When it comes to money, small changes may work better than big ones.
It's because smaller bite-size changes are more likely to grow into new habits
that stick. These changes may seem minor, but they can have a major impact.
1. Save a Little
Sure, saving a lot
would be great. But saving what you can is even better. Maybe that’s Rs. 10 a
month into the piggy bank on the kitchen counter, putting an extra Rs. 100 a
month into your bank savings account, or beginning a 1 percent contribution to
your provident fund. Small moves like this have a big impact over time.
2. Make an Extra Payment
What if you made one
extra mortgage payment a year? Or rounded your car payment up to the nearest
hundred dollars? A little extra here and there can mean your mortgage is paid
off years in advance or your car is paid off months in advance.
One word of caution — with mortgages you may have to make the entire
extra payment at once rather than paying a little more each month. If you add a
little extra each month the lender may not apply the extra payment to
principal. Contact your lender to find out how to pay extra in a way that the
excess payment reduces your principal balance.
3. Learn Your Bracket
Taxes matter. If you
pay them, you should learn how they work. Start by studying the tax
brackets. When you look at the bracket you’ll see that after your taxable
income exceeds certain limits, the tax rate goes up. Once you understand this
you can see the benefit of contributing higher income amounts to a retirement/provident
funds or traditional PPF - the deductible contributions save you money at the
higher rate.
4. Switch to an Index Fund
Just because you
can’t see the fee being deducted doesn’t mean it doesn’t matter. Mutual funds
deduct fees before they give your share of the investment returns. It’s been
proven that one of the best ways to find the best performing mutual funds is
to switch to lower fee funds — which usually means using an index fund. As your
account balances grow this simple change can save you thousands year after
year.
5. Project
It would be hard to
find your way through a thick forest if there was no trail. It can also be hard
to save for retirement without a sense of where your actions will take you.
Online retirement calculators project your path - they help you see
how your savings will grow over time and what kind of income might be available
to you later. If you’ve never run a projection - get online and give it a go.
6. Read One Finance Book
A single book can
impart knowledge that will serve you for a lifetime. Even if you don’t like
reading, surely you can get through one book? The one I would recommend is Behavior
Gap, by Carl Richards. It’s a great book on how our behaviors cause us to
unknowingly make dumb decisions with our money.
7. Organize
Financial stuff can
feel overwhelming. A simple step you can use to make it more manageable is to get
your financial information organized. I was buried in debt at one point in my
life. I didn’t want to see how bad it was - but it was only after I forced
myself to organize all my credit card statements and tally up the totals that I
began to make significant progress toward paying things off.
8. Buy Used
Cars, furniture,
clothing… you can almost always find what you want and pay less for it by
buying used. If you get in the habit of looking for used items first you
can save hundreds, sometimes thousands, every transaction.
9. Cancel Something
Too many of you have
some type of recurring charge that is coming out of your bank account or being
charged to your credit card — and it is for something you don’t even use. It
might be a magazine subscription, annual membership renewal fee, or something
you signed up for accidentally. Scour your statements and set aside the time it
will take to cancel those things you don’t use.
10. Turn off Financial TV
One client told me
that one of the things he really liked about working with a financial advisor
was that he didn’t watch financial TV anymore. He found life to be far more
relaxing once he tuned that stuff out. Everyone can benefit from turning off
the financial stock tip shows. Put a solid long-term plan in place and watch
stuff that will make you laugh - not stuff that will only stress you out.
https://www.thebalance.com/small-money-moves-with-big-impact-2388361
