Follow This One-Size-Fits-All Financial Advice
One of Lifehacker’s core tenets is that not every hack works for every person. This is especially true with advice on money, because the individual situation and goals of each will be very different from those of others. For example, you might spend too much money when using a credit card, so advice on choosing the best bonus card won’t help you.
But there are some rules of thumb that almost anyone can follow. These include:
Don’t accumulate credit card debt
It’s obvious, but worth repeating: if you use a card to “pay” for something because you don’t have money in your bank account, you run into debt and end up paying significantly more in the long run. Likewise, you shouldn’t spend more than you earn, and you should always pay your bill on time, even if you can only make the minimum payment . But it’s a matter of course, uh, a letter, isn’t it?
You might think that this applies to all debts, but it is not. There is a difference between good and bad debt . Simply put: Good debt, like a mortgage or car loan, usually helps your credit score because it is backed by something tangible, while bad debt, like a credit card debt, hurts your credit score because it not this way.
Student loan debt is a more complex topic – it can be good debt for many people as it can help improve your credit score and open up more opportunities. But it can also be bad if it overwhelmingly overshadows every financial and career decision you make. As with everything, there are shades of gray and differences between the two extremes.
Exceptions : You are in the midst of a disaster / emergency and have no choice but to use your credit card.
Contribute to your 401 (k) pre-employer
The 401 (k) account has gotten a bad reputation and some of them are justified. They can be expensive to run and offer limited investment opportunities, and they do not replace a defined benefit plan for most workers. Not everyone has access to one or more money to put aside. But they are also one of the most effective financial instruments offered to full-time workers.
If you are unhappy with your options and 401 (k) fees, which is a legitimate criticism, then at least contribute to the match to be fully compensated. As I wrote earlier:
You should think of this money as part of your compensation. Would you agree if your employer paid you $ 49,000 instead of $ 50,000 if you agreed to the latter? Not? It’s the same with your 401 (k) match. Suddenly, your two percent contribution turns into four percent. They have to give you money anyway, but they made it a requirement, so you have to do it anyway. If you don’t put in enough money to get a match, you are effectively missing out on some of your paycheck.
Plus, 401 (k) s lowers your taxable income by giving you tax credit now, and you will benefit from compound interest if you leave your money alone.
Exceptions : You need money in the short term, but plan to increase your contributions as soon as you catch up with them.
Open your accounts and financial documents when you receive them
Last week, I logged into my Fidelity account to upload some tax forms. When I did this, I saw that the account tied to my old employer was completely emptied. Balance: $ 0. I got scared for a moment and then texted an old colleague. It turns out that the company changed their ISP, which I would have learned if I had bothered to open my mail. Bottom line of this sad story: open your mail, especially if it was sent by your bank or other financial institution with which you do business. You will save yourself a headache (and shock).
Exceptions : Thieves now rely on (sorry) that you open your mail, which also means you need to keep a close eye on fraud. This is especially true for the elderly. As a general rule, avoid anything that promises you a certain amount of profit or, if you have student loans, claims that they can make them disappear.
Anything else that you want to ignore? Credit card convenience checks . Don’t use them.
Pay yourself first
This is one of those tips used in every How to Save More Articles article, but that’s because it’s the best way to really save money. Pay yourself first before spending on unnecessary expenses and you will come out ahead in the long run and be able to live more comfortably and stress-free day in and day out.
This means automating paycheck savings, ideally before you even receive them. Better yet, make that money more difficult to access: place it in a separate high-yield account, or use an app like Digit to save money.
Exceptions : You have at least $ 1000 or monthly savings and you want to pay off some of your debt.
Speaking of boring …
Your finances must be boring.
Get rich quick schemes and complex investment products that you don’t really understand may seem too good to be true, and that’s because they are. Many financial services and products exist solely because they generate a lot of money for other people. The time-tested best products and strategies are relatively simple and straightforward. This article goes into detail about these strategies and how they help build wealth over time. When in doubt, follow Jack Bogle .
Exceptions : you are already rich and love to play with day trading. Just kidding, don’t do that either.
Read Everything Before You Sign (or Buy)
While it seems obvious too, there are many less obvious situations in which it applies, from housing to credit cards to loans:
- Ask your landlord what happens if your roommate moves out in the middle of your lease, or if you lose your job and have to terminate the contract early. Make sure this is written in your lease.
- You didn’t realize that your car loan includes an extended warranty.
- Your gym is automatically renewed for an annual membership after a one week trial period.
- Your payday loans are costing you significantly more than you expected when you signed up.
- Student loan interest starts to accumulate while you are still in school.
- The credit card you use has a deferred interest policy that takes effect after a specified number of months.
- What was verbally agreed upon (for example) when buying a home was not included in your final documents.
Exceptions : none.
Know that past successes do not translate into future results
When you write about investing in the long term, Lifehacker recommends low-cost diversified mutual funds and ETFs that have historically performed better at a lower cost than actively managed funds. But, as with most things in life, there is a serious caveat: results are not guaranteed. No one really can predict what the stock market will do – or your bank, boss, spouse, etc. This is important to remember when researching any fund, credit card, or bank account.
Likewise, know that nothing – except death and taxes – is guaranteed. If someone is trying to sell you a product with a “guaranteed 100 percent profit” or result, call it bullshit and walk away.
Exceptions : none. Everything changes and nothing remains the same.