Are You Using Your Extra Money Right?

Extra money is a blessing for most people – but not for everyone. There are some who don’t know how to make proper use of additional income, and in some cases, their finances might even end up worse in the end as a result of that. It might sound strange, but it’s a very real occurrence, and it happens more often than you might think.

It’s particularly prominent among people who’re used to living with less money, and suddenly find themselves with a lot of extra cash on hand. They often don’t know what to do with that money in order to utilize it in the most efficient way possible, and end up wasting most of it on senseless things. And once they’re back to their standard finances, they realize that they’ve developed some habits which are now very harmful.

How Much Is Too Much?

Of course, you should always aim to have some extra money saved up. Anything can happen in your life, and you must be prepared for the worst. But at the same time, there is a reasonable limit to how much you should be aiming to save. After a certain point, building up your savings more becomes detrimental and doesn’t make much sense. That point varies from person to person though, and some are going to hit it much faster than others, because they have access to better income.

The general rule of thumb is to aim for something in the range of 6-12 months’ worth of your standard monthly expenses, everything included. That way, should the worst happen and you find yourself out of a job and with no source of money, you should at least have enough saved up to comfortably get through that period.

Investment Opportunities

Investing your money is always a good way to spend the chunk that’s above your savings threshold. There are many ways to put your money to work these days, especially if you explore what’s available online. Try to be reasonable though, and don’t just jump at the first opportunity that you come across because it promises good returns. Be patient, and if you’re not familiar with how investing works in general, try to take things slowly at first.

You’re going to make some mistakes at that level, this is pretty much guaranteed. What’s important is that you learn the right lesson from each of those mistakes and integrate that knowledge into your next investments.

Keeping Your Money in Circulation

Your money must keep flowing at all times. If you let it sit idly for too long, that’s a waste – it’s pretty much the equivalent of keeping it in your savings account. It could even be worse, if the money is held in a checking account where it gets no interest at all. If you notice that you’re accumulating larger sums of money that you’re not doing anything with, take steps to correct that as soon as possible. But remember what we said above as well – be slow and patient, and don’t jump to things that you could regret later.

Cashing Out at the Right Time

Some types of investments are not meant to last forever, and will eventually dry up. If you keep involving yourself with them for too long, you’re going to start burning through your money. Learn to recognize when you need to back away, and take the opportunity when it’s available. You should also avoid the mistake of falling for the “sunken cost fallacy”. In other words, believing that just because you’ve invested a lot of time and/or money into something, you should not give up on it.

Because that’s how you end up in an even worse situation, and any experienced investor or entrepreneur is going to tell you the exact same thing. You need to spot the opportunity to back off when it arises, and take advantage of it.

Help When You Need It

Last but not least, remember that you’ll sometimes be unable to deal with everything you want to do on your own. Especially if you want to make some more complex or risky investments. In those cases, you might need help in the form of extra funding or something along those lines. Make sure that you know where you can get this help in advance though. When it comes to something like a loan, you should be familiar with the local market, and know which lenders are worth working with.

This will save you a lot of time if you eventually get into a situation where you need extra money fast. And of course, be prepared to deal with any strings that come attached to that loan. It doesn’t matter if it has a shorter repayment term or something along those lines, you have to repay it without any delays or extra fees incurred, if you don’t want to jeopardize your investment operations as a whole.

How to Keep Your Financial Assets Secure

The average modern person has a lot of financial assets to take care of. From bank accounts and online payment methods, to credit cards, loans, investments, cryptocurrencies, and so much more. And it should go without saying that dishonest people have been keeping a careful eye on this situation for some time now. We’ve seen the rise of various new methods of stealing people’s money, and unfortunately we’re likely only seeing the tip of the iceberg too.

With that in mind, it’s more important than ever to pay attention to the security of your financial assets, and ensure that you always know what’s going on with them at any given moment. While there are many possible sides that you can get attacked from, there are also some fundamental things that you could do to minimize the chance of getting hit in any of those areas.

Common Security Holes

Many people get compromised because they’re lazy about their passwords. Sure, using the same password for all of your accounts is simple and means you don’t have to remember that many random numbers and letters. But it also means that it only takes one compromised account among the dozens you have for all of them to become wide open.

That’s exactly what many hackers are banking on – they attack smaller, less secure sites, extract their database of usernames and passwords, and then attempt to reuse the same combinations in more popular services.

Common Scams

Scams are also very prevalent these days, especially online. It’s sad, because the original intention of the internet was to bring us closer together and promote the sharing of information. However, the reality at the moment is quite different from that. You should be wary towards any stranger online by default. In fact, you should even be wary towards people you know.

A common scam is to hack someone’s e-mail and send a message to all of their contacts, claiming that they have an emergency and need a couple hundred dollars to pull through. Even if just a few people respond, the hacker can make off with thousands before anyone realizes what’s going on.

Be careful if you’re currently paying off a loan as well. Some scammers might try to pose as legitimate lenders to fish for information from their customers.

2-Factor Authentication

Passwords are quickly becoming obsolete for various reasons. We already explained one of the main ones above, but there’s more. It’s theorized that the development of proper quantum computers will eventually render all current encryption modes insecure – and we may not be that far off from that moment either.

That’s why many companies are starting to adopt the idea of 2-factor authentication. The basic concept is that after logging in with your standard password, you have to confirm your login through some additional method. It may be a code you receive via e-mail or SMS, or even something displayed on a dedicated physical device. It’s a good idea to explore this option on all your accounts that support it. In fact, some companies have already started to enforce it as a mandatory policy, especially in the banking sector. And this will probably become a common trend in the very near future.

Social Engineering

Social engineering is an advanced form of scamming that relies on tricking you in more complex ways than simply lying to you. For example, someone might call you pretending to be from the tax authorities, claiming that you’re being investigated for tax evasion. Conveniently, you can pay a fee to have the whole thing go away. Another example is a call from your bank alerting you of an issue with your account, and asking you to confirm your password so that they know it’s really you.

First, tax authorities always communicate by post when there’s an issue. They will also never ask you to pay any fee without sending you a detailed letter outlining what’s wrong. Second, your bank – or any other account provider – will never, ever have a valid reason to ask you for your password. No employee at those institutions should ever need it.

But in both of those cases you feel pressured to give up the information that’s being asked of you, because the potential consequences of refusing could be very damaging. That’s the whole point of social engineering in a nutshell – to put enough pressure on you so that you can’t think straight, and push you into making a hasty decision.

Emergency Plan

If you do get compromised, know what you can do to minimize the damage. Have the number of your bank’s fraud department handy and be ready to call them to freeze your accounts. Have a backup phone or e-mail to verify your identity additionally if you get compromised, so you can take your accounts back and have priority over the attacker.

Most of all though, practice staying calm. It might sound like silly advice given its non-technical nature, but the problem with most people in these situations is that they tend to panic and make stupid mistakes that could have been avoided otherwise. Don’t rush into any decisions – remember what we said above about social engineers and pressure.