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Top 5 hacks that can help you achieve financial maturity

October 21, 2020
Top 5 hacks that can help you achieve financial maturity

Ok, we all know the theory – spend less than you earn, save, have more than one source of income, build passive income sources, etc.

Theory is one thing, applying it is another. You work and earn a salary, but you can hardly save and you don’t have any other source of income. The financial maturity that we mentioned is like a chimera and seems so difficult to achieve. And most importantly, where do we start?

Don’t worry, there is good news. There are some very easy hacks that you can implement which can help you a lot. Let’s have a look at them.

Hack #1 Saving life insurance

Most people know what life insurance is, but not everyone knows that there is a type of life insurance that can also support your financial goals. It is saving life insurance. In very simple terms, it means that you pay monthly contributions for a certain number of years, e.g., 20 or 30.

If anything happens to you, the beneficiary of your life insurance is entitled to receive its value, but saving life insurance provides an additional benefit: if nothing happens to you and you live happily beyond the term of the life insurance, i.e., for more than the 20 or 30 years, then you get the value of the life insurance plus the accumulated interest.

Why is that hack so good? Because throughout the term of the life insurance, you view the monthly installments as a cost; you just subtract your monthly payments from your monthly income, and you can allocate the remaining sum to your monthly expenses such as food, travel, and entertainment.

In reality, the monthly payments for your life insurance are savings – this is your money, which, moreover, accumulates good interest. And when you add the fact that your insurance contributions are tax deductible, this becomes a very attractive option!

Hack #2 Automated saving

This financial instrument has been around for decades. However, not all banks or financial institutions offer it, although quite a few people still use it. And it’s very convenient! It simply means that your bank automatically allocates a certain amount of money on each credit or debit card transaction into a separate savings account.

For example, you can specify that you want 5% of every transaction you make to go automatically to your savings account. If you buy a jacket that costs $100, the bank will withdraw $105; $100 will go to the shop that sells you the jacket, and $5 will go to your savings account.

The advantage of this hack is that it is fully automated; you don’t have to do anything in order to save money. With every transaction, you automatically save. And you have the flexibility to say what percentage of the amount of the transactions should go to your savings account.

Hack #3 Investment portfolio (it’s easier than you think)

In the past, investment in company stocks was the privilege of the “enlightened,” but these days, online trading platforms have made investment accessible to more or less anyone who has a bank account. It’s not a surprise that more and more people these days have their own investment portfolios.

There is one caveat, though. Having an investment portfolio sounds cool, but it doesn’t mean that you’ll make a profit from it. Here is the catch: investment is a very complex financial subject. (Everyone who studied finance at university will understand what I mean.) It might sound easy, but it’s not. Well, to be precise: investing is super easy, making a profit is not.

So if you want to make a sustainable profit and build a source of passive income, consider using a trading platform that provides management of your portfolio, and view historical performance data which will allow you to select the best-performing platforms and trading management options.

Most platforms these days allow you to invest as little as $1K and have robotized portfolio management. If you invest larger sums, many platforms offer you a dedicated team which manages your investment portfolio, quite often beating the market performance. Again, historical data will help you to choose the best option.

Why is that easy? Because you can set it and forget it. Once you have decided, you can engage with your chosen trading platform, invest, and choose your preferred portfolio management option. Then the professionals will manage your money for you, providing visibility on the accumulated profits and all the visibility you need.

Of course, if you really want to show off to your friends the fact that you do your own investing, then do it. But recognize the difference between showing off and actually accumulating strong profits, absolutely passively, through professionals working for you.

Hack #4 “But I work so hard, why shouldn’t I buy that expensive car?”

Ok, again, we all know the theory here: Avoid buying expensive items with fast depreciation, such as expensive cars. But many of us want to drive such cars, and in reality, if you have the money to buy such a car, driving a cheap car can create a lot of emotional tension in you – and you don’t want that. All the arguments such as “But I work so hard, why shouldn’t I buy that expensive car?” come into your head, and they seem so reasonable.

The good news is that you can buy such a car, but with a slightly different purchasing model.

If you buy an expensive car with 100% upfront payment, this will most likely hurt your budget and finances. The standard leasing approach is a minor improvement, as usually you pay off the whole value of the car in installments over several years, most commonly 3 to 5.

The operating lease, described below, provides a very different opportunity:

  • First, you might avoid any upfront payment.
  • Second, the operating lease is structured in a way that your payments reflect the depreciation of the car, rather than the total cost.

So your monthly payments are way smaller than with standard leasing, where your monthly payments have to cover the total cost of the car.

Let’s use a very simple example. If you buy a car that costs $100 000 with a standard 3-years lease, you have to pay the whole sum, plus interest, over the duration of the contract (3 years).

With an operating lease, payments are very different:

If the car depreciates by $30 000 over these 3 years, you will just pay this $30 000 plus some interest, so your monthly payments will be approximately 3 times smaller than with a standard lease. Yes, with a standard lease, you’ll have the salvage value of the car, $70 000 in our example, so the total financial result will be similar, but the operating lease will help you to avoid big fluctuations in your financials and better plan your cash flow.

You can just allocate your monthly payment to “transportat” and adjust your monthly budget. Your “transport” installments will be much smaller than with a standard lease, so you end up driving an expensive car without necessarily a big impact on your monthly budget.

Hack #5 “Protect your assets”

Having many and complex assets means that there is a high risk that they will be legally “stolen” from you. Have you thought about how your trading platform, digital wallet, bank or insurance provider will notify your family about your assets if anything happens to you?

Your partner might know about some of them, but who else knows, apart from the two of you?

The gruesome reality is that billions of dollars remain unclaimed every year – in the companies and institutions that hold them – instead of reaching their rightful owners. Apart from the obvious unfairness – you worked so hard to attain these, and then someone just steals them – this dramatically diminishes the quality of life of the affected families.

Digital inheritance asset protection services, such as DGLegacy, allow you to easily protect your assets and secure your family financially.

It’s this easy:

  1. Catalog your assets in a fully encrypted environment with bank-level security.
  2. Designate your family members as beneficiaries.
  3. The custom-engineered Heartbeat protocol detects unforeseen events happening to you.
  4. Upon detection of such an event, the information about the assets is provided to the beneficiaries to whom the assets have been assigned. They are aware of the assets and can identify and locate them.

If they miss the email notifications, for example if they are elderly people or the email went to their spam folder, they are also notified by phone to ensure that they are aware of the assigned assets and know how to identify and locate them.

Digital inheritance services provide many additional features to protect your assets, such as legal support for your family members in the process of claiming.

Peter Minev
Co-founder of DGLegacy®, the digital legacy planning and inheritance app that protects your assets and secures your family when it matters the most. Author of the book Building TECH. Learn more: https://topstrengthener.com/about-the-book/