Tuesday, September 17, 2013

Old School Finance Tips That Work

English: Debit Card فارسی: کارت عابر بانک العر...
English: Debit Card(Photo credit: Wikipedia)
There are all kinds of things people can learn from the Great Recession. However, the biggest lesson is that there’s no such thing as a guarantee. While some investments may be conservative, they’re still a gamble. Locked-in interest rates usually aren’t worth the trouble, considering you’re making a large set of funds unavailable for emergency situations. It’s safe to say more people are miss-managing their money (whether it’s a lot or a little) today than they were 100 years ago.

While you won’t get rich from old school investment and savings strategies, you will be relatively secure. How did our grandparents save, invest and manage their money? Maybe they knew a few things that today’s race for high ROIs leaves in the dust. After all, slow and steady has long been the mantra for many things in life, so why not money management?

Actually Budget

Everyone knows you “should” have a budget, but do you actually have one in place? A budget is a written down, line item document that itemizes every single expense and source of income. A budget is something you stick to even if you really want a new BBQ for the summer or if large garden desperately needs an expensive organic rabbit repellant (you should budget-in emergency funds). Despite this knowledge, most people don’t have one or fail to follow its guidelines.

However, most people also have a salary, work the same amount of hours, or get the same benefits each month. It’s no secret how much money you get, and it shouldn’t be a secret how much money you spend. Write down your fixed-costs, such as utilities and actually track how much you spend on everything else. You’ll quickly pinpoint some ways to save money and make sure you re-direct it to savings, emergency funds or retirement.

Use Cash and Precious Metals

It’s simply easier to spend on a debit or credit card than with cash. In an emergency situation, it’s always best to have cash on hand, and maybe even some precious metals bought when the prices were low. However, cash is also easy to steal and most burglars know exactly where to look. Invest in a fire-proof safe that’s bolted to the home and impossible to remove to store vital documents, cash and other precious belongings — that’s what our grandparents did.

Sadly, most banks don’t offer a good enough interest rate to make savings accounts worthwhile. You can easily get disheartened looking at monthly interests that never go beyond single figures. If you have trouble saving, choose an online account and opt out of getting debit cards and checks. You can still transfer funds to make them accessible, but it will take a few days so it stops impulse purchases. 

Reconsider Needs

A big problem many people have while budgeting is their undefined definition of necessities. Few people need a house as nice or as large as the one they live in, or the cars that they have in the garage. If you really want to be financially sound, keep in mind you’ll likely need more than your current income per year when you retire. Suddenly the urge to save is much stronger — and you find downsizing a little easier.

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