4 Financial Tips Nobody Ever Told You
When you were growing up, your parents might have advised you to save some of your allowance in your piggy bank, and they may have had a college fund set aside for you. Other than that, your financial education probably came from a personal finance class in high school and then basically learning on the fly as you entered adulthood.
Here’s some good news: it is never too late to learn all you can about finances — including the tips that nobody ever shared with you. So with this in mind, let’s look at four solid pieces of advice that can help get your finances into great shape.
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Tip 1: Credit Cards Can Give You Free Money
Throughout your life, you may have been told to steer clear of credit cards. While this advice is good in theory — after all, you don’t want to rack up thousands of dollars of debt on your Visa or MasterCard — what many don’t realize is that you can actually earn money with certain cards. For example, USAA offers its members the Preferred Cash Rewards Visa Signature Card, which pays back an unlimited 1.5 percent. Let’s say you buy a total of $2,000 each month in groceries, gas, entertainment and other bills. If you use this Visa to pay for these things and then are disciplined about paying off the charges immediately, you will earn $30 in “free money” that month.
Tip 2: Investing in Stocks Is Not Just for the Wealthy
If you are under the assumption that investing in the stock market is for people with a lot of money in their bank accounts, nothing is further from the truth. As The Balance notes, you can start by setting aside the money you typically spend on fancy coffee drinks and open a portfolio at the end of the first month. In fact, Charles Schwab is now offering “Schwab Stock Slices,” which will give you the chance to own any of the S&P 500 companies for as little as $5. Although there is no guarantee on how your stocks will perform, the stock market has averaged a 10 percent return on investments since 1926, which is not too shabby.
Tip 3: Budget With the 50/30/20 Rule
Many people feel that budgets are restricted. But with the 50/30/20 rule, you can use this easy formula to get control of your money, not the other way around. This rule means you will use 50 percent of your income for “non-discretionary” things like your mortgage, food, utilities, gas and your electric bill. Thirty percent can be set aside for non-essential things like vacations, eating out and buying presents for others at the holidays and the last 20 percent goes into a retirement fund, a savings account or to pay off debts.
Tip 4: You Don’t Want a Huge Tax Refund
Every April, you probably hear from several friends who are delighted to be getting a tax refund. Some may even pay for their summer vacations or new furniture sets with the check. But here is something many people don’t realize: that refund amount is your own money that Uncle Sam had in his account all year long, instead of you. If you routinely get more than a couple hundred bucks back at tax time, it would be wise to re-do your deductions at work and have less taken out of your pay. This way, more of your money will stay in your pocket all year, instead of handing it over to the government.
Be Financially Savvy at Any Age
Despite what your financial education — or lack thereof — has been like your entire life, you can always take control of your money. By starting off with these four relatively unknown tips, you will be well on your way to being more educated about money, all while enjoying more financial stability.
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