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 and how to best manage their
money and in this video i will share with you seven money hacks that only one
percent 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 forego managing their money altogether but that's a
topic for another video the reality is that most people drudge through the
management of their finances from tracking their savings to remembering to
pay their electrical bill while you would assume that the rich spend more
time managing their 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 is 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 isn't 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 82 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
when i initially set up this process i allocated 10 percent of my after-tax
income to my savings account 10 to my investment account and 5 to my
emergency fund now as i have earned more money and have fully funded my emergency
fund i have now switched to sending 15 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 billing 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 all 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 in said account while ensuring that you also have set up
regular payment deductions with your employer to cover the ongoing
withdrawals over time number four leverage 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 card 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 app will track all debit and credit charges in
real time but when you pay with cash this tool starts to lack in its
effectiveness well you should be charging everything to your credit cards
to receive either points or 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 five 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 they 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 in 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 21st 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 loans and lines of credit which many
people then draw from and put into the stock market however if you can only get
loans with inflated interest rates then again you 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 having 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'll be tempted to rack up a large charge 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 which will 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 set up for your gym membership
and can't even remember the last time you lifted a weight then it's worth
assessing this expenses value on a monthly basis i too have fallen victim
to the automated payment trap for the last year i've been paying for a netflix
subscription that i've 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 them monthly to ensure you only spend the
money you need to number seven outsource tax help 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 a tax specialist 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 for my return and while i was reluctant to pay for tax help initially
i easily recovered the costs 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 you the hassle of
dealing with taxes and i think that's something we would all love to avoid hey
it looks like youtube thinks this next video is the one that will change your
financial life forever give it a watch and let's see if they're right