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Five Reasons to Manage Personal Finances with Mint

Five Reasons to Manage Personal Finances with Mint

Virtual money management has been a real game changer in the last decade. With all of our personal finance data at our fingertips, it makes total sense to find the best tool out there to get on top of this area of life. In my opinion, Mint.com is by far the best application available for anyone interested in attaining financial freedom on their own terms. Here are the top 5 reasons that this is the case:

1. Full Integration

Mint is an incredibly powerful tool in that it allows you to bring all your financial relationships together under one roof. By integrating all of your bank accounts (i.e. checking and savings), brokerage accounts, retirement accounts, credit cards, store cards, loans, and practically anything else, Mint provides a solid platform to get a full picture of your financial situation and to continuously monitor all activity across that world. Long gone are the days where you need to balance your check book and go through credit card statements line by line. Mint’s automatic categorization of almost all expenses makes it super simple to go through and make minor edits to run all sorts of personal financial analysis.

In order to get the full benefit of an integrated personal finance platform like Mint, my strong suggestion would be to get in the habit of paying for everything with your credit card. While there has been much hype over the years that credit cards are dangerous and get you into trouble, with responsibility, they can be your most powerful asset. By paying for everything you can with credit cards, all transaction details get automatically ported over into Mint and roughly categorized for review at a later time (plus there are tons of other benefits like rewards points that come with using plastic!). If you find that you don’t have your credit card on you for some reason, reach for your debit card next as you will get the same information into Mint although without the rewards points. In my opinion, cash should only be used as a last resort for two reasons: it’s difficult to track spending and there are no rewards for using it.

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Oh, by the way, Mint provides seamless integration across web and mobile devices as well so all of your financial information is accessible wherever you go.

2. Trend Analysis

Once you have at least a month’s worth of data, you can start doing some informative analysis of your financial life. Here’s a general breakdown of the monthly routine that I go through:

  • Start by checking each spending activity item in the Transactions section.
  1. Modify the names of transactions noting specific information (e.g. item, place, etc.).
  2. Re-categorize any items that were not automatically filed correctly. My suggestion would be to only create subcategories for areas that will have multiple items per month.
  3. Split out any transactions that were lumped together. With cash withdrawals, I find it difficult to always account for where that went but try your best.
  4. Mark any transactions as duplicate to not include in reports. I prefer to leave out any small interest and investment activity all together.

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    • After modifying the underlying data, check out the Trends section.
    1. Start with Spending by Category using pie charts for exactly a month.
    2. Click through each category to check all Transactions are accurately filed.
    3. Pull up the Net Income report to see how your income for that month compared to spending.
    4. Compare your Net Income and each major Category for the Last Month with the Previous as well as some other custom time period (e.g. 3, 6, or 12 months).
    5. Make note of general trends and spending habits that can be planned for in your budget.

    3. Budget Setting

    Setting budgets for your monthly spending is a good habit in general. While budgets can be overly constraining, Mint does a great job of providing functionality to make budgets a helpful reference point for financial freedom. I definitely recommend using this part of Mint at least  to program some broad categories and a few subcategories especially for things like Food & Dining. My suggestion would be to only get more granular with subcategories with things like automatic payments (e.g. magazines, Netflix, Hulu, etc.) so you can quickly account for these when reviewing your budget. Caution: the “Everything Else” section conveniently hides the rest of your spending so you’ll need to be diligent about seeing how much money is slipping by your plan.

    Another helpful feature is that Mint rolls over budgets to the next month making it easy to make a few adjustments here and there over time. As part of a monthly review, definitely go through what has been carried over and project out your expected spending for the month to be prepared when things come through. After doing trend analysis and drawing some conclusions, I use the key takeaways to figure out how my budgets could be modified.

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    4. Alerts & Notifications

    On the Overview tab of Mint, there is a section called Upcoming Bills that is really useful for planning purposes. Rather than taking up mind space having to remember when all of your various bills are due each month, I highly suggest taking the time to go through and specify who needs to be paid, the amount and the approximate date for the recurring payment. Trying to figure out the best timing for paying bills in relation to income is always a bit of a hassle. Having Mint visually display spending patterns I find to be a nice feature that allows me to find ways to most efficiently manage my money. Once this information has been specified, Mint will automatically send you reminders that bills are coming due either through email and/or mobile devices. I’m also a fan of some of the other notifications that are sent out as well such as getting paid!

    5. It’s free!

    In my opinion, Mint provides a ton of value at zero cost to the user. There are a few different personal finance applications now available but they often times have a business model that requires subscription such as LearnVest. With so much to offer, I don’t see why everyone and their Mother isn’t using Mint at the least to help bring greater clarity to their financial situation.

    There are a lot of other good functions of Mint but I find some of it to be a little cumbersome and not as useful as one would imagine. For example, the investments section is rather temperamental so I prefer to stick with my actual brokerage or retirement accounts to monitor activity. Also, the goal setting module has not been something that I have not gotten in the habit of using but surely others  find this valuable.

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    As a pre-requisite for self-actualization, money is something that continuously requires our attention. However, the more freedom that we can attain in relationship to this area the more we will be able to place on our higher aspirations. For this reason, I strongly suggest implementing Mint.com in your life if you haven’t done so already!

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    Last Updated on September 2, 2020

    How to Set Financial Goals and Actually Meet Them

    How to Set Financial Goals and Actually Meet Them

    Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

    In this article, we will explore ways to set financial goals and actually meet them with ease.

    4 Steps to Setting Financial Goals

    Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

    1. Be Clear About the Objectives

    Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

    It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

    Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

    2. Keep Goals Realistic

    It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

    It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

    3. Account for Inflation

    Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

    Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

    For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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    4. Short Term Vs Long Term

    Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

    As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

    By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

    How to Achieve Your Financial Goals

    Whenever we talk about chasing any financial goal, it is usually a two-step process:

    • Ensuring healthy savings
    • Making smart investments

    You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

    Ensuring Healthy Savings

    Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

    This is the focal point from where you start your journey of achieving financial goals.

    1. Track Expenses

    The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

    Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

    If you’re not sure where to start when tracking expenses, this article may be able to help.

    2. Pay Yourself First

    Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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    Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

    The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

    Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

    3. Make a Plan and Vow to Stick With It

    Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

    Nowadays, several money management apps can help you do this automatically.

    At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

    Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

    You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

    4. Make Savings a Habit and Not a Goal

    In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

    Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

    • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
    • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
    • If you go shopping, always look out for coupons and see where can you get the best deal.

    The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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    5. Talk About It

    Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

    Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

    6. Maintain a Journal

    For some people, writing helps a great deal in making sure that they achieve what they plan.

    If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

    When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

    Making Smart Investments

    Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

    1. Consult a Financial Advisor

    Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

    Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

    2. Choose Your Investment Instrument Wisely

    Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

    Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

    As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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    3. Compounding Is the Eighth Wonder

    Einstein once remarked about compounding:

    “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

    Use compound interest when setting financial goals

      Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

      Start saving early so that time is on your side to help you bear the fruits of compounding.

      4. Measure, Measure, Measure

      All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

      If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

      Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

      The Bottom Line

      Managing your extra money to achieve your short and long-term financial goals

      and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

      More Tips on Financial Goals

      Featured photo credit: Micheile Henderson via unsplash.com

      Reference

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