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.
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.
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.