One of the underlying principles of Lifehacker is that not every hack works for every person. This is especially true of money advice, because everyone’s individual situation and goals will vary dramatically from everyone else’s. You might overspend when using a credit card, for example, so advice on the best rewards card doesn’t work for you.
But there are some rules-of-thumb that make sense for pretty much everyone to follow. Those include:
Don’t Accrue Credit Card Debt
This one is obvious, but it bears repeating: If you’re using a card to “pay” for something because you don’t have the money in your bank account, you’re digging yourself into debt, and you’ll end up paying significantly more in the longterm. On a similar note, you shouldn’t spend more than you earn, and you should always pay your bill on time, even if you can only make the minimum payment. But those go without saying, er, writing, right?
You might think that this applies to all debt, but that’s not the case. There’s a difference between “good” debt and bad debt. To put it simply: Good debt, like a mortgage or car loan, will typically help your credit score because it is secured by something tangible, while bad debt, like credit card debt, will harm your credit score because it is not.
Dear Lifehacker, I keep seeing certain types of debt (mortgages, student loans) referred to as 'good' debt, whereas other types (credit card debt, for example) are referred to as 'bad' debt. What does that mean? What makes a certain type of debt 'good' and another type 'bad?'
Exceptions: You’re in the midst of a disaster/emergency and have no other recourse but to use a credit card.
Open Your Bills and Financial Documents When You Get Them
Last week I logged into my Fidelity account to download some tax forms. When I did, I saw that the account tied to my old employer was completely drained of money. Balance: $0. I had a momentary freakout, and then texted an old coworker. Turns out the company had switched providers, which I would have known if I bothered to open my mail. The upshot of this sad tale: Open your mail, especially if it’s from your bank or another financial institution you do business with. You’ll save yourself a lot of headaches (and shock).
Exceptions: Now, thieves are banking (sorry) on you opening your mail, which also means you need to be on the lookout for scams. This is especially true for seniors. Generally, skip out on anything promising you a certain return or claiming that they can make your debts disappear.
Pay Yourself First
This is one of those tips that gets thrown into every “how to save more article,” but that’s because it’s the best way to actually save money. Pay yourself first, before you spend on superfluous expenses, and you’ll get ahead in the long run and be able to live more comfortably and stress-free day-to-day.
That means automating your savings from your paycheck, ideally before you even receive it. Better yet, make that money more difficult to access: Put it in a separate, high-yield account, or use an app to save.
Exceptions: You have at least $1,000 or one month’s worth of expenses saved and you want to pay off some of your debt.
And speaking of boring...
Your Finances Should Be Boring
Get-rich-quick schemes and sophisticated investing products you don’t really understand might seem too good to be true, and that’s because they are. Many financial services and products exist solely because they make other people lots of money.
The tried-and-true best products and strategies are relatively simple and straight forward. This piece details those strategies and how they help you build wealth over time. When in doubt, follow Jack Bogle.
Exceptions: You’re already rich and you like to play around with day trading. Just kidding, don’t do that either.
Read Everything Before You Sign (or Buy)
While this one also seems obvious, there are plenty of less-obvious situations it applies, ranging from housing to credit cards to loans. Here's how you can stay ahead:
Ask your landlord what happens if your roommate moves out mid-lease, or if you lose your job and need to terminate early. Make sure that’s spelled out in your lease.
Find out if your car loan includes an extended warranty.
Check if your gym automatically renews for a year-long membership after the one-week trial.
Make sure something that was verbally agreed to in a house purchase (for example) is included in your closing documents.
Does anyone read the Terms of Service for anything they buy or sign up for? And I don't mean 'glance at it to acknowledge its existence.' I mean sit down with a cup of coffee (maybe a carafe, depending on how long the document is) and go over everything the manufacturer or company wants you to know about. We don't blame you if you don't, but you should.
Know That Past Performance Does Not Ensure Future Results
When writing about investing for the longterm, Lifehacker recommends low-cost, diversified mutual funds and ETFs, which have historically returned better results at a cheaper cost than actively-managed funds. But as with most things in life, there’s a huge caveat: Results aren’t guaranteed. No one can actually predict what the stock market — or your bank, boss, spouse, etc. — will do. That’s important to keep in mind when researching any sort of fund, credit card or bank account.
Similarly, know that nothing — except death and taxes — is guaranteed. If someone is trying to sell you a product with a “guaranteed, 100 per cent happening” return or outcome, call bullshit and walk away.
Exceptions: None. Everything changes and nothing stays the same.