Pro2Net Accounting – Practical Guide to Saving, Investing, Borrowing and Spending
Read our guide for tips on budgeting, reducing costs, increasing income and investing, and tricks for getting rid of impulse purchases and shopping addiction. You will also find life hacks to achieve your financial goals, and we also figure out how to save money correctly. You will learn to save wisely. You will need these skills to build your safety cushion, get out of debt, and save for your goals.
6 rules every novice investor should know
Don’t keep all your eggs in one basket
Don’t invest all your money in just one financial instrument. The more you diversify, the less you risk. Although this is not the most profitable strategy, it will save you from complete ruin.
Don’t think you’re lucky
If you decide to rely only on your intuition in investing, you will most likely quickly lose everything. Great investors didn’t get that way just because they were lucky. You must have an investment strategy and goal. You need to carefully assess all the risks and opportunities to make money. Trust logic and theory rather than your feelings. This is the only way you can achieve success.
Come up with your strategy
Learn from experts and investment geniuses, but don’t copy their strategies. Nobody can guarantee you a profit. Today the investment market offers too many options and the world is changing too quickly. Therefore, no one can give you a ready-made recipe. Try to develop your own strategy, which will lead to your success.
Invest in what you understand
Don’t be fooled by promises to get rich the next day. The decision to invest money should be made carefully. As famed investor Warren Buffett said, “Don’t invest in areas that you don’t understand. It is much more profitable to invest in a business that you can understand. ” Remember, the more you know, understand and analyze, the higher the chance of making the right decision.
Don’t invest your last money
Proper investment, first of all, means that you have foreseen all the consequences of an unsuccessful investment. You should always have an untouchable safety pillow for a rainy day that will help you hold out for at least 2-3 months, without any income. For a novice investor, investing the last money is a very risky undertaking.
Choose the optimal level of risk/reward ratio
Usually, the higher the return on investment, the higher the risk. You must decide for yourself whether to take risks but be able to make high profits in a short period of time, or have a stable but not very high profitability.
The ability to invest money correctly is part of financial literacy, without which it is difficult to become successful. The goals, strategies and financial instruments may be different, but if you find your own approach and learn how to properly apply your knowledge, you can make money on everything.
7 effective ways to save money in any situation
During the pandemic, many people around the world analyzed their income and expenses and began to look at personal finance in a new way. Daily spending, which was habitual before quarantine, was no longer available. And those whose income did not change during this period were able to set aside money for long-awaited purchases or even form an airbag that did not exist before. At such an uncertain time, it became clear how important it is.
For example, in April of 2020, the amount that Americans set aside for savings as a percentage of their income rose to 33%. People also managed to save money during the quarantine and put it off. Managing finances in a crisis is difficult. Here are some tips.
Set aside a fixed percentage of income
This is the first place to start. Create a separate account or debit card where you can transfer interest from your salary, part-time job, advance payment, or business profits. The amount depends on the level of income and required spending. It is important that this becomes a habit. Therefore, try to save money systematically every time, do not miss or carry overpayments. Save at least 10% monthly.
Set up automatic deductions for deposits without the possibility of withdrawing money
To avoid the temptation to transfer or cancel your monthly contribution to your piggy bank, you can set up automatic deductions. Ask your bank how to do this. You can select the date and amount that the service will have to write off. But even automation of the process does not always help. Therefore, you can open a deposit in the bank for these purposes from which it will not be possible to withdraw funds until it is closed. Then, with each receipt of funds to your account, the bank will immediately transfer money to this deposit.
Get the most out of your debit and credit card
It’s no secret that many debit cards have cashback for the balance or for certain categories of purchases – a certain percentage will be returned to your account. In some banks, funds are returned in cash, in some – in bonuses. And if you have more than a certain amount on your debit card per month, then the bank can also charge a couple of percent for this.
You can also follow the bonuses of the bank’s partners, as a rule, they are updated in the mobile application. Credit cards also come with cash back if you spend a certain amount on them per month. It can be replenished immediately from a debit card so as not to pay interest, and the cashback can be sent to a savings account.
Use impulse shopping to your advantage
To avoid an optional or impulsive purchase, transfer the same amount of money to your account. You get a double benefit here. Firstly, if you understand that sometimes you cannot fit into a strictly planned budget, then with rash purchases, your savings account will also be replenished. And secondly, before buying an unnecessary thing again, you will think, is it worth it? After all, you have to “pay twice”. For the purchase in the store and for your desire to buy this thing by transferring the same amount to your account.
Arrange a challenge
Arrange a match with yourself or a friend. This is advice for gambling. You can turn the accumulation process into a real challenge. Indicate a specific amount and the date until which this amount will need to be accumulated. And come up with a reward. Here you can tune in to larger spending – a new device or shopping.
You can also partially apply the previous rule. For example, your goal is to accumulate $1000 in six months. If you can do this, spend the same amount on yourself reward for your efforts. And if you are competing with a friend, then you can determine in advance a prize or some task that you would not want to complete. Whoever accumulates the set amount and wins gets a prize, and whoever loses doesn’t get a prize, and even completes the task.
Use the 30-day rule for large purchases
The 30-day rule says: before you make a big and sometimes unplanned purchase, put it aside and think about it for 30 days. This life hack can be suitable for those who buy a new model of a phone, laptop, electronic watch or other devices with each new release. Take the amount you plan to spend on this item and put it aside in a savings account. If it still seems like a vital purchase to you after 30 days, buy it. If not, leave money in the account.
Use the 365 rule every day
The 365 rule is suitable for those who like to start a new life on Monday or New Year. To follow this rule, you need to save money every day. But not like in the previous paragraphs, but the amount should increase every day. For example, on January 1, you will add $5 to your account, and on January 2, you will have to add $6. And so on, until next New Year.
5 tips on how to take loans so as not to remain an eternal debtor
The growth in the number of borrowers shows that payday loans are still in demand among consumers. Today, we will tell you about how to wisely approach payday loans.
Match your desires with your capabilities
This applies not only to payday loans but in general to any financial product. In general, it is recommended to take into account a very simple formula and proceed from the rule that all monthly payments for all existing loan obligations should not exceed 30-35% of monthly income. You should not apply for borrowed funds if you are not sure that you can comply with the terms of the agreement.
Understand the nature of payday loans
The specificity of a payday loan is that it does not duplicate a bank loan: shorter loan terms, smaller amounts, availability to consumers who do not have a credit history, or it is spoiled. And the payday loan is intended as an ambulance tool. That is, this is “quick” money for solving urgent issues of borrowers.
Carefully consider the selection of a lender
It is necessary to check whether the company is legal. This is necessary in order to make sure that it is not an illegal creditor, imitating a legal one.
Study the loan agreement well
When concluding an agreement, you should carefully read the document and study the conditions for issuing money and paying off debt. The agreement must contain all the necessary information about the lender, data on the full cost of the loan. The contract must reflect the limit for the overpayment.
Loan insurance is an additional service. Even if it is included in the agreement, the borrower has the right to refuse it within several working days from the date of signing the document. The client should remember that the lender is not entitled to issue loans in foreign currency, unilaterally change the terms and rates on the loan, fine the borrower if he or she wants to repay the debt ahead of schedule.
Don’t hide your debt service problems
Do not use the services of debt dealers. With such interaction, the client loses money and receives nothing in return.
If the borrower cannot make the loan payment on time (an unforeseen life situation, a delay in a paycheck), he or she should not wait until late fees begin to accrue. It is better to inform the lender and request an installment plan or restructuring.
8 ways to spend less every day
Everyone has bad financial habits. We must get rid of them. We have collected eight lessons from American bloggers and financial advisors and drew conclusions on how to spend less.
Spend money more slowly
The main culprit behind the spending of financial blogger Jesse Feron was the online store Amazon. Feron has three children, and online shopping seemed to her a great way to avoid the hassle and queues at the regular store. But at the same time, she bought much more on Amazon than she needed because it was easy – one click.
To cut down on unnecessary spending, Jesse Fearon arranged a “month without Amazon”. She untied her debit card from the store account and unsubscribed from all promotions and special offers.
Tip: think about where and how you are spending money too quickly. You should probably close all your credit cards, delete your online store accounts, or even opt out of contactless payments using your phone or PayPass cards.
Stop before buying
Blogger Tom Drake had a soft spot for impulse buying. The release of a new gadget or a sale with huge discounts was a reason to fork out. He could spontaneously spend all his money. This led to debt and credit.
To limit impulse buying, Tom Drake introduced the 24-hour rule. He withstood the day before buying a thing over $100. The next day, the purchase often seemed not so necessary.
Tip: Give yourself time to get over the “charm” of spontaneous buying. Check the prices for this or a similar product in other stores, ask your friends for advice, critically evaluate your budget.
Financial blogger Mitchell Walker categorizes cash into groceries, business lunches, entertainment, and gifts. If overrun occurs in one of the categories, the other category has to take a hit. You have to choose: more entertainment and fewer gifts or more business lunches and less food.
This strategy made Walker plan his budget well and think before every purchase.
Tip: visualize your income and expenses. For example, pay with cash and count daily how much money is left in your wallet.
Blogger Michelle Schroeder-Gardner worked in a clothing store. All employees had a large corporate discount on store goods. Therefore, Michelle spent a lot of money on clothes – it is difficult to avoid the temptation, working with beautiful things and being able to buy them a little cheaper. In the end, she had no free space in her closet … and no money.
This situation forced Schroeder-Gardner to quit his job. Later, the blogger stopped visiting shopping malls so as not to buy something unnecessary randomly. And now she lives outside the city in a house on wheels, where there is simply no place for unnecessary things.
Tip: Reconsider your lifestyle if you spend too much money. Are you used to going to the mall after work, buying coffee every day, or going shopping with your girlfriend as a company? Then you should learn to avoid temptation.
Plan your budget
When financial consultant Charles Scott first decided to plan his personal budget, he drew a table. It had three columns: Wishlist, necessary expenses and bills. He gave priority to the last two categories. And the Wishlist was distributed for several months in advance.
After a while, most of the Wishlist two or three weeks ago turned out to be not so desirable. He didn’t want to buy them anymore. So Scott began to spend money much more wisely.
Tip: Try to keep your personal budget for at least a few months to identify your financial mistakes. It really helps to save money.
Keep some cards
Kate Horell’s family bought too many groceries. It was either Kate’s husband or herself who went to the store – and it was difficult for them to keep track of each other’s spending. As a result, every month there was overspending in the food category.
To keep spending in check, Horell set up a separate debit card for grocery shopping. So the couple always knew exactly how much money was left to buy food. This helped them avoid overspending.
Tip: create a separate account for the “highly dangerous” categories. It is disciplined and can also be beneficial. Banks have cards with increased cashback or bonuses for certain purchases.
Financial consultant David Niggel and his wife mark each purchase in a shared Google Docs document. And at the end of the month, they analyze how much money and what was spent. Sometimes this is how completely insane spending comes to light.
Tip: write down where your money goes, every penny.
Look for opportunities to save
Blogger Deacon Hayes is used to drinking good coffee in a coffee shop not far from home. He loved the atmosphere of the place, the friendly barista, and the taste of the drink. One day Hayes counted how much his daily coffee treat cost him – and grabbed his head.
In the end, the blogger bought a high-quality coffee maker and learned how to make the same delicious coffee at home. And the $5 saved every morning turns into $150 at the end of the month.
Tip: Find a way to get things you like for less or for free. For example, buy clothes during discounts and special offers, buy popcorn in the supermarket, not in the cinema. And if you love fine dining, sign up for a course and learn how to cook your dream food.