5 financial hacks we wish they taught us in school

Hey, teacher – leave those kids alone. Or at the very least, maybe teach them something that will be useful in the real world? Financial hacks to keep them out of a lifetime of living paycheck to paycheck and debt might be a good place to start.  

stat about financial literacy in America - financial hacks
Source: National Financial Educators Council

One thing an overwhelming amount of Americans agree on is that financial literacy should be taught in schools.

A hard majority – 85% according to a recent study by National Financial Educators Council – think so.

Surprisingly, despite this widespread agreement, personal finance coursework is only required in less than half of states.

It’s puzzling, isn’t it? You would think that budgeting, understanding the true costs of loans and interest rates, and real wealth-building strategies might generate more productive, law-abiding, tax-paying members of society. And that’s the goal…isn’t it?

Whatever the backstory on that mystery, the bottom line is that many of us were never properly taught how capital works. To cover some of that lost ground, we’re sharing some financial hacks that can help you get off the paycheck-to-paycheck treadmill. 

So if you want to do your homework on real-world financial hacks, this in-depth lesson will get you in the right mindset.

But for those of you just looking for the cliff notes, here’s a 1-minute video featuring HappyNest CEO and founder Jesse Prince giving you the TL;DR.

 

Financial hack 1: Pay yourself first

You put in the work, you should get the reward. Everything else is secondary – period. 

One of the most common mistakes people make when they get their paycheck is getting squared up on bills, rent, loans, etc. first. They then try to get to their next paycheck on whatever’s left over. 

Sure, it seems like the responsible thing to do. But with this approach, the check that takes two weeks (or whatever payout cycle you’re on) to earn is spent within hours of hitting your bank account. By the time the next paycheck rolls around, it can’t come soon enough. The goal of saving and investing gets put off once more. 

Not anymore. From now on, the first line item on your paycheck to-do list is paying yourself. This is the single most important wealth building financial hack. get rich slow turte, happynest real estate investing

Your nest egg is now priority number one. If your goal is to save $250 per paycheck, then the first withdrawal from your paycheck should be $250 for your nest egg.

Feeding two birds with one scone: This nest egg account should have some safeguards in place to prevent you from tapping it too easily. For example, a savings account is not an ideal nest. Not only because saving account interest rates are a joke and inflation is eroding the purchasing power of your money while in one, but also because it’s just a little too easy to dip into. 

Keeping it in stocks, bonds, REITs, or other alternative investments makes them less liquid. Having to process a transaction and wait for the transfer builds in some natural friction to curtail dip slips. (Hey, it happens to the best of us).

Financial hack 2: Automate your nest building with robo investing

In fact, paying yourself first is so important, you may want to take some extra precautions to eliminate room for human error. Enter: Robo deductions. What a time to be alive. 

If your bills are set up on auto-draft, no reason why your nest building shouldn’t be, too. Set up a monthly automatic deduction that goes straight into your net worth. 

If the insurance company and your landlord get their cut of your paycheck, your long-term portfolio value deserves an auto-draft too. 

HappyNest offers monthly deductions from your funding account and redirects the funds into your investment account. 

Financial hack 3: Cut the zombie subscriptions and redirect funds into your nest egg

Ever get notices that a magazine subscription you’ve been meaning to cancel for 10 months just renewed? Or that a video editing app you downloaded one time to cut out that would-be career-ruining contraband that rendered an otherwise hilarious video unpostable over a year ago and never bothered to cancel?

As life itself moves to an increasingly subscription-based model, be sure to do a scrub of memberships and auto-renewals. These sneaky expenses can really pile up over time. All those those “try it for free” sign-up forms or free trails are fully counting on you to forget about them where they can quietly drain your portfolio undetected. Too much weight makes the boat go slow. 

To implement this financial hack, review your bank and centralized payment accounts such as PayPal or ApplyPay. These central payment stations offer the best birds’-eye view of auto nest killers. 

Better yet, cut a few dead-weight subscriptions and tally the total monthly savings. Then, redirect that draft amount into an investment account for nest building. This action has a net impact of zero on your day-to-day spending. 

Be sure to check in on your subs at least twice a year. Take the time to comb through for annual renewals too – those sneaky scoundrels will creep up out of no where with a  hefty draft that leaves you feeling violated. 

Beat them to the punch.

Financial hack 4: Sleep on it before you buy it

The internet is a fluid place, and one thing can rapidly lead to another. Next thing you know, your out a few hundred bucks on some impulse buys that sounded life-changing at the time but just lead to more clutter in your pad. 

It can be hard to fight the “you deserve it” devil on your shoulder on a late-night treat yourself. The truth is, you do deserve it, and heaven knows we all need a little self-love and care. We all do it – there’s no judgment here. 

The best tool in your financial hacks toolbox for separating the quality “treat yoselfs” from the empty depths of mindless consumerism is to sleep on it. 

If you really do deserve it – and you probably do – you’ll still deserve it in the morning.

All the glory, none of the guilt. 

Financial hack 5: Get your children’s financial beaks wet early

Can you imagine how much money you would have saved if you had been properly taught about managing finances? You know, the things you learned the hard way – whether that means cleaning up a bad credit score, climbing your way out of student debt (not terribly unlike climbing out of the pit in Buffalo Bill’s basement), or even the helpful things you learned on your own time via late-night YouTube binges of Rich Dad, Poor Dad videos? You can give your kids a head start by teaching them what you learned in the school of hard knocks. 

Before they swan dive into the real world, give them some floaties. But if you just can’t get around to it, maybe the collections agent will be interested to hear about the Alamo, which was, of course, covered extensively in the classroom. 

Spare your kids the same fate.

Feeding two birds with one scone: Because we all know someone’s got to pay their way for the first round of the world slapping them up with late fees and the joys of collection accounts. Odds are, as their parents, you’ll have to bail them out of at least one or two of these financial boobie traps. That makes investing in your child’s financial literacy early on a win-win for both of your nest eggs.

Building up your financial literacy is a years-long journey. These five financial hacks are good starting points to get the ball rolling. 

What you should know about the power of compound interest

Many investors are flocking to real estate investment trusts (REITs) because they’re considered a relatively safe and high yield investment. Some dividends can be 10% or higher and offer the potential for capital appreciation. Approximately 84% of real estate investors indicate that they will make another investment soon, and compound interest can help them achieve their financial goals faster. Here’s what you need to know about compound interest and how it applies to REIT investing.

What is Compounding Interest?

Compounding interest is the concept that your money makes you more money over time when the interest compounds on your original investment and interest earned. Compounding interest creates a snowball effect that can accelerate the value of your investment. For example, if you invest $1,000 at an annual interest rate of 10%, you will have $1,100 at the end of year one. If you leave the interest earned ($100) and the original investment ($1,000) in your account and earn another 10% in year two, you will have $1,210 at the end of year two. Fast forward 30 years, while continuing to earn 10% annually and not making a withdrawal on your account, you will have $17,449.4. Conversely, if you decided to withdraw the $100 interest earned every year for 30 years, you would have only received $3,000 in interest (30 years x $100) and still have just $1,000 in your account. In this scenario, the effect of compounding interest generated more than four times the amount of money compared to making annual withdrawals.

How Can You Use Compounding Interest to Your Advantage?

Compounding interest takes patience but is not difficult to use to your advantage. Most REITs and brokerage platforms offer a dividend reinvestment plan (DRIP). By enrolling in a DRIP, you are reinvesting your dividends back into the REIT or stock that you own. Over time, you will own more shares of the REIT or stock, and the dividend payments will become greater (assuming consistent dividend payments over your investment period). When you redeem your shares in 5, 10, 15, or 30 years, you will see the fruitful effects of compounding interest.

Why Does It Matter?

If you don’t harness the power of compound interest, you may be cutting yourself short of your actual earning potential. Non-accredited and passive real estate investors are already generating a massive amount of wealth using the power of compounding interest by investing in REITs with DRIPs.
If you’re looking to maximize your investments’ value, compound interest can help accelerate your portfolio’s growth over time. To learn more about compound interest, speak with one of the professionals at a commercial real estate investment company online, or better yet, in person, with someone local. Ask them how you can reach your financial goals faster by harnessing the power of compound interest.

What Are REITs and Why Should You Care?

A Quick Real Estate Investment Trust Description

A real estate investment trust is a company that owns, operates, or finances properties. The properties can range from homes to hotels, malls, offices, medical buildings, or any other real estate type.
Investing in REITs can be a great way to generate passive income and build wealth through real estate. Perhaps that is why nine out of 10 investors add real estate to their investment portfolio. If you want to diversify where you put your money to grow it steadily over time, you can buy shares of a REIT.
Of course, you might be thinking that your portfolio is already diverse, with a mix of stocks and bonds. Why add REITs into the mix? There are several reasons.

 

REITs Can Be Affordable Ways to Get Into Real Estate Investing

Let’s say you want to invest in real estate. That’s a great goal, but it might take a lot of capital to get started and purchase a property substantial enough to generate cash flow. After all, if you are only beginning your real estate investing career, you’re probably going to purchase just one property at a time.

Rather than wait until you have enough property to start seeing regular returns, you can use an app for investing in commercial real estate and jump right into the REIT world. No-fuss, no muss, and it’s economical, too.

REITs Can Generate Steady Income Streams

As you may have heard, real estate tends to outperform the stock market over the long-run. A real estate investment trust often provides dividend distributions, that can then be reinvested through dividend reinvestment plans (DRIPs). By reinvesting your dividends back into the REIT, you are purchasing more shares of the REIT, and increasing the potential to be paid more dividends in the future.
When it comes time to start reaping the benefits of your investment, you could potentially realize a significant stream of income. And that’s good for your retirement years.

 

The Stock Market Has Less Effect on Public Non-Listed Real Estate Investment Trusts

Are you concerned about stock market volatility when it comes to distributing and managing your investment portfolio? Public non-traded REITs tend to fluctuate in value less than other publicly traded REITs and stocks when the market takes a tumble.
Although no investment is entirely immune to market swings, public non-traded REITs are more closely aligned with a pure-play real estate investment and can be less volatile. If your risk profile leans toward taking fewer chances, download one of the best investing apps and look into a public non-listed REIT.

 

Professional Management Teams Oversee the Commercial Real Estate

Let’s say your friend tells you he’s buying up tons of commercial property for sale in the area and wants you to be an investor. Sounds good–in theory. In practice, your arrangement could end up a nightmare, especially if your buddy isn’t a smart money or property manager.
Real estate professionals manage REITs. This means that they’ll treat your investment like you would, with care and diligence.

 

The SEC Has Oversight of All Types of REITs

If you choose to invest in a publicly traded or public non-traded REIT, you have the SEC overseeing financials of the REIT. In other words, you don’t have to wonder if the REITs are in compliance. They’re legally bound to follow SEC regulations, or they risk losing their REIT status and could run into legal troubles. This provides you with security that you may not get investing in private equity or a private REIT.
Your desire to invest in real estate, even if you can only invest in real estate with $500 or less, makes sense. Over the past 20 years, REITs have proven to be the right fit for investors of all ages, from Generation Z to Baby Boomers. Download a real estate investing app today and have fun exploring the wide world of REITs.