Five Personal Finance Habits That Everyone Should Follow

personal finance habits

 

To begin, let’s figure out what a financial habit really means. To put it simply, it’s your attitude towards your own money and how you spend it. Every day we decide whether to spend or save. Not everything we splurge our money on is really necessary. If after a purchase you ask yourself why you need this thing at all, it was probably a bad financial decision. With this being said, a good financial habit is a custom that helps add more money to your bank account every month.

It’s not that difficult to develop good financial habits. The very first thing you need to do is admit that you have bad spending tendencies that will hurt you financially in the long run. These include the inability to control your income and expenses, impulse buying, and delaying payments on bills and credit card until the last minute.

Want to get your finances in order? Here are five useful financial habits that will help save your budget.

1. Keep track of your finances

You need to have a clear idea of how much you earn, taking into account all sources: salary, bonuses, deposit interests, etc. and how much you spend: loans, utilities, food, entertainment, etc. You’re not required any expensive software or special skills to keep such account. All you need is an aspiration to take your life under financial control and a notebook with a pen.

2. Learn new things

As they say, you’re never too old to learn! And what’s really important to your daily life is that you learn about things that help you become financially independent. This can be getting a new profession or developing skills for your current job that will aid in boosting your salary. Be sure to allocate at least 5% of your income for this purpose. Perhaps you will need to take some courses or classes, but in the long run, it will be totally worth it.

3. Don’t make impulsive purchases

Under the influence of flashy advertisement on TV or on the internet, or if we see a sale in a store, sometimes we succumb to the temptation to buy things that we don’t really need. It’s best to wait a few days before parting with your hard-earned money. Sometimes even two days are enough to understand that you can easily do without such a purchase. However, if after a week or two you still crave for this thing, then you may actually need it.

4. Put some money in a saving bank account

It’s a very useful habit to deduct 10-15% from your salary and put it in an interest-bearing deposit. It’s better to do this on a day when you receive your salary, so it’s easier to part with the money. You can also set up an auto transfer from your regular to saving account. If you’re looking for a bank to accommodate your money but don’t have time to visit financial institutions in person, you can easily open bank account online.



5. Pay utility and credit card bills on time.

When you don’t put your financial obligations on the shelf, you will be able to avoid fines and interest. It’s better to pay bills on the payday or set up auto payments on your credit card. If you follow these simple rules, you will easier understand how much money you can spend for the next month.

Financial discipline is a pipe dream for many people. However, there are lots of easy-to-follow financial tips out that that can help you save the big bucks. Try out some of these tips and you’ll see how effortlessly you can boost your bank account.

 


The Investment Account You Might Be Missing: HSA

No matter your investment strategy, the opportunity to invest 100% tax-free and avoid taxes on any investment growth, is unique. Investors need to understand the HSA (health savings account).

While the HSA was designed for healthcare costs, their tax structure mimics a 401(k) or IRA. You can use this IRS structure to your advantage. Before we get started, you can check your HSA-eligibility and determine if your health insurance plan qualifies you to make HSA contributions.

Why HSAs Matter for Investing

HSA tax structure allows for tax-deductible contributions, tax-free growth, and tax-free distributions (if you use the funds for qualified out-of-pocket medical expenses). Let’s translate this to HSA investing. These triple-tax benefits enable individuals and families to leverage their HSA contributions for unencumbered tax-free growth.

2018 HSA contribution limits are $3,450 for individuals and $6,900 for families. Imagine if you had that money to invest? This is likely why some of the largest HSA investment accounts, now have over $200,000 in funds. That is not a typo.

At the age of 65, HSA funds can be used for anything (not just health expenses), just like 401(k). Just pay income taxes at that point. No penalty. They also don’t require mandatory distributions. You can let your HSA investments grow well into your 70s, 80s, and 90s, without interruption.

HSA Investing Details

Choice is fantastic. Flexibility allows us to choose a personalized path. HSA investing provides that option. HSA investments are not encumbered by overbearing IRS regulations. As long as your HSA provider enables these features, you can invest in individual stocks, bonds, CDs, ETFs, and mutual funds. Find the personal investment strategy that works for you, without limits.

These factors are one reason why HSA investments assets have eclipsed $10 billion and are growing 45% year over year.

Retirement Investing

Want to save more tax-free funds for retirement? Or add more flexibility so you don’t have to wait until 59 and 1/2 years of age to access your funds (or be forced to pay a tax penalty), like with a 401(k)? Use an HSA to complement, supplement, or replace your existing retirement investing strategy.

Combine the tax-power of an HSA and 401(k) to become an ‘ultra investor’. HSAs and 401(k)s create the most retirement tax-savings you can get, legally, from the IRS. The more you save, the more you can invest.



Opening an HSA creates more saving and investing opportunity. Coupling tax-free contributions and growth with the power of compound interest is going to leave you with a more robust investment strategy. And hopefully more money for retirement.


How to Brexit-proof your online investments?

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Regardless if you are a traditional or online investor or if you are a novice or an expert, if you are living in the UK it is likely that two things are keeping you awake at night: Brexit and the bear.

We are getting close to nine years of bull market, and it is not unreasonable to think that we could be very close to the top. However, it is very difficult if not impossible to beat the bear that everyone is expecting to be around the corner. The difficulty is that you don’t want to be too late as the first downturn could be swift but in the same way you don’t want to get out too early as this hurts too. Let’s be honest nobody likes to leave too much on the table.

Yes, the bear but what about beating Brexit? We only suspect the bear to be around the corner while we know for sure that Brexit is coming. It is almost here, and it is happening the 29th March 2019.

So far it has been a prolonged and tortuous process, and the stalls in negotiations are casing a long shadow over the UK economy. ‘We don’t know yet how this is going to end up, but we are bracing for the worse’, said John Pentin financial analyst at a leading Top Trading Platforms UK comparison site.

‘A rise in the inflation is going to have a detrimental effect on consumer confidence, and this could get worse if companies are forced to start cutting jobs in the country. However, then again being too negative it is probably not the right thing to do as there is still some time to avoid the worse and ultimately there are possibilities also outside the EU even if maybe more in the long run’.

What Brexit has delivered so far is uncertainty, and surely this is not something that markets like particularly. It has pushed UK investors, however, both online and offline to be a lot smarter about how they invest. For example, you might be looking to invest in companies that do benefit from the uptick in inflation like discount retailer B&M. This company are offering groceries and non-food items on a seasonal basis at significantly better prices than the supermarkets. Investing in gambling companies is also an option as those tend to continue to do well even in difficult economic periods. Alternatively, you can also look at companies with domestic earnings in the non-discretionary spending space like for example Motor insurers.

Another area that is not going to slow down is Cybersecurity: following the growing number of attacks in the last months, this is an area that continues to attract capitals.

Another thing to notice is that even if the stock markets have suffered some steep falls in the past months, London-listed shares have underperformed most major world markets in the last 18 months: this is almost certainly caused by the anxiety about Brexit with international investors that have started to cut back their exposure to British firms.

As always tough with challenges there are also opportunities for investors. If you are prepared to spot undervalued companies and get them at low prices, you can make a considerable profit. The main issue though is that the majority of investors do lack in time and confidence of making such strategic investments.



What is suggested at this time is to analyse to see how ‘British’ are your current investments. Since London’s stock market is very international, you can find companies that are listed in Britain but have the majority of their earnings from elsewhere. So you would need to find out what is the exposure to the UK as opposed to other markets of all the companies you have shares. Once you have done this due diligence, you might want to reduce your UK exposure progressively to reduce your risk that a ‘bad Brexit’ is going to destroy your investments. Reduce doesn’t mean completely cut out so if things have a positive turn you are going to be able to benefit even if your UK exposure is significantly lower than it was let’s say a year ago.


How Investing in the Super Can Help in Managing Finances after Retirement

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You’ll acquire one of the biggest assets of your life by the time you reach your golden years if you start investing in the super much earlier on in life. Enjoying a certain lifestyle during your retirement years may require you to contribute a certain amount to your super every year. But you must remember that the amount of money that you contribute in a super won’t be accessible to you till the time you retire. You must check out your options in order to pick the right contribution strategies over others.

1. Investing Pre-tax Salary

Seek information regarding your chances of putting a bigger portion of your pre-tax salary into the super beyond the SG amount worth 9.5%. The amount of tax that you’ll need to bear is worth 15% of this amount. But you must remember that in your attempt to put more in the super, you’ll be taking a lesser amount back home by salary sacrificing.

2. Tax contributions

After-tax contributions should be made to the super quite consistently. No extra taxes are applicable on these contributions and this income is already taxed at the usual rate. If your entire super balance is lower than $1.6 million, then you’ll be entitled to make after-tax contributions. If the income of your spouse is worth $37,000 or lower, then you’ll achieve a tax exemption worth up to $540 while contributing to her super. You may achieve a tax offset partially when your spouse earns any amount lower than $40,000.

3. Tax-deductible contributions

Employees are now allowed to contribute to the super on their own and show it as a tax deduction. Earlier only self-employed individuals were allowed to make such contributions. About 15% of the amount of your contribution will only be taxed in this case. A notice of intent needs to be filled out and submitted with the super fund prior to filing your tax return.

4. Availing fund loans and other options

It’s actually very important for you to review your investment options and the super fund for at least once every year. You must check out all options while reviewing all investment options. Your retirement nest-egg gets accelerated and expanded when you opt for the super-leveraged property investment. Your investment strategy gets a boost up when you get a loan for your super fund. You may even consider checking if you have adequate insurance protection. Your premiums and fees may accumulate and affect your balance over time.

5. Consolidating the super

During our working lives, it’s quite natural for us to switch between jobs. However, the outcome is often a missing or lost super. A missing or lost super is often the outcome of such job switches. Missing or lost super can be easily tracked down if you opt for a lost super search. Increasing the retirement nest-egg could be a possibility once you accumulate them into a single super fund. You must check out existing funds and all associated withdrawal or exit fees for the same. Prior to consolidating your super, you must ensure you have adequate insurance protection.



Know the Limitations

Super contributions may be associated with certain limitations. You’ll need to gather more information about these contribution limits and their impact on your possibility to make such contributions and the amount of tax to be charged for these contributions.


Financial Options Compared: Which Is Better, Debt Settlement or Debt Consolidation?

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As you’re looking for reliable methods to eliminate your debt, you’ll come across two terms: debt settlement and debt consolidation. How are they different? Which one is right for you?

The answer will differ based no your unique needs, but both exist to provide relief in situations where your debt is simply too much for you to handle alone. Here’s an overview on the difference, and what each entails.

Debt Settlement

Debt settlement is where a company enters negotiations with the companies you owe money to. In some cases, the savings can be incredible. Let’s assume you owe $4,000 on a credit card. Debt settlement can see you paying this debt off for a one-time lump sum payment of $2,500.

Now, if you have a large enough amount of cash to do this, it can be great. Getting rid of a debt in one large payment, with a balance reduction of 30-50%, is amazing. But there are a few drawbacks to choosing settlement.

The first is that it can take time. Some sources report that finalizing their debt settlement took a few years. During this time, you’re discouraged from making payments, which means your balance climbs in penalties and interest. Which, as we know, is bad for your credit score.

This can be exacerbated by the fact that you won’t be settling all of your debts at once. The company you choose – and you should be very discriminating when choosing – will have to negotiate each debt separately, meaning there could be mixed results overall.

Debt Consolidation

Debt consolidation is an option for people who have a flood of statements coming in, and are looking to seriously reform their spending habits. While there are a few different kinds of debt consolidation, they usually involve rolling all of your debts into one and getting the best loan to pay it all off.

What this means is that from here on out, you are making one payment. The loan has covered your debt, and now you’re paying it back.

Therefore, like debt settlement, this can take a few years to accomplish. The biggest problem is that once you consolidate, you have to avoid creating more debt while you’re paying off your consolidation loan.

Remember that with consolidation, you aren’t paying a reduced amount; you’re just taking care of your debt with one payment at a time. If there’s any reduction in what you end up paying, it should be thanks to the single, agreeable interest rate you have, as opposed to multiple interest rates across your balances.

So, before you sign up for debt consolidation, do a complete breakdown of what you would pay to eliminate your debt as it stands now, interest included. If consolidation somehow ends up costing the same or more, try another company.



Financial experts typically regard debt consolidation as a more practical option, reserving settlement for extreme cases only. And if you choose a reputable company to walk you through it, it can even end up improving your score. Any way you look at it, both are options worth exploring before you consider bankruptcy.

 


Ways to Pay Off Your Mortgage in Advance

Lower mortgage rates often allow a homeowner to pay off mortgages in advance. However, you’ll need to determine if that’s a good idea or not. You may explore certain other alternatives like that of investing a portion of your extra income in a 401(k). You may pay off your mortgage earlier if you haven’t applied for any academic aid for kids based on your need.

Consider a few good ways for paying off your mortgage earlier:

Opt for short-term mortgage refinancing

You may consider refinancing into some 15-year or 10-year mortgage for paying off your mortgage within a short-term. Let’s assume you have a mortgage for $200,000 at a fixed rate of 4.5 per cent for 30 years. Suppose, after a period of 5 years you agree to refinance into a loan for 15 years at a rate of 4 per cent. By doing this, you’re actually paying off your mortgage some 10 years in advance and it will help you save a little over $60,000 with the exclusion of your refinance closing costs.

Compared to all 30-year term mortgages, those worth shorter terms come with interest rates between quarter and three-quarters of the percentage point. But you’ll need to bear the closing costs when it comes to a mortgage refinance. The value of monthly payments is bound to become higher when you opt for a quicker payoff. In case you don’t have adequate money to pay for your mortgage on a particular month, then you’d be locked in. You should only consider refinancing if the old interest rate is higher than the new rate.

Pay an extra amount every month

If you can afford to pay a little more every month, then you may enjoy the benefits of an advance payoff without having to worry about the additional refinance costs. You may recalculate your monthly payment by enjoying the fruits of an advance payoff without bearing any extra charges for refinancing your mortgage. The interest and the principal amount that you pay every month have to be divided by 12 and added to your monthly payment for up to 12 months. For all these 12 months, you’ll be making about 13 payments.

By doing so, you’ll end up saving an amount over $18,000 in terms of interest and get your mortgage paid off in advance by about three years. In order to get your additional payments adjusted properly with your loan, you’ll need to get in touch with the mortgage servicer. Just to make sure that your payment has been adjusted properly, you ought to pay more attention to the following statement. Let your servicer know how eagerly you’re trying to repay and seek out the best repayment options.

Make an additional payment every year

It might be in your interest to bear an extra monthly payment every year instead of paying an extra amount every month. You may continue to save an amount worth 1/12th of your monthly payment each month, which you can pay once every year.



You may try doing this for the very first month after you achieve your mortgage for $200,000, which is distributed over a 30-year term with an interest rate of 4.5%. You’ll end up saving an amount worth $27,000 in terms of interest and your mortgage will be repaid by about 4 years in advance.

You may get your money directed towards the mortgage regardless of whether you’re experiencing an unforeseen windfall, some tax refund, or achieved a bonus for your performance at work. However, you must take care of your other financial needs in advance. For that, you’ll need to assess your entire financial situation and achieve a true picture.


Trading Options: Everything You Need to Know To Get Started

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If you have never traded options before or if you know that you want to start exploring everything it has to offer but you don’t quite know how then you have come to the right place. Here you can find out whatever you need to know and without spending hours researching information.

Beginners Should Start with Stock Options

if you are a beginner then you should start out with stock options. Options that are based on equities are most commonly known as stock options and they are a natural choice for those who are new to trading. They are listed on exchanges such as the NSE and they are always done in the form of a quote. It is so important to understand the details of a stock option quote so that you can get to grips with the various features that they have to offer.

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Options Trade on Underlying Securities

Options can be used in many different ways. You can use them to reduce risk or even to speculate. You can also use them to trade with various underlying securities. The most common underlying securities include indexes, ETFs, equities and more. There are so many options available when you look at these so make sure that you learn the differences so that you can make the right choice for you.

Defining Your Goals

Options traders have a clear understanding of their own financial goals and they also have a very desired position in the market. The way that you approach or think about money, in general, will have a huge impact on your trade options. The best thing that you can do before you go into any kind of option investment is to look at the goals that you have and to also make sure that you are always making the right decisions and at the right time.

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The Language of Option Trading

Trading experts often use various phrases to define a trade. For example, you can have a call or a put. You can also be in the money or out of the money. These are just a few of the most commonly used words that you will hear when you are in a room full of traders. Simply put, you need to try and get your terminology straight and that is why it helps to have a glossary so that you can go through everything that you need and without any problems at all.



Learn Other Options

All trading options require research, but it’s so important that you look into the other options that are available as well, rather than just the one you plan on doing. So try and learn what algorithmic trading is and also put the work in to try and look into different strategies and methods as well. This will really help you to make the most out of your investment and it will also help you to achieve way more with every move that you make as well. After all, it’s the little things that often make the biggest difference.

 


What You Need To Know About Getting A Home Loan

When you’re thinking about getting a home loan, it can be incredibly exciting. Because deciding to buy a house is something that feels incredibly grown up and momentous. But at the same time, it’s also a very serious thing too. So you often have to know exactly what it takes to get the home loan. So if you’re just starting out and you want to know what to do, here’s three points to be aware of.

The Downpayment

So, of course, you’re going to need to make a downpayment. And you have to save up the money for the downpayment. So make sure that you’re working out what kind of house you want to buy, and how much it’s going to cost. That way, you can then give yourself a goal of what you need to save, which is usually 10% of that.


The Terms

You should also then take a look into mortgage terms that are offered. Understand what kind of rates there are available, how long you’ll need to make the repayments for, and any other terms that come with the loan.

The Requirements

But that’s not all. Because alongside knowing everything that you really do need to know about your home loan, you also need to be aware of what you need to bring to the table. To get your home loan, you may find that you need a certain credit score. So take a look at some of the scores in the infographic below, and then work on building your credit before you look to get the loan.


Infographic Design By mortgage credit score rules


Investing in Commodities With a Profitable Resale Value

Nowadays, people tend to think that the only way to make significant money is to set up their own business. They think that they have to come up with an innovative product concept, design and develop it, manufacture it, and sell it to consumers around the world. Now, this, of course, is a brilliant plan. After all, small business based on unique consumer products is a brilliant way to make a stable income. But have you ever considered investing as another money making scheme to get involved in? Investing involves purchasing something at a low price with the intent of selling it on at a higher price. Sounds relatively simple right? The good news is that it can be. You just need an eye for detail and to know what items you can make a decent profit from. To succeed, you’re going to have to invest in commodities with a particularly high resale value. This gives you a better chance of avoiding loss and making profit. Here are a few different products that you should consider specialising in!

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Smartphones

Nowadays, the majority of people have smartphones. But the latest phones on the market do tend to have a particularly high price tag. It’s not all too surprising that the majority of us avoid upgrading our contracts and instead look online to buy second hand models. You can profit significantly through selling smartphones. Keep an eye out for individuals selling their old cells for a low price when they upgrade their own contracts. Then sell these on for a higher price on online auction sites. Keep a particular eye out for Apple smartphones. These tend to hold the best resale value, as Apple is a highly desirable brand.

Gold

Gold has always held value. When you actually think about it, this may seem a little odd. After all, besides being aesthetically attractive, you can’t do a whole lot with it. But societies around the world have long associated this substance with monetary value for years now, and this is something that it has managed to maintain until this very day. So, consider buying gold from Sprott Money. Unlike paper money, gold has retained significant value for a huge portion of human history. It provides an excellent hedge against inflation and can almost always be sold off for a good profit.

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Designer Clothing

There are certain objects that will always be desirable, as the majority don’t have access to them. Items of designer clothing are out of the majority of people’s budget, making people want them more. So, you can make a serious amount of money by keeping an eye out for designer items in charity stores or for sale second-hand from individuals who have enough money to keep up with the trends. List on online auction sites, as this is where the majority of people tend to look for cheaper second hand goods.



These are just a few different commodities that retain their value well, allowing you to sell them on for much more than you invested into them!


What to Do After Your Trust Deed Ends

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Once your trust deed has come to an end, you’ll receive a formal discharge letter from the trustee and your details will no longer be on the Register of Insolvencies.

Trust deeds usually last for three or four years and once the time period is up, any unsecured debt included in the agreement that remains is written off. Your creditors can’t chase you for these amounts – they also can’t pursue you during the term of the agreement either. There’s lots of information online if you want to find out more about trust deeds.

You’ll feel free, so keep up the good work

You’ll feel like you’ve really achieved something, and you really have. Being in debt is scary and many people despair of getting out of it, so you should be proud of yourself. It takes dedication to pay off large debts and now you’ve freed yourself, you need to look to the future.

You need to check your credit file to make sure it’s been updated

When you enter a trust deed, which is formal insolvency, your credit rating takes a beating. Your trust deed will be on your file for six years after it starts, so you need to ensure that the credit reference agencies know yours is over. This means that when the six years are up, it’s removed from your file.

Usually, this deletion happens automatically, but you need to check with the three main credit check agencies to make sure it’s been marked. If this doesn’t happen within three months of the end of the agreement, you can write to your creditors to request the necessary notifications.

You need to rebuild your rating

You won’t have been able to borrow any money during the term of your trust deed – it’s one of the conditions – and formal insolvency does affect your credit rating badly.

When you apply for credit again, you may see that your interest rate is higher than normal to reflect the perceived risk on the part of the lender. You can rebuild your credit rating, though.

You can apply for a credit-builder credit card. These also have a high rate of interest, but if you pay off your debt each month, on time and in full, you’ll be showing you can be trusted. Eventually, you’ll be able to apply for mainstream cards with lower interest rates.

Prepaid cards are also very useful because you can use them in the same way as credit cards, but it’s your own money you’re topping them up with. The credit reference agencies find out that you’re topping your card up regularly, which works in your favour.



You can save the money you used to make your trust deed payment

This makes great sense because you’ve been managing well without it for a while, so why not invest it in your future? You don’t have to invest or save the whole amount if you want to have a bit more disposable income, but as long as you’re saving something, it’s all good. You’re building up a cushion of savings that will help to protect you from debt in the future.


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