Life Hacks for the Modern Wealth Builder


Sometimes it pays to be a hacker.

I'm not talking about socially maladjusted computer geeks. Or shadowy syndicates stealing your personal data for profit. I'm talking about the concept of life hacking.

It shares a bit in common with traditional computer hacking. Both use shortcuts to create more efficient solutions to existing problems .A better, easier way of overcoming life's hurdles.

In this case, we're going to focus on a specific variety of life hack -- personal finance, investing and retirement. Some of these are remarkably simple. Others require a bit more work. Yet they all have something in common -- they're highly useful, and they'll help you build wealth.

So let's jump right in.

Action Plan: Using Financial Life Hacks to Improve Your Bottom Line

Successful wealth creation largely boils down to making the right decisions -- and identifying the right opportunities. Start by considering the following money hacks:

  • Many health insurance plans offer reimbursements for gym memberships. This could save you several hundred dollars each year -- money that could otherwise be invested.
  • You don't have to be a member to buy prescriptions at Costco, thanks to federal law. Prices are lower than at most retailers and pharmacies.
  • Channel your inner actuary and use an online calculator to estimate how long you'll live. Sure, it's a rough estimate. Yet not knowing how long we'll live is the biggest variable in retirement planning.
  • Think you'll live past 80? That's the Social Security "break even" point. If you collect early at 62, or delay until 70, you'll have saved the same amount of money at 80. Every year after, however, the person who delayed earns far higher benefits. Think you'll live to a ripe old age? Delay until 70.
  • Take full advantage of your Roth IRA flexibility. There are certain situations where you can make tax-free withdrawals from your Roth IRA after five years. These include college tuition, a house down payment, or health care if you're suddenly jobless.
  • Here's another Roth IRA bonus. These accounts generally are not treated as parental assets in terms of financial aid, making them even more attractive as a funding vehicle.
  • Pay your yearly insurance premiums in lump sums, rather than monthly. You'll often get a nice price break.
  • Keep "lifestyle creep" in check. Most people spend more when their income increases. Breaking this cycle is one of the best things you can do for your retirement. 
  • Many credit cards offer an initial period with zero-percent interest. If you have debt on another card you're capable of paying off, transfer the balance to the new interest-free card. There is typically a charge for such transfers.  You'll have to crunch the numbers to see if the interest savings beats the charge. For most large debts, it usually does.
  • Never buy the store's extended service plan.
  • Automate everything you can, financially. Automatic bill pay, automatic banking and automatic savings contributions. New software apps will save or invest any change you have left after a transaction. This is a great way to build wealth without even noticing you're doing it.
  • Negotiate everything. Inflated cable bills, a raise at work, credit card interest rates, vegetables at the farmer's market.

When it comes to building wealth and securing a stable retirement, every little bit helps. Take full advantage of the financial hacks listed above, and use your creativity to identify your own earning and savings shortcuts. 

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