When you think of what differs between the rich and the poor what comes to mind
the size of their house the car they drive and of course how much money they
have in the bank these are all logical answers however what truly separates
these groups of people is their knowledge on how to best manage their
money and in this video I will share with you seven money hacks that only 1%
of people know so you can start to manage your own money more effectively
and if you're new to the channel then hit the subscribe button below for more
life-changing content ask the average person and they will
tell you that managing their finances is a chore that they would rather do
without and sadly some people forgo managing their money altogether but
that's a topic for another video the reality is that most people Drudge
through the management their finances from tracking their savings to
remembering to pay their electrical bill well you would assume that the rich
spend more time managing the money than the average person
the truth is that in most cases they spend way less time allowing them to
focus on activities that will only further increase their wealth so in what
ways are the rich making money management a simple task here are seven
things that will help organize your finances and put you in the best
financial position of your life number one open up the right accounts the first
step in building an automated financial management process is opening up the
right accounts whereas most people operate with a single checking and
savings account the strategy is an ideal if you want to make managing your money
as simple as possible you see if you only have one or two
accounts open you'll have to start moving money around every month and this
can be a hassle instead you will want to open up multiple accounts that will each
have their own designated purpose so what accounts should you open
besides these standard checking and savings account you will want to open up
an emergency fund and an investing account so that all your financial
categories are covered number two set up automated deductions in the United
States eighty-two percent of workers are paid via direct deposit and if you make
up this majority then you were definitely able to leverage the power of
automated deductions to be frank one of the best things I have ever done for my
finances was setting up automated deductions for my pay with my employer
in essence what these deductions allowed me to do was divide up my paycheck and
send portions of it into their respective accounts what I initially set
up this process allocated 10% of my after-tax
income to my savings account 10% to my investment account and 5% to
my emergency fund now as they have earned more money and a fully funded my
emergency fund I have now switched to sending 15 percent of my income into my
investment account and once you begin to employ this technique in your own
financial management plan you will realize that over time you will need to
allocate your income where your money can be best used now I think this
automation technique works for so many people for two main reasons
first it allows you to pinpoint exactly how much you want to save and invest as
long as you set up the deduction percentage properly you can rest assured
that you'll be putting the correct amount of money into their respective
accounts every single month second using automated deductions removes the need to
constantly think about your finances and in my case allow me to focus on other
important things like improving my skills in order to make more money so in
order to streamline part of your finances you should definitely be
leveraging the power of automated deductions number three automate Bill
and credit card payments paying bills is a drag but trying to remember to make
timely payments only further adds to the pain as such you should always use the
power of automation to ensure your bills get paid in full and on time now there
are two ways you can set up automated bill and credit card payments the first
is to have creditors automatically draw out the bill balance every month from
either your checking or savings account since you probably already have one of
these two accounts open although it will take is a few calls to your service
providers and the withdrawals will start on their own the second option is to
open up a bank account specifically for bills this approach has both pros and
cons the benefit of this approach is that it makes reviewing your bills on a
monthly basis easier since the account has been set up strictly for this type
of expense however the con is that you can risk going into overdraft and
incurring banking fees as a result you see if the creditor goes to pull a
payment and you don't have adequate funds in that account
your bank will cover the withdrawal amount and then charge you a fee for
doing so this likely won't happen when routing the deduction from your savings
account since that's where a large chunk of your free cash will be but it doesn't
mean that you should forget about using a bill payment account
to mitigate this risk when you first open your bill payment account put one
to two times your normal monthly expense amount instead account while insuring
that you also have set up regular payment deductions with your employer to
cover the ongoing withdrawals overtime number for leveraged expense tracking I
am a big advocate of tracking your expenses manually as I believe it makes
you a more conscious spender however I realize this method isn't for everyone
luckily there are numerous apps out there that can keep track of all your
expenses and require no effort on your part
for instance the app mint allows you to connect your debit and credit cards so
that you can see changes in your spending balances and bank accounts in
real time this means that there is no need to write down that five dollars you
spent on coffee or the cost of drinks at the bar that somehow you can't remember
the only two caveats when it comes to relying on automated tracking software
is security and non connected spending like all forms of technology finance
apps are susceptible to hacking and information theft and while apps like
mint have a great track record in keeping your information safe you need
to be aware that there still exists some risk that your personal information
could be stolen the second caveat to this money management technique is
remembering to track your non connected purchases for instance the Apple track
all debit and credit charges in real time but when you pay with cash this
tool starts to lock and its effectiveness well you should be
charging everything to your credit cards to receive either points or cash back
there are times when paying with cash is the only option available and it's
important to keep tabs on where this money goes number 5 monitor your credit
money coming in and going out is obviously an important aspect of your
finances to have under control but another critical aspect is your credit
when most people think of credit to think of applying for a mortgage and
there's no doubt that credit plays a big part in the home buying process however
whether you realize it or not it affects numerous other aspects of your life
first as you know having bad credit can limit your ability to obtain a mortgage
but it can also impact your housing situation and a much broader way most
landlords run credit checks on their tenants and not having good credit may
mean getting refused for the property you want to lease besides affecting your
living situation it may also impact your ability to join the 20
for a century and have a phone when you sign a phone contract the phone is
relying upon your monthly payments to cover the cost of the phone and if you
have a poor history of repayment then you may find yourself without a phone
what most people don't know is that having bad credit can also hurt your
ability to make money it is becoming more and more common for employers to
run credit checks on their prospective employees and you wouldn't want to lose
that on your dream job just because you neglected your credit moreover when you
have a good credit you can usually get the best interest rates on the lines of
credit which many people then draw from and put into the stock market however if
you can only get loans with an inflated interest rates then again you will have
to give up another way to increase your income so how do you avoid these credit
pitfalls and monitor your credit more diligently well services like Credit
Karma allow you to not only track your credit but they also give you
suggestions on how to improve it and in some cases go to work for you to
challenge the negative marks in your credit history plus a lot of credit
services have apps that can be very useful for a few reasons first how many
a credit score app will allow you to check your credit health which is an
obvious benefit but it will also keep the thought of financial credit in the
forefront of your mind which is an added bonus
so in times where you be tempted to rack up a little are charged on your credit
card and increase your credit utilization ratio which negatively
impacts your credit score you will instead think twice and maintain your
pristine credit record so we'll help you avoid those terrible situations I just
explained number six eliminate automated spending now I know we are trying to
make our finances simpler by automating where we can but one of the exceptions
to this process relates to automated spending credit cards and housing bills
aside credit cards have made it too easy to sign up for monthly services and many
of these services deserve to be scrutinized monthly for instance if you
have an automated payment setup for your gym membership and can either remember
the last time you lift it away then it's worth assess in this expenses value on a
monthly basis I to a fallen victim to the automated payment trap for the last
year I've been paying for a Netflix subscription that I probably used a
handful of times needless to say I wasn't getting my money's worth and that
hundred dollars would have been better spent on a nice night out or remaining
in my bank account therefore for all automated spending
outside bill and credit card related expenses put their payments on manual
mode and review the monthly to ensure you only spend the money you need to
number seven outsource tax health besides the word budget the next worst
financial term that makes just about everyone cringe is tax the process of
paying tax is not only a costly one but can be an administrative burden if you
let it be you see tax software like turbo tax has
become very popular as it allows people to file their own tax returns and save
on the cost of a tax accountant now I may be biased because I am an accountant
myself but I truly believe it's worth the money to outsource your tax filing
responsibilities for two main reasons first hiring attack specialists can save
you hours of trying to figure out what forms to fill out and what documentation
you will need to support your claim moreover trained tax professionals have
the experience and knowledge to be able to maximize your return even with my tax
knowledge I had tax specialists find ways to lower my taxable income and
maximize my return and while I was reluctant to pay for tax help initially
I easily recovered the cost with the extra tax savings the individual was
able to identify therefore besides being able to ensure you submit an accurate
and complete tax return outsourcing your filing will save the hassle of dealing
with taxes and I think that's something we would all love to avoid thanks for
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