Try out these six personal finance hacks next time you’re designing a spending or savings plan.
- 1 1. Sign up for some membership services…you’ll save in the long run
- 2 2. Establish one account for non-vital purposes
- 3 3. Identify the best rewards program for your lifestyle, but don’t lose track of your cards
- 4 4. If spending is a problem, put your credit cards on ice…literally
- 5 5. Rewards aren’t just for credit cards; sign up for a rewards checking account
- 6 6. If you’re on a budget, stop auto-saving information
1. Sign up for some membership services…you’ll save in the long run
Turned off by yearly membership services that you’re not sure you’ll use enough to break even?
Sometimes, your reticence is well-placed (think: The annual amusement park membership your kids pressured you into joining, or expedited airline security when you fly twice per year you.)
Other times, however, membership programs can help you save a lot of money — and aggravation — in the long run.
Take AAA for instance.
If you commute by train or bus to work, getting AAA probably isn’t necessary.
If you drive long distances to and from work (and own an older car), however, an AAA membership could save you save you hundreds of dollars a year.
Without AAA, the price of just one lock-out, tow or jump-start will likely exceed the price of membership, which is often less than $100 a year.
Another membership program that can help keep money in your wallet is AARP. The card packs discounts on everything from restaurants to Kindle books and costs only $16 a year.
One current AARP deal gives cardholders access to a $40/year Zipcar membership, which normally starts out at $70. Cardholders will already get their money’s worth on the $16/year AARP membership.
If you’re younger than 50, but know someone with an AARP card, combine grocery shopping trips with them to take advantage of the coupons and mark-downs made available to AARP shoppers.
2. Establish one account for non-vital purposes
In most situations, saving money doesn’t involve adding more plastic to your wallet. Sometimes, though, more plastic can help.
Start by categorising your expenses. In one column, place your essentials, like rent, groceries, debt payments, gas, etc. In the other column, place non-essential purchases, like movie tickets, dining out, shopping and all the stuff you can probably do without.
Then, instead of going cold turkey on your amenities, set aside a certain amount of money each month that you’ll spend on splurges (maybe $200, maybe $500), Trent Hamm, founder of the financial blog The Simple Dollar, recommends.
Once you’ve decided how much money you want to spend each month on non-essential purchases, set up a different checking account with those funds. You can even ask your employer to funnel those funds directly into a separate account.
By having the plastic, but not keeping it in your wallet at all times, you’ll be more attuned to how much you’re spending and how much remains to spend.
“I said, ‘This is an account that I can spend whatever I want out of the $100 or $200 that goes into it. I don’t touch anything else and I don’t take it with me,'” Hamm explains. “That worked really well for me.”
If you’re going to work and home immediately afterwards, don’t carry your non-essential card with you. It’ll only tempt you, Hamm says.
Also, Hamm adds, make sure all of your online purchases go through the secondary card.
3. Identify the best rewards program for your lifestyle, but don’t lose track of your cards
Not all credit cards rewards are made equal.
Some programs give cash-back rewards for all spending while others dole out points for shopping in certain categories, like food or travel.
If you’re in the market for a new card, pick one that rewards you for buying essentials items, like groceries and gas.
Reward programs aren’t that simple, though.
“They’re often tough to keep track if you’re signed up for multiple reward programs,” says Greg McBride, chief financial analyst at Bankrate.com.
To make sure you’re optimising your rewards (and not wasting time trying to figure out which card has what benefits), use Walla.by, a browser extension that stores your cards in a “cloud wallet” and organises their rewards information, so you don’t have to dig around to find it.
Walla.by is especially helpful if you’re using your card to make online purchases (and reap the points). Every time you buy something online, the Wallaby plug-in will greet you at check out and tell you which card will optimise your rewards.
4. If spending is a problem, put your credit cards on ice…literally
Does putting your credit card in the freezer sound like overkill to you?
It shouldn’t, LearnVest Founder and CEO Alexa von Tobel says.
“People laugh when I say this,” she says, “but it’s truly a quick way to break the habit of over-spending and over-relying on your credit card.”
Von Tobel stresses that people need to be honest with themselves about what they’re spending.
By putting their credit cards in the freezer and taking out “safe to spend” money (funds that von Tobel says are separate from mandatory expenses and savings) in cash, consumers become hyper-aware of what they’re purchasing.
“When you’re physically handling your money, you might be a bit more reluctant to dole out those dollars,” she adds.
5. Rewards aren’t just for credit cards; sign up for a rewards checking account
You opt for direct deposit at work, receive online statements from your bank and make at least 10 debit card transactions a month.
You might not think that’s anything out of the ordinary, but your bank may be willing to reward you for basic financial behaviors like that.
Bankrate has compiled a list of high-yield checking accounts, which pay higher interest rates to clients who abide by certain — often simple — criteria.
“A lot of people already do this,” McBride says, “but they’re not getting paid for it.”
Instead of earning .0025% in a bank savings account or .01% on a money market mutual fund, for example, a high-yield customer might be able to receive 2% bank interest.
“They’re a great place to stash emergency savings if you meet the requirements,” McBride adds.
6. If you’re on a budget, stop auto-saving information
We all love buying items online.
The selections are seemingly limitless, we don’t have to go out and stand in a store and all of our information can be saved in our browsers.
That last “advantage” can be especially problematic, von Tobel says.
When our information is saved, we’re much more likely to purchase an item because of the simplicity of the transaction.
When we manually plug in our information, however, we’re less likely to analyse the purchase — is it crucial to have that item right now?
“If your information is already saved, you’ll be that much more likely to pull the trigger next time you’re browsing,” von Tobel explains.
“But,” she adds, “if you have to whip out your wallet and plug in your details every time you want to shop, you’re probably less likely to click ‘purchase’ unless it’s something you’ve considered.”