How often do you find yourself on the internet looking for ways to save money and get out of debt? Chances are, you’ve either searched or thought about it. Debt can control your life and make it hard to do just about anything.
There’s no quick fix really to getting out of debt and living a financially comfortable life (unless you inherit a large amount or win the lottery). However, by implementing small changes into your day-to-day life, you could see yourself attaining that financial freedom you’ve been seeking.
Don’t think every money move is going to be life ending. Sometimes, all you need to do is change your mindset or make minor adjustments to reach your end goal. To help you out, here are four smart money moves you should implement.
Take Control of Your “Latte Factor”
Have you heard of “the latte factor?” Basically, the latte factor is seeing how much your small trivial purchases add up over time. How often do you go out for lunch instead of packing your own, or buy your morning coffee rather than brewing a pot before you leave? Those are the purchases that can make a significant difference in your finances if you take control of them.
Imagine you spent $10 a day on lunch, Monday to Friday. In one week that is $50 and in just one month, you’re looking at $200 on lunch. How about in one year? That would be $2,400. That $10 lunch that doesn’t seem like a big deal sure looks like it now.
The latte factor makes you stop and think of all these small purchases to get a clearer image of your finances. Once you see how much money you’re throwing away, you can start to make the needed adjustments.
Build Up an Emergency Fund
Have you ever thought how you would financially handle losing your job or primary source of income? How long could you pay all the bills and make ends meet? What about if there was a sudden emergency that required a significant amount of money? Could you handle the expense?
If yes, chances are you have an emergency fund or have attained the financial freedom many seek. If not, however, you might want to reconsider starting an emergency fund. Why? Because a 2015 stat (just three years ago), saw that only 47% of Americans could handle a sudden $400 expense without needing help. That means 53% would need to borrow money or use their credit card to pay for the expense.
Putting aside a bit of money each month will help you if something unexpected occurred. That way you wouldn’t have to dive into your savings account, ask for another loan, or max out your credit card, pushing you further into debt.
Start With a Small Investment
The word investment shouldn’t be intimidating. In fact, you should become familiar and friends with the term. Investments can help you further your financial freedom goals and, if done correctly, bring in a sizeable amount of money.
Don’t wait for the perfect time to begin investing. There is no “ideal” moment to start. Even if it is only $10-$20 a month, starting now with a little bit will put you that much farther ahead later down the road.
Do the research and make sure you understand the basics of investing. You don’t necessarily need a broker to help you. Rather, research online, ask friends who have been investing for a while or speak with an investment advisor until you’re comfortable to start.
Start Dollar Cost Averaging
Dollar cost averaging is an easy investment tool that you should start implementing right away. The idea is to invest a specified dollar amount at regular intervals for an extended amount of time. Maybe you want to set aside $10 a week or a percentage of your monthly income. Either way, the idea is to keep it at the same amount each time.
Every contribution you regularly make will add up over time. What makes is attractive is the consistency and predictability. Every month you know exactly how much you will be taking from your income to put into investments. This will make it easier for budgeting.
Also, it can make investing more affordable. For some, it is difficult to put down a large lump sum of money. When setting aside a small amount each month, you’ll have a better chance of sticking with it and watching your investment quickly grow.