and search for products to check prices online and locally. And don't ever buy anything without looking for online coupons. One place to start -- our deals page.
Saving more, Part 2
Problem:You don't make enough to automate your savings and never seem to have anything saved.
Hack: While tracking and analyzing your expenses is the only way to know if there's really any money hiding in your budget, the time-honored technique of a change jar is a low-tech, simple and effective way to save. When you come home, simply empty your pockets or purse of change.
Want to turbocharge your change jar? In this post, Len Penzo suggested adding dollars to the mix:
When you are out during the day, don't spend any dollar bills you get as change. Then, after you come home and are ready to make contributions to your jar, be sure to include all of those unspent dollar bills along with your coins -- and if you have no singles, then pull out a fiver and drop it in the jar.
Since I read Len's post, I've started doing this and the amount I've saved is astonishing. Try it.
Problem: You'd love to use more coupons and discount codes, but don't have time to clip them or scour the Web.
Hack:Automatically create and maintain a searchable collection of deals and discounts. The easiest way to do it: Subscribe to RSS feeds from deals sites like Slickdeals, Techbargains and Dealnews using a free feed reader like Google Reader. (We've bundled some good ones for you -- check out Tip No. 9 in "9 best ways to get free stuff.")
Problem: You're accumulating parking tickets because while your intention is to run inside a store for just a minute, that always seems to be the minute that parking enforcement is dropping by.
Hack: One of the best pieces of advice I ever read: Always keep change in your car so you can feed the meter. Not in your pocket or purse -- in your ash tray. Sounds simple, but do you do it? Since I started a few years ago, I've pretty much eliminated this maddening budget-buster.
The hacks above are a few of my favorites, but they're really just the tip of the iceberg. So, what about you? What simple techniques have you used to save more, spend less, or otherwise reach your financial goals?
More on Money Talks News and MSN Money:
My oldest boy has been putting 33% of his paycheck into his 401K since he started working at 16. He's almost 20 now and I while I know he will have to cut it down to 5 or 6% when he's out on his own, he's got a huge head start. Calculating the same return I have gotten per year (including the last 10yrs which haven't been good), he will have $1.5 to $2mm by the time he's 67yrs old so long as he leaves the 5-6% as a minimum. Even if he was an idiot and stopped putting any more money in once he's on his own, he will still have $250-$300K based on those same projections.
As for me, I'm putting 25% of my IRA into Energy/Gas companies to take advantage of Iran's posturing over the Straights. That should make for a nice 10-20% pop in 2012 and should there be a war gas will go to $200 a barrel which will lead to really big profits.
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ABOUT SMART SPENDING
Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.
Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.
A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.
Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.
Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.
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