How Do You Manage Your Money More Wisely

Money management tips are a dime a dozen. Spend some time on the Internet searching with relevant keywords and you’ll find hundreds of websites offering tips on how to manage money more efficiently.

How are the tips given here on this website any different from all those run-of-the-mill tips?

money management tips

The tips I am going to share are different in two ways. First, they are completely actionable meaning they require you to take certain actions, keeping your emotions at bay. Second, they are a bit unconventional in nature. Here are the tips:

Experiment with debt settlement

Debt – a dreaded word comprised of four letters that’s enough to rob people of their sleep. If you are struggling with debt, here’s a solution. Try not to pay off your debt with your active income. Try paying it with your passive income instead. I know that this solution sounds weird and stands in contrast with the tips that you get from financial gurus.

But I request you to consider the upsides to settling debt with passive income. First, most people are lazy and hence refrain from discovering passive income opportunities. Having a debt can be their cattle prod to grow their money via passive income. There’s a caveat, though. Simply dipping the toes won’t work. You need to be proactive and take passively earning opportunities very seriously. As seriously as you take your active income.

The second benefit is that you can save tons of money. Saving opportunities multiply as you ratchet up more of your active income. Your savings balloon once you clear all the debt.

Leverage a financial crisis

Once again, a suggestion that you are unlikely to come across on other websites. A financial crisis is not a walk in the park, nor is it something to celebrate. However, in such times you get the opportunity to shore up money.

Here are two huge benefits of an economic upheaval that normally go unnoticed. First, the industries causing this crisis will be desperate for new customers when the crisis is over, simply to recover from all the bad press coming their way. Hence, they will offer more perks. Basically, you can better deals from them. Nevertheless, expect them to tighten their rules.

The second benefit is that you can invest in public limited companies in a time when their shares are in a free fall. When the bulls win back the market again, you’d be laughing all the way to the bank. As mentioned in the beginning, you need to keep your emotions away. Don’t just buy a share because it is historically low. You might be tempted to do so but don’t. Wait for it to recover from the 52-week low period or cross several resistance lines and then place your bid.

Use up your 401(K)

But don’t suck it dry. I can guarantee you that you won’t get this advice from anywhere else. In fact, if you share this plan with anybody, chances are that they are going to be discouraging to you.

Most people encourage saving money until retirement. The problem is that 401(K) is not really saving, it is actually an investment; it’s an investment for the future. The future being unknown increases the risk of losing the money in 401(K).

Sometimes, the risk is obvious while other times it’s hard to calculate. In the case of 401(K) plans, withdrawal is difficult until you retire. Now if you have a traditional 401(K) it would be taxed at the time of retirement. If the tax rate is very high at that time, you’d lose a significant portion of your hard-earned money.

Normally, 401(K) plans come with investment options like stocks, bonds and mutual funds. If the market is down at the time of your retirement, you won’t get the amount that you deserve. A lot of people have faced this bleak scenario and decided to delay their retirement.

If you use up some money from your 401(K) for some productive purpose which you are sure will benefit you later, do it. Trust me it’s not a bad idea. But don’t use up all the money and make sure that the outcome is rewarding.

Can you follow them?

I know some people will scoff at these tips. That’s not what I am concerned about. I am concerned about people who will take these tips seriously. It’d be hard for them to convince themselves to follow these tips, because they go against the common wisdom. So ask yourself. Do you think you can follow the tips given here?

Summing up

The best thing about these tips is that you can always customize them. Like I mentioned, these are not bookish tips. You can apply them in whichever way you deem fit and maybe that’s how you’ll come up with some brand new money management solutions.

James Paul is a personal finance blogger at Basic Finance Care which provides valuable insights about personal finance and money management.