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5 Money Management Tips For Leading A More Productive Life

5 Money Management Tips For Leading A More Productive Life

If there is one thing guaranteed to raise your stress levels, it’s the money worry. Whether you’re under pressure to pay the mortgage or struggling to find the cash for that much-needed holiday, personal finance is one of the modern world’s biggest worries. Concerns over money can have a negative impact on your life, limit your choices, and impact your relationships with others.

However, armed with a little financial know-how it is possible to get a grip on your finance, and ensure your money is working hard for you, allowing you to lead a more productive life.

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1. Claim Back On Tax Allowance

If you are self-employed, you may well be eligible for a variety of tax benefits that you’re currently unaware of — anything you pay for which is necessary for your job — can be claimed back against income tax, ensuring you keep a higher proportion of the money you earn.

Travel expenses, work clothing and equipment, all qualify and if you work from home you’re even entitled to claim back the cost of electricity and internet bills if they’re relevant to your work — and by limiting the amount of tax you’re paying, you’ll have more money left over for investment opportunities.

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2. Keep A Record of Outgoing Expenses

    One way to ensure you’re getting the most out of your earnings is to keep a record of everything you spend — by monitoring your outgoings, you can gain an understanding of your finance which will stand you in good stead when it comes to the potential future investments, as well as ensuring the money you do spend goes as far as possible.

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    It’s all too easy to unwittingly overspend, but by keeping a record of what you spend on a daily basis, you’ll have a better idea of where the money is going.

    3. Take Advantage of Savings Account Offers

    Once you’ve got a grip on your accounts, the next step is ensuring that you have a savings account which suits your needs. In the ultra-competitive field of high street banking, companies offer all sorts of interesting deals designed to get you to bank with them. High rates of interest will see your savings inflated over time, while other perks include air miles and luxury hotel accommodation — perfect for high-flying businessmen and women who travel the globe for work.

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    4. Put Your Savings To Work

    If you’ve managed to save up a lump sum for the future, it’s important to make sure you’re putting that money to the good use. Whatever your position, there are plenty of opportunities to increase your savings through investment — bonds offer small but steady rates of interest, while if you’re looking for larger potential rewards, you might consider researching stock trading or spread betting.

    Although the risks are higher (and it’s possible to lose money as well as make it), by studying market movements, you can gain the knowledge required to earn substantial profits, taking advantage of benefits including tax-free profits and 24-hour trading. By learning how financial markets work, using the wealth of market-insight resources available from websites such as Market Watch, Reuters, and CMC Markets, you can try to grow your savings pot and turn a profit on your existing capital.

    5. Research Crowdfunding Opportunities

    Another possibility for investment which you may want to consider is crowdfunding — raising money for projects by presenting investment opportunities to a large number of people, offering significant opportunities with limited risk. Not only does crowdfunding allow you to begin a business venture with a reduced capital investment, it can also increase the profile of that venture as investors spread the word — and if the business is successful, everyone’s a winner, as those who have a stake in the business will receive a proportion of the profits!

    Those are five of the best money management tips to incorporate into your routine. Give it a try!

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    Tom Willis

    Web Marketing & Content Producer

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    Published on May 7, 2019

    How to Invest for Retirement (The Smart and Stress-Free Way)

    How to Invest for Retirement (The Smart and Stress-Free Way)

    When it comes to stocks, I bet you feel like you have no idea what you’re doing.

    Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

    Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

    You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

    Here’s how to invest for retirement the smart and stress-free way:

    1. Know Clearly Why You Invest

    Odds are you already know why should invest for retirement.

    But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

    • Will you spend more time with your family?
    • What does retirement mean to you?
    • Are you looking to launch that business you’ve been holding off for years?

    Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

    Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

    2. Figure out When to Invest

    “The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

    It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

    The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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    A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

    Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

    3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

    Investing your money well depends on your emotions.

    Why?

    Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

    Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

    Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

    Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

    4. Open a Reliable Retirement Account

    Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

    If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

    You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

    1. Vanguard
    2. TD Ameritrade
    3. Charles Schwab

    5. Challenge Yourself to Invest Consistently

    Committing to invest for retirement is hard, but continuing to do so is harder.

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    Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

    That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

    Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

    A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

    6. Consider Where to Invest Your Money

    The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

    Robo Advisors

    Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

    Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

    Bonds

    Think of bonds as “IOUs” to whomever you buy them from.

    Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

    Here are the different types of bond categories:[5]

    1. Treasury bonds
    2. Government bonds
    3. Corporate bonds
    4. Foreign bonds
    5. Mortgage-backed bonds
    6. Municipal bonds

    Mutual Funds

    Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

    One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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    Real Estate

    Yes, buying a home is an investment when done correctly.

    Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

    This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

    But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

    Savings Accounts

    Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

    7. Master Disincline to Dodge Short Success

    Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

    So how can you master delayed gratification?

    By building your discipline.

    Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

    Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

    8. Aggressively Invest on This One Investment

    I’ve mentioned several types of investments but haven’t covered the most important one.

    It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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    More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

    But, how can you invest yourself?

    Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

    Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

    But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

    Retire Happy with Excess Money

    The key to a secure financial future doesn’t only belong to financial experts.

    It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

    I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

    Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

    One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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    Featured photo credit: Matthew Bennett via unsplash.com

    Reference

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