Despite developing COVID-19 strain stress, inflation woes and the hesitation that many Americans have to ring in yet another new year that doesn’t seem so new, people are planning to spend more this holiday season. A wealth of surveys suggest that consumers are feeling more comfortable shopping in stores and are leveraging their online purchasing power after the wash that was the 2020 holiday season.
In fact, the National Retail Federation is predicting that, as jingle bells swing and jingle bells ring, Americans will spend up to $859 billion this year—the highest holiday retail sales on record. The average American, according to the research, will spend a cool K on the holidays. Similarly, Mass Mutual projects that Americans expect to spend an average of $1,243 on holiday purchases. The survey finds that 42 percent expect to spend at least $500 more than they did last year throughout the holidays, and 25 percent expect to spend at least $1,000 more.
However, not everyone is so quick to jump on the spending sleigh. A Deloitte survey finds that 11.5 percent of people are planning to sit out the season without spending anything on gifts. Those who do plan on going out dancin’ and prancin’ around retail stores are likely bigger earners. High-income households (raking in at least six figures) will spend five-times that of lower-income households (making less than $50,000) this holiday season. They’ll spend an average of $2,624 each over the holidays, which accounts for a 15 percent increase from 2020 and compares to the $536 that each lower-income household will spend, marking a 22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} decline from last year.
After all, according to a NerdWallet report, one in three shoppers still have holiday debt incurred last year hanging over their heads. And a LendingTree survey purports that 41 percent of people anticipate going into debt this season, too.
Wherever you fall on the spending spectrum, debt doesn’t do you well. Follow these personal finance tips for holiday shopping to make jingle bell time a swell time without spilling all your eggnog.
And don’t forget to check out Q.ai’s Limited Edition Holiday Shopping Kit, which helps you tap into the holiday shopping frenzy in a less conventional way. The Kit considers where everyone else is spending their money, and then allows you to invest in the major retailers that are crushing it this season—so you can get a piece of the pie, err, ginger bread.
1. Build a budget that’ll keep you and your wallet merry.
Holiday shopping without a budget is like going grocery shopping on an empty stomach—but with even more glittering garnish to attract your attention. It’s important to make a budget of how much you can feasibly spend this holiday season without breaking the bank—and to make that budget before you hit the stores.
2. Make a list, and check it twice.
Make a list of the people for whom you’re shopping, and even include yourself if you know that you’re someone who tends to treat yourself along the way. Consider those to whom you really need to give gifts (perhaps people like your family and your favorite boss) and the people who you’d ideally love to celebrate should you have any budget leftover (like your neighbor down the road).
Once you prioritize these people, give some serious thought as to what exactly you plan to purchase for them. Having a list of what you need to snag from the stores will help hold you accountable and not spend extra dollars (that add up) on that shiny ornament or adorable stocking stuffer you didn’t need. It’ll also help you save money if, for example, you can buy some stuff in bulk—like two-for-the-price-of-one candles for your colleagues.
3. Ask Santa for better prices.
Once you know what you want to buy, don’t be so quick to do it. Shop around for the best prices. Some shops offer holiday sales or coupons you could collect to shave dollars off the price tag.
While physically going into all the dizzying stores crawling with shoppers can be daunting, you could shop online or call stores ahead of time to see what they have in stock—and for what cost to you.
4. Take advantage of all the holiday miracles.
Look out for little ways to save money here and there, like through shopping cart abandonment. This is an e-commerce term that refers to placing items in your online cart, but not completing the checkout process. Some retails may email you coupons to commit to checking out if they see that you’re sitting on some stuff.
Also keep an eye out for discount codes that are floating around your social media, which will certainly serve you ads tailored to your online shopping history.
5. Keep your receipts at the ready.
At the end of the day, be sure to hang onto your receipts and collect gift receipts when necessary. The last thing you want to do is waste money on gifts that don’t fit or function properly, which would be a bummer for both the recipient and your wallet.
Keeping your receipts can also help you track your expenses and stay on track of your holiday budget.
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The Haywood County Public Library plans to expand its personal finance collections following the receipt of a grant from the FINRA Investor Education Foundation (FINRA Foundation).
The additional resources will help ensure that residents have the information they need when making critical money decisions as they repair, rebuild and clean up.
“When disaster strikes, the community comes together,” said Library Director Kathy Vossler. “The Haywood County Public Library provides residents with unbiased information to guide financial choices that will have lasting impact.”
Filing claims, accessing government resources, managing lump-sum payments from insurance companies and meeting immediate expenses when income might be disrupted — these are just a few of the money challenges that residents in disaster areas must navigate.
FINRA Foundation President Gerri Walsh noted, “Many of us lack experience with these decisions. Nonetheless, we have to get it right the first time around or face long-term financial consequences. Fortunately, the Library has information that can help.”
The expanded personal finance collections at the HCPL are made possible by a $5,000 grant from the FINRA Foundation. For nearly 15 years, the FINRA Foundation has provided funding, staff training and programs to build the capacity of public libraries to address the financial education needs of people nationwide. Much of this has been accomplished in partnership with the American Library Association through a program known as Smart investing@your library®.
It is estimated that consumer financial fraud costs Americans more than $50 billion a year, according to FINRA Foundation research. Financial fraud is especially prevalent following major natural disasters. Since it was established in 2005, the National Center for Disaster Fraud, which is part of the U.S. Department of Justice, has logged more than 220,000 disaster-related complaints from all 50 states. Financial fraud makes tough times all the more difficult for people recovering from the trauma inflicted by disasters.
Walsh observed, “Recovery follows disaster, but the path to recovery can be smooth or very bumpy. And financial fraud can be one of the biggest potholes along that road. The Haywood County Public Library has information to help people avoid the financial potholes and bring the route to recovery into sharper focus.” As a result of the grant, the Library is adding both print and digital materials to all branch collections.
The FINRA Foundation supports innovative research and educational projects that give Americans the knowledge, skills, and tools to make sound financial decisions throughout life. For more information about FINRA Foundation initiatives, visit finrafoundation.org.
As the UAE celebrates its Jubilee year, the country has emerged as a leading global player in the financial services industry that has been revolutionised by technology and transformed the way we bank, invest and save our money.
From opening bank accounts with facial recognition technology to investment robo-advisories that deploy artificial intelligence to measure risk factors to instant money transfers, neo banks and landmark legal reforms, the sector has come a long way since the early 1970s, when the dirham was first introduced as the country’s official currency, Women Fashion.
That was a time when it would take weeks to remit money home, when financial services employees would painstakingly fill out forms manually and consumers would line up at a bank or exchange house to apply for travellers cheques before taking an overseas holiday.
But it was the 1980s that proved to be the turning point for the sector, when the humble fax and telex machines became a crucial means of “real-time” communication for the country’s banks, exchange houses and other financial services firms, Women Fashion.
“I recall the handwritten book-keeping and the use of carbon paper to create copies before the photocopiers and computers came into the picture,” Rashed Al Ansari, the chief executive of Al Ansari Exchange told The National.
“I also recall when travellers cheques revolutionised international money transfers, which is today considered obsolete. There were days when transactions were being recorded by hand and mailed, before being sent by telex and fax.”
However, it was the internet that was the driver behind the sector’s transformation, which made transactions simpler, quicker and more affordable than ever before, while today’s mobile technology has also influenced the way money is being transferred around the world, Mr Al Ansari said.
The digitalisation of the UAE’s financial services sector accelerated during the Covid-19 pandemic, as consumers increasingly relied on the convenience of mobile apps to do their banking, send money home, trade in stocks or shop online during movement restrictions, Women Fashion.
“Smartphones and other mobile devices effectively reshaped the future of the global remittance business,” Mr Al Ansari said.
New technology will continue to drive the sector’s transformation thanks to innovative FinTech start-ups, which are working with numerous lenders and exchange houses on open banking concepts and blockchain, for instance, in an effort to further streamline services.
Banking customers today want a seamless, automated experience with little waiting time – a far cry from the days when the internet did not exist and queuing up to make a deposit or cash withdrawal at a physical bank was the norm, according to Philip King, the head of retail banking at Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate.
To enable this, banks in the region are digitising complex processes and end-to-end customer journeys across their front, middle and back offices, according to the UAE Banking Perspectives 2021 report by KPMG.
Smartphones and other mobile devices effectively reshaped the future of the global remittance business
Rashed Al Ansari, chief executive of Al Ansari Exchange
“At ADIB, we believe the digitisation of banking services is a necessary advancement to help banks fuel new growth opportunities and unlock greater value for customers,” Mr King said.
“For simple transactions like payments and transfers, customers prefer digital or mobile channels that provide instant and convenient services,” he adds, Women Fashion.
“For more complex or critical banking products, including investments and home finance, customers prefer to visit the branch and interact with their relationship managers. So, the appetite for digital interactions varies across banking products, which is why at ADIB we always look at a hybrid approach.”
Meanwhile, the UAE introduced landmark legal reforms in 2020 that improve the protection of our personal finances in the future. The sweeping amendments to laws on inheritance, bounced cheques, bankruptcies and economic support during the Covid-19 pandemic were introduced as part of the Emirates’ efforts to reshape its legislative and investment environment for the 21st century.
One of the most welcome changes was the update to the Federal Law on Commercial Transactions, which includes several new provisions that aim to discourage criminal lawsuits against people and businesses for bouncing cheques.
The amendments come into effect in 2022 and will introduce a mechanism that ensures banks partially pay the amount to the beneficiary after it is deducted from the available funds in the account of the cheque issuer.
The opportunities for retail investors to take control of their investments has also undergone a significant change compared with the days when financial advisers, driven by high commissions, would mis-sell complex investment products to unsuspecting people.
These days, retail investors are increasingly seeking access to markets with the help of technology, leading to a surge in popularity for zero-commission trading apps such as Robinhood, eToro and Interactive Brokers.
Digital wealth managers such as the UAE’s Sarwa and StashAway are also helping to revolutionise the financial services landscape in the Middle East by offering low-cost investment solutions to a large market that has traditionally had limited access to trading and investing in the past.
Demand for trading apps soared during the pandemic as monetary easing by the US Federal Reserve and other central banks around the world gave novice day traders more money to invest during pandemic lockdowns, according to a report by Finra Investor Education Foundation and the National Opinion Research Centre at the University of Chicago.
Novice investors are turning to trading apps such as Robinhood to buy stocks. AP
This trend is set to continue. The global robo-advisory market size is projected to grow by 31.8 per cent to $41.07 billion by 2027, up from $4.41bn in 2019, according to Allied Market Research.
“There have been a lot of milestones that we can point to [in investing], but the main trend at every step was making it cheaper, low cost, almost free in some cases, and making it more accessible so there is more wealth in more hands,” according to Mark Chahwan, co-founder and chief executive of Sarwa.
“It started with mutual funds, then it went on to exchange-traded funds. There was a resurgence in passive investing, but now active is making a comeback with trading, where it’s not just about securing your safety net and a diversified portfolio, but also about investing in themes you believe in.”
Over the coming decades, it will be Generation Z and their younger cohorts who will reshape the financial industry in their tech-savvy, mobile-first image, which will have ramifications for all consumers, companies and investors, according to Morgan Stanley.
Mr Chahwan agrees: “I won’t say this is a plot twist, but the new big element that’s now shaking up the industry is the amount of young people that are investing … and are growing up in such an environment”.
They say 30 is the new 20. Considering how undisciplined many of us are with money in our 20’s, that’s probably a good thing — because that also means it’s not too late to learn some good habits and steady the ship. Whether you’re five years from 40 or you managed to stumble across this article with a decade to spare, here are 6 key personal finance moves you can make right now that could help make life easier on your future self.
1. Build a Budget
You’ve probably heard this one a hundred times before — but that’s because it’s a really good idea. That’s why it’s our top tip here. Your financial goals may remain out of sight if you can’t build (and stick to) a budget.
When it comes to divvying up your income, consider the 50/30/20 rule:
50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for essentials: Think rent, groceries, bills, etc.
30{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for wants: Maybe it’s a new gadget or you’re saving for a vacation.
20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for savings and debt: savings or investment accounts, paying off credit cards or student loans, etc. And don’t forget to include a pad of emergency funds within your savings account (or somewhere that’s easily accessible).
2. Tackle Your Debt
If you’ve got debt, you’re not alone. In fact, the average American has $52,940 in debt, according to Business Insider. And that can be a hindrance, especially if you’re still establishing yourself as an adult, and want to work towards financial goals like homeownership.
One strategy you could consider is debt consolidation. Jennifer McDermott, a Consumer Advocate with finder.com, often recommends “consolidating all debts into one place.” You can sometimes take advantage of introductory offers with low interest rates, and having one singular payment may feel easier to manage than juggling several monthly bills.
Then there’s the “good debt vs bad debt” debate. A credit card, for example, could be considered “bad debt” by some, because of the interest rate you may be charged to carry a balance. Drew Parker, who created the Complete Retirement Planner, says “Paying $200 per month on a $5,000 balance can take almost three years to pay off with a high interest rate (18{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} or more), and it will add more than $1,300 in interest charges.”
Parker adds, “If you were to instead invest that $200 per month, you could “have $10,000 in hand in the same amount of time (with a 7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} return).”
3. Save, Save, Save
It’s never too late to start saving. Once you’ve got a plan to get any debt under control, saving — even a few dollars a week — can really go a long way.
If you get paid through direct despot, consider routing some of that to a savings account automatically. Out of sight, out of mind, and earning interest.
Lou Haverty, a CFA at Financial Analyst Insider, recommends saving at least the equivalent of 1x your annual salary by the time you’re 35. “If you’re not at that level yet, and a lot of people aren’t, it can serve as a good reminder that you should consider increasing your savings rate to get closer to that 1x mark.”
4. Invest in Yourself (You’ll Be Glad You Did)
For some people, the word “invest” brings to mind fancy financial maneuvers not meant for the average person — but that’s not really the case. There are simple, smart ways to invest at an early age that, with the help of compound interest, could help bolster retirement savings down the line.
You’ve probably heard of one of the most popular examples, a 401(k) account. Contributions to your 401(k) are made with pre-tax dollars. They then accumulate (tax-free) until age 70 ½ , when you start receiving regular distributions. If your employer matches a percentage of your 401(k) contributions, you should consider a regular contribution of at least that much. Another way to think about an employer contribution is “free money.” Sounds nice, right?
If you change jobs, you can roll over your 401(k) to a Roth IRA. As of 2021, the annual contribution limit to a Roth IRA was $6,000. With compound interest, that can really add up over time.
Take Advantage of Compound Interest!
Compound interest is your friend. Put simply, the more you put away now (so, the longer you save) the larger your account is likely to grow over time.
Richard Best, a writer for dontpayfull.com, agrees: “There’s a real cost of waiting to save for your retirement.” He gives the following example:
“Vince contributes $20,000 starting at age 25 and then stops making contributions at age 45.
Ally waits until she’s 45 to start contributing $20,000 per year until age 65.
They’ve both invested the same amount of money. However, assuming a 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} average annual return, Vincent would have $2.5 million by age 65, while Ally would have just $790,000.”
That’s a difference of over $1.7 million. Go ahead and read that last sentence again.
5. Keep an Updated Will
A will is a form of estate planning that can help protect your assets and your family’s future financial well-being should you pass away. It’s worth considering if you’ve recently tied the knot, had kids, or are otherwise wading into the waters of positive net worth.
While you can write your own will, it might be wise to at least meet with a professional first. If you became incapacitated without plans in place, someone may have to go to court to gain conservatorship over your finances.
If you’ve already put together a plan, it’s always a good idea to regularly check and update your beneficiaries.
6. Consider Life Insurance
If you think life insurance is something to put off until you’re older, you might want to think again.
The truth is, the rate you pay for your life insurance is usually determined in part by your health and other factors at the time of your application. So if you’re young and healthy, you’re more likely to pay a lower premium than if you waited until you were older.
And unless you’ve amassed serious assets already, a product like term life insurance could be an affordable way to help ensure some financial stability for your loved ones if you passed away.
While everyone’s financial situation is unique to them, following and implementing these six money moves by the time you’re 35 could help give you a great financial foundation to build on.
We receive a referral fee from Bestow Agency, LLC dba Bestow Insurance Services in CA, who is the licensed agent.
The information provided is not intended to offer any tax, legal or financial advice. It is always a good idea to consult your tax, legal and financial advisors regarding your specific situation. Furthermore, this article does not ensure your eligibility for any specific product.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.
The holidays can push budgets past their limit as people do more entertaining, attend more events, dine out and participate in gift exchanges. Whether you’re gathering in person or celebrating at a distance this year, it will be tempting to overspend. Here are some tips to help you plan for a less financially hectic 2021 holiday season.
Create a holiday budget
The last month of the year offers many opportunities to splurge. Prevent unfettered spending by setting a “do-not-exceed” dollar amount for holiday-related expenses. Include all purchases tied to the season, from gift giving to refreshing your holiday wardrobe, buying decorations, entertaining and more.
Track your expenses
A budget is only useful when you track your expenses against it. Keep receipts for purchases and tally expenses at the end of each shopping excursion. Check your totals to make sure you’re not exceeding your budget — and are prepared to make returns if you have.
Manage your expectations
The COVID-19 pandemic continues to affect global supply chains, causing disruptions in many different and surprising product categories. Merchants of all sizes will have product shortages and may offer less merchandise choice overall. Prices will be higher too, driven by increased demand, inventory shortages and higher than normal inflation. And don’t expect fire sales as we get closer to the holidays. Retailers will be unlikely to discount product that’s flying off the shelves.
Shop early
More than ever, this year you’ll want to give yourself plenty of time to do your holiday shopping. Both brick and mortar and online stores will be affected by the supply chain challenges. Be flexible. You might have to spend more time looking for what you want. You may need to switch gears if you can’t fulfill your initial wish list. And if you need to ship your gifts, keep in mind that the holidays always cause shipping delays, but this season the slowdown is predicted to be greater than usual.
Plan for increased shipping costs
In addition to inflated prices on general merchandise, shipping costs are spiking upward as well. The U.S. Postal Service has announced price hikes, and other major shipping carriers are also raising their prices to counteract higher oil prices and staffing shortages.
Give differently
If the gifts you want to buy are in short supply or “things” aren’t your thing, consider ticking off your gift list by giving experiences. Local restaurants are eager to make up for months of lost business. Likewise, theaters and sporting events are finally opening up and need to fill seats that have been empty too long. You could also consider giving financial gifts to your loved ones such as a partially funded savings account, Roth IRA, savings bond or an appointment with a financial advisor. And finally, charitable donations are becoming more popular as holiday gifts, particularly if the non-profit is meaningful to the recipient.
Bronwyn Martin is a financial advisor and chartered financial consultant with Martin’s Financial Consulting Group, a financial wealth advisory practice of Ameriprise Financial Services, LLC. in Kennett Square, and Havre de Grace, Md. She specializes in two fee-based financial planning and asset management strategies and has been in practice for more than 21 years. To contact her visit www.ameripriseadvisors.com/bronwyn.x.martin
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There’s no shortage of great personal finance advice out there. The problem is figuring out whether or not it applies to you.
“Personal finance is personal before it’s financial,” Talaat McNeely told me during an interview earlier this year. McNeely is the co-founder of the site His and Her Money, which he runs with his wife, Tai. I’ve found this idea to be a helpful way to think about your finances and life in general.
There is no single tip or money hack that will instantly change your life. But some principles and concepts can put you on the path to achieving your goals. You’ll just need to figure out a way to apply them to your unique situation.
Here are the most impactful lessons I’ve learned during my time as a personal finance reporter, and how I’ve applied them to my life. These tools and concepts helped my wife and me set aside over $20,000 to pay off student loans (once interest resumes next year), build our emergency fund, and feel less stressed about our financial future.
A good budget should manage not only your expenses but also your emotional relationship with money.
5 Things I Learned as a Personal Finance Reporter
Since launching NextAdvisor in the middle of the pandemic, our biggest priority has been sharing actionable advice readers can use right away in their daily lives. In the course of fulfilling this mission, we’ve learned quite a lot about ourselves.
Here are four personal finance concepts my wife and I have incorporated into our everyday approach to finances, plus one strategy we plan to use when we are ready to buy a house.
1. Budgeting Is About More Than Just Managing Money
For years my budget was a homemade spreadsheet I updated sporadically in hopes of becoming a young Warren Buffet. It rarely worked as well as I wanted. In theory, my budget should have turned me into the ultimate saver. But what frequently happened was: I’d update it once a month only to find out I’d overspent on eating out. And it wasn’t helping me feel any less stressed about money.
One of the first stories I wrote for NextAdvisor was about creating a budget, and that is where I discovered zero-based budgeting (ZBB). Once my wife and I started using the zero-based budgeting method, we didn’t just start saving more but also began to feel less worried about money. In my experience, a good budget should manage not only your expenses but also your emotional relationship with money.
Piper after his surgery. He hated the cone of shame, so we put him in a baby onesie.Jason Stauffer/Getty Images
With ZBB, every dollar that comes in is given a purpose. We assign funds to pay for rent, cellphone, and other expenses. But we also assign money for more than just our current bills. This strategy helped us pay off student loans sooner than we expected.
ZBB also helped us build an emergency fund for the first time in my life. When the cat needed a $2,000 emergency surgery this past summer, we already had that money set aside. If we hadn’t had an emergency fund, this surprise cost would have been a setback for other goals. Since this money was already set aside, it didn’t negatively affect our other financial obligations.
We’ve been using the zero-based budgeting app You Need a Budget (YNAB) for almost a year and a half, and we absolutely love it. This app has effectively turned our credit cards into debit cards, which is important because I’m a full-blown travel credit card junkie. When I enter a credit card purchase into the YNAB app, the funds are immediately assigned to pay off that card. So even though I won’t actually pay the credit card bill for up to 30 days, the budget tells me that money is no longer available to spend.
How to Find a Budgeting Strategy That Works for You
If you want to try zero-based budgeting for yourself, I think YNAB is a great place to start. It’s important to note that it’s not free. But there are plenty of free or cheap ZBB templates available. And ZBB isn’t the only budgeting method that works. As you explore different approaches to budgeting, zero in on why you want a budget in the first place. A budget can help reduce financial stress, and get you closer to your goals without turning you into Ebenezer Scrooge.
2. Prioritize Income Over Expenses
There is a limited number of Starbucks lattes you can cut from your budget—but an unlimited number of ways to make money.
I’ve talked with people who’ve paid off their mortgage in under six years and conquered six-figure sums of debt. One common thread from these success stories is they find ways to make more money. They start side hustles, businesses, or find better paying jobs. Having a budget that works for you is still the first step. But if you don’t net enough income after expenses, then saving for anything else will be a struggle.
My wife and I are expecting our first child in 2022, and for us, it’s as important as ever to increase our household income. My wife is considering a move from freelance to full-time work, which would provide a more stable income. From there, we might explore other freelance or side hustle opportunities.
How to Increase Your Income
Starting a side hustle might not be as challenging as you think. Chances are you already have interests and talents you could use or develop to boost your income. One great bit of advice Marc Russell shared with me was to repurpose the skills from your current job into a side hustle. Russell is the creator of the personal finance Instagram account Betterwallet. “As long as there’s no conflict of interest with your current job, you can go off and create your own thing on the side and get paid for it,” he said in a previous NextAdvisor story.
3. Negotiating Can Be As Simple As Asking
The thought of negotiating has always terrified me. My idea of a good negotiator has always been a former Navy SEAL or pro athlete, someone who’s in control, confident, and used to winning. In reality, negotiating is often as simple as asking for what you want. Crafting a good offer sometimes includes offering something of value in return.
I’ve never asked for much of anything, much less a discount on my housing costs. Recently, I was looking to move into a new apartment on a short-term 3-month lease. I emailed my current property managers to ask about two units downstairs I knew were vacant. I asked if either unit would be available for a short-term lease and I gave them valuable information, reminding them the one apartment had been vacant for over a year. Then I offered to pay all three months upfront if they would reduce the rent.
Now I’m paying over $150 less a month and my landlord has $4,000 more than before I asked for what I wanted.
How to Negotiate More Frequently
Any negotiation is better than no negotiation. Find an approach that could help you ease into it and be more comfortable. Try making an indirect request and see if that’s easier for you. Instead of coming out and saying you want a pay raise, ask your manager something along the lines of, “what have people in my position done in the past to help increase their pay?” At the very least, it gets the conversation started. You’ll never get something if you don’t ask for it in the first place.
4. Be Patient and Consistent. Change Takes Time
Changing the trajectory of your finances takes time.
That can be disheartening to read. Everywhere you look it’s one headline after another highlighting the youngest millionaire or someone who went from insurmountable debt to financial freedom in less time than it took to read their bestselling book.
Life is a marathon, but we only see the last few hundred yards of other people’s victories. Almost all financial achievements are preceded by a long period of learning and building momentum. Whether it’s learning to code before becoming a tech entrepreneur or saving up for a down payment on a house, meaningful changes take time.
If you can only take small steps, just keep taking small steps. It can be tough seeing how fast everyone else seems to be moving. What’s not obvious is how much time it took them to develop the speed you’re seeing. Understanding how much time is involved in making meaningful improvements is the foundation for positive financial decisions.
How to Use Time to Your Advantage
The best way to get time working for you is to start now. Start small, start slow, start without it being perfect. Then your job is to continue what you started, however slowly you’d like, and to learn and make adjustments along the way.
5. Prospective homeowners: Ask about a zero-cost mortgage
While reporting on mortgages, the most overlooked strategy I’ve come across for reducing your mortgage cost is to ask for lender credits in exchange for a higher interest rate. In this situation, the credits would be used to cover the loan fee portion of your closing costs. A zero-cost mortgage means you’d be paying a lot less out of pocket every time you buy a home or refinance.
Here’s why I plan to get a zero-cost loan:
By reducing the upfront cost I’ll have more liquidity.
What I would have spent on upfront closing costs can be used to pay down the mortgage balance, invest in a retirement fund, or set it aside for unplanned home repairs.
If I move or refinance a combined six times in the next 30 years, I’d pay closing costs (3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}-6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the loan) six times. So for me, taking the higher interest rate with a zero-cost loan is cheaper because our future plans aren’t set in stone.
When researching lenders, ask if they have a zero-cost loan option. Compare your options and see which one makes the most sense for you. In my experience, the zero-cost mortgage is not as common or widely advertised. Also, the zero-cost mortgage is different from a no-closing-cost mortgage. A no-closing cost mortgage is when the closing costs are rolled into the total loan balance.
How to Pick the Right Mortgage for You
Any time you take out a home loan, you’ll want to be sure that you understand all your options. Ask a lot of questions and work with a professional who will help you understand your options, rather than just someone who gives you “the answer.” In my experience, most borrowers are overly concerned with the mortgage rate and overlook the closing costs. Interest and closing costs can be easy to miss because they might be added to your loan balance, but you’re still paying even if you’re not paying out of pocket when you close.
Bottom Line
The above practices have given me the patience I needed to establish financial habits that will last a lifetime. They worked for me. But it doesn’t mean you should take the same approach. If nothing else, use these concepts to start thinking about how you can approach your finances differently or to start asking questions you hadn’t considered before.For more information, check out this library of resources on NextAdvisor’s savings page.
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