Often Overlooked Financial Tips
There is no universal foolproof plan for beating debt and achieving financial health. Why? Because each consumer faces a totally unique mix of characteristics: income, lifestyle, type(s) of debt, goals and more. It is more helpful to view financial health as an individual journey; what works for one household may not necessarily constitute the best approach for another.
Whether you are trying to beat major debt or simply trying to tighten up your day-to-day budget, consider these often-overlooked financial tips. Then apply the strategies most conducive to helping you achieve your personal financial goals.
Cut your cost-per-meal
Most food-related financial advice revolves around preparing meals at home rather than going out to restaurants. This is a foundational way to cut your cost-per-meal. But how you go about prepping and storing food at home has a huge impact on the effectiveness of this strategy. For instance, did you know approximately half of all produce in the U.S. gets thrown away? That is 60 million tons worth $160 billion per year.
On an individual level, consumers can save money by making better use of every grocery item they buy. Making meals in large batches allows for easy refrigeration and freezing of leftovers. It is useful to label leftovers and make a concerted effort to eat them in a timely manner. Many leftover ingredients — like most vegetables and some meat products — are simple to reconstitute as hearty stock for broth. Freeze these scraps as they accumulate, then prepare a stock when you have enough to fill a bag. Simple tricks like these help people get the most mileage out of grocery trips.
Entertainment subscriptions often seem like a small price to pay for access to a substantial collection of TV shows, songs and other forms of media. But these costs can add up quickly, especially as consumers tend to acquire them over time. Cutting back on entertainment subscriptions can save households hundreds of dollars per year.
One writer notes for Business Insider that entertainment subscriptions cost her family nearly $700. As a result, she canceled those subscriptions and started accessing free entertainment through her local library. Consider how you, too, can cut down on recurring entertainment costs.
Organize debts by interest rate
Those tips pertain to cutting costs. But what if you also face significant debt? While streamlining expenditures is an important start, proactively addressing debts is the only way to enact long-term change.
Andrew Housser, CEO of Freedom Debt Relief, offers this advice for consumers facing down multiple debts: Pay the most you can on your highest-interest debt first while making minimum payments on the rest. Once you have paid off one, repeat this process. This is known as the “avalanche method.” Another way to tackle debts is by starting with the smallest balance and working your way upward — the “snowball method.” The main takeaway here: Be systematic in your debt repayment. Not only does it make the process less daunting, but it will help you stay organized throughout so you can see results.
Stick to a zero-sum budget
Zero-sum budgeting hinges on spending every dollar you earn — with a catch. Spending includes saving, paying down debts and investing. The end result is a leftover sum very close to zero. This strategy helps consumers get up close and personal with their income by forcing them to prioritize what is truly important. This strategy is especially helpful for consumers carrying credit card debt with high interest rates because these balances receive priority over other expenses.
Don’t forget these often-overlooked financial tips when you are strategizing for your financial future. A combination of overhauling spending and addressing debt positions people to take the reins.
Article by Alden Bert