8 Finance Tips For People Who Completely Suck At Money
Ah, January. A magical month of hope and despair. A month when your bank balance is a bit like your gut – you’ve had a great time, but now you need to do something about it. A month where you’re actually thinking Powerball may be your way out of this mess (hint: it’s not).
That’s why serial entrepreneur and finance geek Rob d’Apice has pulled together eight pro tips to shortcut your way back to a six-pack bank balance.
#1 Do a money detox
There is only one possible way to get rich: spend less than you earn (and make those saved earnings work for you). Spending money is super fun. We get it. You know what else is fun? Not being broke.
For exactly four weeks, you are going to detox your wallet. Do you feel like that $16 quinoa and kale salad from the corner café? Well, today you are getting a $6 Banh mi, or eating leftovers from last night. Need a new dress for an upcoming fiesta? Borrow one from a friend.
Get creative – every time you need to pull money out of your wallet, try to find a way to go without it. Just for four weeks. If you haven’t built a serious wad of cash in that time, I’ll eat my own foot.
#2 Minimise and sell
eBay is still a thing. A thing that magically turns your crap into cash.
Set a goal, say, to make $500. Find five things to sell on eBay: your old mobile phone, a broken old laptop (yes, it’s actually worth something), shoes, clothing, appliances, video games, furniture.
Every guide to selling on eBay makes the same point: photos, photos, photos. Make sure you snap your stuff professionally, and include a thorough and honest guide so that you make top dollar on your useless crap.
#3 Check yourself before you wreck yourself
Salaries generally aren’t static. They’re a negotiation. Make sure that down the line, you’re not unintentionally getting screwed. Talk with your colleagues, check Glassdoor and make a call to a recruiter. Get a sense for what you are worth, and if it’s less than you’re currently receiving, bring it up with your employer.
It doesn’t have to be awkward. In fact, The Cusp already has an expert guide for making sure your pay rise conversation is a success. You have nothing to lose.
#4 Use the 20% rule
Almost half of Australians spend first, then save whatever happens to be the remainder of their pay. Often, the remainder is not much.
Here’s a pro tip: pay yourself first. As soon as you get money in the bank, siphon 20% into a high-interest savings account. This is an account that rewards you for not making withdrawals (they’re usually called reward saver accounts), so you’re more inclined to resist the temptation of blowing it all on cronuts and jalapeno margaritas.
If you want to engage hard-mode, put 10% of it in one savings account and 10% in a separate type of savings account. Keep one for big short-term purchases: overseas holidays, a new Macbook, a £16,625 Star Wars Light Sabre Pen. You know, the important stuff. And keep the other one for the long-term: you’ll use this to buy a house or start a share portfolio.
#5 Stop automated buying
Companies love charging subscriptions, because it really capitalises on human inertia. We are generally crappy at making decisions, so an arrangement where you continue to pay if you make no decision is a big win for consumer businesses.
Write a list of all your subscriptions – use your transaction history as a reference. Put them in order of importance to you. Then either a) cut out the last item on the list, or b) find a way to reduce the last two items by 50%.
#6 Cut (down) the coffee
Hold up, this doesn’t mean cutting it out altogether. We know you love coffee and that talking about cutting it always gets emotional. But did you know that a two-a-day habit could cost you about $2500 a year? Ouchies.
Silence your inner hipster and give yourself a chance to embrace coffee pods. You can find machines for less than $200, and you can buy pods that fully biodegrade in 180 days for 75 cents a pop (FYI aluminium pods are a little bit terrible for the planet). If reading this is making you cringe, replacing just one of your daily coffees with a pod could net you $1,000 every year. That’s more than enough to buy two signed photographs of George Clooney as Batman.
#7 Can’t spend responsibly? Incinerate your credit card
If you can’t use a credit card responsibly and tips #1 through #6 aren’t enough to combat your wicked ways, then it might be time to say bye bye to your plastic addiction. For the easily influenced, a credit card is a really easy way to spend more than you earn, and that is basically a one-way ticket to financial servitude.
Throw a little party. Light a bonfire. Invite some friends. Pour one out. Then make it die.
If the thought of that gives you the shakes and you really want to keep a credit card for emergencies, here’s the deal: you’re going to fill a bag with water, drop your card in, and put it in the freezer. If you ever want to use the card, you’re going to need a damn good reason to thaw that sucker out.
If your newly-deceased card had a hefty balance, please proceed to #8.
#8 Balance Transfer that debt, bro
Do you have a big, fat and juicy credit card debt? If you’ve never heard of a balance transfer, oh boy, do we have some seriously great news for you.
Many banks offer promotions to new credit card customers where they do not charge interest (or charge very low interest) on balances transferred to the new credit card. If you have a $10,000 debt, at the time of publish, getting a card like this could save you $3,000 over 18 months. These promotions change regularly but it’s clearly worth doing some research.
Rob d’Apice is a co-founder of Sage, a new way to save heaps without thinking about it. He has trained as a financial planner, worked as a management consultant, and struggled as a serial entrepreneur. Rob presented the money segment Insufficient Funds on FBi Radio. He is also a bit of a geek.