The Simplest Money Management Hacks No One Ever Told You

15th January 2024

Have you ever gotten a raise and got really hyped about it, only to somehow end up having the same amount of money as before? Sure, on your paycheck, you clearly see a bigger number, but you somehow just don’t feel as much of a standard change as you hoped for.

You still aren’t closer to paying off your debt, you’re still not managing to save as much as you should, and you still can’t start investing.

Sometimes, it’s more important that you know what you’re doing than to have the right resources. Here are some tips to help you get started.

  1. Automating your savings is life-changing

The biggest challenge with saving is showing restraint and not putting your hand in the money drawer every time you see something you like on Instagram ads.

The biggest problem with this is that we live in a consumerist society where there’s always something to buy. Sure, our predecessors led simpler lives, but they weren’t bombarded with so many cool items and gadgets on an hourly basis.

So, how do you triumph against such odds? It’s simple: you automate your savings. This means that you set it up so that every time you get a deposit (or on a specific day), a part of your assets is transferred to your savings account.

All of this can be done with a simple app or a single call to your bank.

A big challenge will be determining how much you can set aside without seriously endangering your finances. Keep in mind that no amount is too low, and it’s better to even set aside £10 every month than to just ignore this entirely.

You see, this is how it starts: you tell yourself that things are rough this month but that it will be better next month. Then, the next month comes, and it’s the same story again. This is exactly why you’re automating.

  1. It is never too early to start investing in the future

A lot of people believe that they’re either too young or that they don’t have enough resources to invest. The same thing goes for your retirement fund, and you’re never too young to start. Sure, you don’t have that amount of excess cash when you’re in your 20s, but even depositing a small amount every month will enable you to retire a lot sooner.

When it comes to investment, a lot of people look at the cost of real estate or the cost of various shares and get discouraged. What they don’t understand is that there’s a way for you to invest, no matter how little money you have. For instance, even if you don’t have enough money to buy an entire apartment, you can always find a real estate trust.

As for stocks and other assets, all you need is a good platform. Here, you can sometimes buy fractions of assets, which will allow you to get started even if you don’t have too much money. Still, you do need to find a reliable platform.

To help you out, here’s a brief list of UK investment platforms ranked in no particular order. Do some independent research, pick one, deposit some money, and start investing as early as today.

  1. Live slightly below your means

This is one of the most controversial tips out there, mostly because people misunderstand it. No one is suggesting that you dress in potato sacks or move into a shack because the rent is lower. In reality, all you need to do is start living slightly below your means (with an accent on “slightly”).

This doesn’t mean you have to move to a smaller place; more likely than not, you’ll just eat two more home-cooked meals per week. After a while, you won’t even notice the difference, at least until you open an app and see how much you’ve managed to save.

Just skip that one extra coffee out that you don’t need, buy a year older car, and get a few inches smaller TV. The truth is that you probably won’t be able to tell a difference. That is unless you turn this into a huge issue and develop a sense that you’re withholding your own pleasure.

Sure, this may have an impact on your lifestyle, but the truth is that you’re looking at it backward. The biggest problem with austerity is that you’re thinking too much about it, and you don’t even have to save too much.

  1. Understand debt

They say that debt is necessary in today’s world and that you have nothing to fear. While this may be true for millionaires and a few of the most finance-savvy people in the country, for the majority of people, the trouble starts with a payday loan, which grows into a loan loop.

Other than buying your own place, buying a car, or starting a business, there’s really no great reason to get indebted (other than an emergency). The thing is that the majority of people get into debt to buy things they don’t really need. This is where the last segment we’ve discussed also comes into play.

So, what do you do if you’re hearing this advice too late and you’re already in debt?

Naturally, your first objective would be to become debt-free.

You should start by re-reading your contract and checking if there’s an early repayment fee. If there’s not, then all you have to do is pace up with your credit payments. Start paying bi-monthly instead of monthly or just slightly increase the amount.

You may also want to focus your efforts on the smallest loans (the ones that you’ll repay the quickest) or loans that have the highest interest rate. By doing the latter, you’re reducing the total amount of money you’ll spend.

Consolidation is also a great idea. It makes it simpler since you get a single loan to focus on instead of multiple.

  1. Create multiple income streams

In the previous section, we’ve mentioned that people get into debt because of emergencies. Well one such emergency is a loss of income, which can happen for a number of reasons. To avoid this, the only thing you can do is create multiple income streams.

In the era of remote work, it’s relatively easy to find an extra job. These extra jobs usually have flexible work hours, which means that you’ll be able to adapt to your current schedule and workload.

It’s also a smart move to start looking for gigs. These are one-time projects (like making a piece of art on a commission), and they’re great for supplementing your budget. Some of these can eventually become a second job.

Most importantly, if you have the opportunity, try to create passive income streams. You only have so many hours in a week. Passive income works for you even when you sleep.

Is this idea fail-proof? Of course not. What if the entire economy collapses? However, at that point, no one is safe, and you’ll have bigger things to worry about.

To change your finances, you must first understand them better

The key to leading better finances lies in two things. First, you need to improve your financial literacy. Without understanding budgeting, loans, and investing you can’t hope to succeed. And third, you need restraint. Just because you’re making more, this doesn’t mean that you should start spending more.