Here’s How to Become a Work-From-Home Bookkeeper (You Could Earn $60/Hr!)

It’s not that you’re a numbers nerd. It’s just that everything makes more sense in a spreadsheet with formulas and even cell spacing.

Your nerdy – ahem, precise – tendencies could make you the perfect fit for a job as a virtual bookkeeper.

And no, you don’t have to have a CPA to be successful. In fact, all you really need are decent computer skills and a passion for helping business owners tackle real-world problems.

Even better? You can earn up to $60 an hour, according to Ben Robinson, a certified public accountant and business owner who teaches others to become virtual bookkeepers.

He’s been a CPA since 1999 and has owned two accounting firms. It was through the firms that Robinson discovered the demand for good bookkeepers.

“A lot of — actually most — business owners struggle with keeping accurate and up-to-date bookkeeping records,” Robinson said. “What I soon discovered is that great bookkeepers are hard to find. And, when I did find a great bookkeeper who owned their own business, they were buried with clients and had a waiting list of business owners who wanted their books done.”

How to Become a Virtual Bookkeeper

After he sold his firm in January 2015, Robinson started learntobeabookkeeper.com to teach not only the technical side of bookkeeping but also the strategies for starting your own business.

We spoke with Robinson about what it takes to become a virtual bookkeeper, as well as tips and advice for making this career track work for you.

What Skills Do You Need to Be a Bookkeeper?

Although the job title might lead you to believe you’ll be holed up alone with your computer and dusty ledgers (wait, do those still exist?), Robinson said real-world skills are also essential since you’ll be dealing with clients on a day-to-day basis.

“When I went to school and got my degree in accounting, I thought, ‘Yes! I can conquer the world,’” Robinson said. “I could figure out earnings per share, but I couldn’t do simple tasks that business owners need, like reconciling a bank account.

“The best bookkeepers can navigate those real-world problems for the business owners they work with,” said Robinson, who noted that computer and communication skills are also essential.

So do you have to have a CPA?

The short answer, according to Robinson: No.

“None of the great bookkeepers I have trained have even been accountants, much less Certified Public Accountants,” Robinson said. “If I were given the choice of training a CPA or someone with no experience to become a great bookkeeper, I’d choose the inexperienced candidate any day.”

Benefits of a Virtual Bookkeeping Job

Besides the high demand, Robinson said one of the great benefits of being a virtual bookkeeper is the freedom to choose where you work, when you work and with whom you work.

And then there’s that $60-per-hour pay rate.

The average full-time bookkeeper earns nearly $40,000 per year (almost $19/hour), according to the U.S. Bureau of Labor Statistics reports. But Robinson pointed out that as a freelancer or contractor, you can actually earn a higher hourly rate while working fewer hours.

“I teach my bookkeepers that they should target at least $60 per hour as their goal,” Robinson said. “You must know how to provide true value to clients — that real-world problem-solving we talked about — to command this kind of income.”

What You Need to Start a Virtual Bookkeeping Business

A good computer and high-speed internet connection should be your first investment. But at the heart of a virtual bookkeeper’s toolbox is accounting software, such as Quickbooks Online, according to Robinson, which helps keep startup costs low.

“The biggest part of the investment, both startup and ongoing, is in yourself: learning,” Robinson said. “I’ve been doing this for more than 16 years and I spend — at a minimum — 40 hours per year learning new skills and improving existing ones.”

Ready to start a career in becoming a bookkeeper? Check out online courses or your community college to start, ahem, figuring out your future.

The Penny Hoarder staff member Maryann Akinboyewa contributed to this post.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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These 5 People Added up to 284 Points to Their Credit Scores by Making the Same Move

My Path to Earning a Full-Time Blogging Income

I know I talk about blogging A LOT. But there is a reason for it, and that's because blogging has been a lifeline for me. Working as a Nurse Before I began my blogging journey, I worked as a nurse. I worked at a pediatric hospital where I saw terrible cases of neglect and abuse. […]

The post My Path to Earning a Full-Time Blogging Income appeared first on The Work at Home Woman.

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13 Website Design Best Practices For 2019

Nearly anyone can get a website up and running with ease these days. It’s awesome. But just because your website is live, doesn’t mean that your design is optimized.

Why does design matter? It only takes 0.05 seconds for people to form an opinion about your website. Yes, you read that correctly — 50 milliseconds. Most of that opinion is coming from the design.

The design also impacts your conversions, credibility, and ultimately makes or breaks the success of your site. No website is perfect, but your goal should be to make your website as optimized as possible.

Here’s something to take into consideration as well: 94% of negative feedback about websites is design related and 38% of users will stop engaging with a website that has an unattractive layout. After a bad experience, 88% of consumers are unlikely to return to a website. That’s almost everyone. So, if your web design isn’t optimized for UX, it’s going to be detrimental to your success.

On the flip side, well-designed websites thrive. Visitors are more likely to convert, enjoy their experiences, and keep coming back in the future. I saw a recent study that 77% of agencies say that a poor website design is the most significant weakness of their clients. That’s what inspired me to write this guide.

Lots of factors go into designing a website. These are the thirteen most important elements to prioritize in 2019. If you follow these best practices, the performance of your site will drastically improve.

1. Minimize text

Stop filling your pages with so much text.

Obviously, if you’re writing a blog post, there will be tons of text on the page — that’s not what I’m talking about here. I’m talking about the number of words on your homepage and your landing pages. There should be very minimal text on those pages. This is a major problem I see when I’m analyzing websites.

Sure, you’ve got a lot to say. You want to tell your website visitors all about you, your company, your brand, and your products. That’s fine. You simply need to learn how to tell that story in just a few sentences — or even better, just a few words.

2. Show, don’t tell

Visuals not only help you break up the written content, but they can also provide a deeper explanation without the use of text. Instead of explaining things to your website visitors, you can simply show them. They’ll understand more completely in a shorter amount of time.

Harry’s product page embodies both of these first two design principles:

For example, let’s say your website sells razors, blades, shaving cream, and other shaving products for men. You operate on a subscription business model and deliver these products to your customers on a monthly basis. The design of your razors is very handsome — they’re made of carved hardwood and are nice enough to give as a gift.

Rather than going into all of this detail on your homepage, you can simply have a photo of these products with text saying something like, “delivered to your door.” You get your message across in just four words. Sure, you can go into greater detail the deeper the visitor gets into your pages, but a lengthy text description isn’t required.

3. Use short sentences

Short sentences are easier to read.

If you bombard visitors with text all over the screen — and make those sentences hard to read, they won’t know where to start reading and won’t be able to digest your content.

Mix it up. If you need a long sentence, follow it with a short one. Variety helps.

4. Try shorter paragraphs

Use paragraph breaks to your advantage. It’s okay to write longer paragraphs, but I like to keep my homepage paragraphs to a few sentences.

Start each paragraph with the new information, so if someone is scrolling they can quickly tell if they need to read that paragraph.

Eliminating unnecessary text on your pages reduces clutter and gives you more room to put emphasis on your call-to-action.

5. Make your CTA clear and obvious

CTAs should not be buried. They need to be big, bold, powerful, and clearly stand out as the action your visitors should take next.

Only 47% of websites have a CTA button that can be spotted in less than three seconds. So there’s a coin flip chance that you fall into the group that takes longer. That’s not the category you want to be in. You can’t drive conversions without an effective CTA button.

Here’s something else to consider: 72% of businesses don’t have a CTA on their interior pages. This is a major design flaw. You can’t expect visitors to navigate back to your homepage to convert.

Take a look at this CTA from Litmus.

Look how simple this design is. There is minimal text on the screen, so the message is clear.

As a result, the CTA “sign up free” stands out. In fact, Litmus even put it in more than one location on the screen.

6. Reinforce actions with familiarity

If your message is the same, your CTA should be the same. On every single page.

Think about how people navigate on your website — even if you set up a certain flow, not everyone will land on a page and convert in seconds. They may browse around for a bit first.

For example, let’s say you have an ecommerce website. You shouldn’t change the CTA button from page to page, which would look like this:

• Homepage: Checkout now
• Category page: Buy it today
• Product page: Click to purchase

If a visitor sees one of those buttons on your homepage, the other on a category page, and the third on a product page, there’s no reinforcement. Instead, follow the example of a global leader like Apple. This is what the Apple homepage looks like:

Right away you can see that it’s very simple. There is limited text on the screen, and it has one featured product in view.

The product has a title, a quick snippet description, followed by two options.

• Learn more
• Buy

That’s it.

Now let’s see what happens when we continue scrolling.

This is the exact same format, but for another product.

After some limited text, we are offered the same two buttons, positioned in the same location above the image. Again, this is still on the homepage.

Just for good measure, let’s navigate away from the homepage to a product page to see if this pattern continues.

The watch page has the same pattern. This is consistent on every page, for every product. That’s how you reinforce actions with familiarity.

You need to apply this design principle to your website as well. It goes beyond the CTA button. The idea is to have this type of reinforcement with as many elements as possible.

7. Simplify the navigation

It shouldn’t be difficult for a website visitor to find what they’re looking for on your site.

Take a moment to put yourself in their shoes. They are browsing on your website for a reason. Maybe they want to buy something, get more information, or see what you have to offer. Whatever that reason may be, if they can’t figure it out quickly, they’re going to leave.

There is just too much competition out there. Users have no reason to put up with complex website navigation. All they need to do is leave your site and find what they need somewhere else.

Don’t try to reinvent the wheel with a complex design. Stick with the standard format.

For example, 88% of websites have the main navigation menu positioned horizontally at the top of each page. If your menu is somewhere else, it’s going to confuse your visitors.

Let’s continue talking about the menu since it’s a major navigation gateway. The fewer options in the menu, the better. Otherwise, it will be too hard for people to find what they need. This concept is known as Hick’s Law.

The more options you give someone, the longer it will take them to make a decision. That’s why complex designs and navigations will crush your conversion rates.

There’s a famous experiment about this, referred to as the jam study, which discusses the paradox of choice.

The experiment was conducted at a local grocery store. Consumers were presented with 24 jams to sample on one day, and 6 jams on the following day. The larger display on day one attracted 60% of shoppers, but only 3% of those people made a purchase. The smaller display of 6 jams on the second day attracted 40% of shoppers, but 30% of them made a purchase.

By limiting choices, conversions were ten times higher. This same concept can be applied to your website navigation.

Find ways to eliminate unnecessary menu options. For example, instead of having a “home” button, just use the website logo to link back to the home screen.

Take a look Square’s homepage.

The design is super clean. The menu options are extremely limited. This makes it easy for visitors to choose a selection that fits their needs.

I chose this example because it also follows the web design best practices that we already discussed. There is minimal text on the screen, and the CTA is clear and obvious.

This type of design makes it nearly impossible for website visitors to get lost or confused when they’re navigating.

For those of you who have lots of options on your website, such as an ecommerce shop, you can add a search bar to simplify the navigation process without using a complicated menu.

8. Optimize your design for mobile devices

According to Alexa rankings, 80% of the top websites are optimized for mobile devices. That’s because mobile browsing is becoming the new normal.

Just look at these trends from Statista.

More than half of the web pages worldwide are served to mobile phones. Mobile Internet traffic has officially surpassed desktop usage. That trend is continuing to rise.

Here’s something else to consider. 57% of people won’t recommend a business to others if that company has a mobile site that’s poorly designed. Getting your customers to recommend your brand to others is definitely something you need to prioritize.

94% of people will judge a website based on a responsive design. So if elements of your website design aren’t responsive, they need to be fixed or eliminated immediately.

A mobile-optimized website is not only essential for the user experience, but it’s important for SEO purposes as well.

Search engines recognize this and reward sites that are mobile friendly. Google knows that 87% of smartphone owners use their devices to run an Internet search at least once per day. The result: 70% of the first page results on Google are optimized for mobile devices.

9. Prioritize SEO

We briefly touched on this subject earlier when we talked about mobile-friendly websites. But everything you do on your site needs to circle back to SEO.

93% of all Internet experiences start with a search engine. So your SEO strategy must go far beyond just adding keywords to your blog posts.

Failure to focus on SEO will put you at a disadvantage to your competitors. Last year, these were the top SEO priorities for businesses.

As you can see, on-site optimization ranked second on the list. This is related to web design. So take a look at your on-page elements.

Create an XML sitemap. This will make it easier for search engine crawlers to analyze content on your website. A sitemap will show the bots the location of pages on your site, when the page was last updated, the updating frequency, and the relationship to other pages on your site.

A proper sitemap shows Google that you don’t have duplicate content, which can damage your SEO rankings.

When you’re designing your site, you need to make sure that the architecture has a logical hierarchy as well.

10. Monitor your page loading speed

I know what some of you are thinking. What does page loading speed have to do with web design? Everything.

Sure, loading times are related to your website hosting plan, server, traffic, and things of that nature. However, design choices can impact your loading times as well.

Each time you add an element to your site, especially images, videos, and other complex media files, your loading times can be affected.

Slow loading times lead to high abandonment rates. You can’t ignore this. If your pages take too long to load, it’s going to be a huge problem.

Furthermore, 40% of people abandon websites that take more than three seconds to load. Yes, three seconds. That’s all you have, or you’ll lose 40 out of every 100 visitors.

And three seconds isn’t always good enough — 46% of people expect pages to load in two seconds or less.

So how can you apply this to your web design?

• Reduce the file sizes of your images.
• Take advantage of browser caching tools.
• Reduce HTTP requests.
• Improve your TTFB (time to first byte).
• Minify and combine your files.

There are lots of tools available online to help you accomplish these things. For example, check out the WordPress Rocket plugin as a resource for minifying and combining your files. Use the Page Speed Insights tool from Google to help you monitor your loading times whenever you make design changes on your website.

11. Choose a color scheme that fits your branding strategy

The color choices you make on your website are more important than you think.

Studies show that products are judged in less than 90 seconds. Your website can be considered as a product. 90% of that judgment is based solely on colors.

The best way to choose your website color scheme is with branding. Refer to your logo. Do the colors on your website fit with your brand image?

Research shows that colors can increase brand recognition by up to 80%.

Here’s an example. Think of Starbucks.

When you hear this brand name, I’m sure you have an image in your head. Maybe it’s the logo, a sign, or a store location.

Do you associate any colors with that name? Now let’s look at their website.

It’s no surprise that they went with a green color scheme.

This design choice matches their logo and brand image, which reinforces what consumers already associate with the brand. By keeping things consistent, there is no confusion. It would be odd if you visited this website and the colors were yellow and red. That has nothing to do with their brand.

We’ll talk more about reinforcement in greater depth as we continue.

12. Continuously run A/B tests

When it comes to your website design, you can’t just set it and forget it.

As I said earlier, no website is perfect. There are always ways for you to improve your design.

That’s why you need to run A/B tests.

Nearly every element of your site design can be tested.

Here are some quick suggestions to get you started in the right direction:

• Test the location of your CTA button
• Test the color of your CTA button
• Test the CTA copy
• Test the images that you’re using on landing pages
• Test wording variations of text on the screen
• Test the size of your navigation bar

There are so many options, I could spend all day talking about this. For those of you who aren’t familiar with A/B tests or need some help, check out my guide on everything you need to know before you start A/B testing.

13. Use bullets

Instead of adding paragraphs and long-form writing, consider using lists. In those lists, use bullet points.

Studies show that more people will look at lists with bullet points than other formats.

Conclusion

Saying that the design of a website is important would be an understatement. Your web design choices will ultimately impact whether or not your site is successful.

• Everyone’s website can be improved. Use this list as a guide as a resource to help you make those improvements.
• Don’t get overwhelmed. I’m not saying you need to implement all of these design suggestions overnight, but you need to start somewhere.
• I didn’t pull these ideas out of thin air. Everything on this list is backed by research and statistics related to design principles.

It doesn’t matter if your website is brand new or if it’s been around for a decade. These are the web design best practices that you need to follow in 2019.

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Dear Penny: I Know My Wife Will Judge My Spending if We Get a Joint Account

Dear A.,

A lot of couples find themselves in this spot sometime after getting married: You have one joint account for big purchases or household expenses, and everything else just gets sort of… lost.

Maybe the hardest part of figuring out how to combine finances is to avoid getting defensive. Like you. Right now. How many taquitos are you buying? How many gas stations are you visiting? How often? What’s at the core of your secret taquito habit?

Please trust me when I say that your wife makes plenty of questionable purchases herself. If she can’t admit that, she’s lying not only to you but also to herself. That’s not to say that those expenditures aren’t worth it to her. It’s just that we all spend money on things that offer a temporary thrill or hold promise but ultimately turn out lackluster.

So that’s the first step. Know and accept that there are going to be some wackadoodle charges on your bank statement each month. Know that you can talk about these allegedly wackadoodle charges. By trying to be vulnerable and talking about your purchases, you’ll learn to judge a little less as your trust in each other strengthens.

But you don’t have to combine 100 percent of your money to share a robust financial future. Consider each of you keeping a checking account for yourself. It’s easy to funnel a percentage of your income into that account with the joint understanding that it’s for personal expenses.

You can nail down what exactly falls under personal — gifts for each other, fancy coffees, taquitos — or leave it open to interpretation. But since it’s a limited amount, you can feel free to spend (or save) without feeling like you’re squirreling away money and hiding it from your partner.

Nervous to talk about money with your spouse? Write to Dear Penny at https://www.thepennyhoarder.com/dear-penny/

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny. For more practical money tips, visit www.thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Five (Potential) Misplaced Financial Priorities

Erika writes in with a great question that grew beyond a normal mailbag entry:

Why do you think people get into financial problems to begin with besides the obvious “not enough income”? The easy answer is temptation to buy stuff but I think there’s more going on than that.

I’ll be honest: Erika hits on the two biggest reasons I can think of for why people get into financial problems. Insufficient income is definitely one issue, but at the same time, I think there’s a lot of spending that’s done as a result of misplaced priorities, mostly because people value the short term a lot more than the long term.

In fact, assuming there isn’t anything that can obviously be done to raise one’s income or bring in some more money, the number one reason for financial problems is misplaced priorities. People spend money on things that should be a lower priority, and then find themselves struggling to pay for things that should be a higher priority.

This comes back to the “important” and “urgent” dichotomy that serves as a really powerful time management insight. Everything you need or want to do in a day fits into one of four categories – it’s either important and urgent, important but not urgent, urgent but not important, and neither important nor urgent. Signing up for your 401(k) is important but not urgent. Taking your sick child to the doctor is important and urgent. Answering a ringing phone is urgent but not important. Channel surfing is neither urgent nor important.

We all do things each day that fit into each of those categories, but the biggest mistake we make is giving too much credence to things that are urgent but not important (answering a phone call) and too little credence to things that are important but not urgent (signing up for a 401(k)).

We do the same thing with money. There are things that are important and urgent, like paying the heating bill. There are things that are important but not urgent, like funding an emergency fund. There are things that are urgent but not important, like buying that thing you want that’s on sale. There are things that are neither urgent nor important, like buying a regular-priced coffee at the kiosk at the store. Obviously, the important and urgent stuff comes first for everyone, but where people slip up is that they often put the “urgent but not important” purchases above the “important but not urgent” expenses.

I see some especially egregious examples of that pop up all the time in reader stories and in the financial lives of people I know and read about, and I’m going to detail five of them that I see happening often, where something that’s really important but not that urgent is overlooked for something that screams for your attention but doesn’t really matter.

Before I dig into these examples, though, I want to point out that everyone has different priorities and different situations in their lives. Something that I describe as a misplaced priority here might not be in your own life. Rather than viewing these as a checklist of misplaced priorities, instead look at these as areas of your spending to which you should give some serious thought in order to ensure that your priorities are in a good place.

Let’s dig in.

#1: Overprioritized Entertainment Spending

Over and over again, I see people with monthly budgets that include literally hundreds of dollars in entertainment spending that’s just included as a default assumption without really considering what it’s doing to their overall financial picture.

A cable subscription is pure entertainment spending. A Netflix subscription is pure entertainment spending. The same for Hulu and Amazon Video and Spotify and Pandora and YouTube Red and on and on and on. Home internet is largely used for entertainment, too. A large data plan is almost always used for entertainment; very few people need more than a gigabyte or two a month for non-entertainment purposes.

There’s nothing wrong with spending some of your time on entertainment, but there are many sources of free entertainment out there. Check out books and DVDs and audiobooks from the library. Turn on a radio. Hook up an over the air antenna to your television. Participate in a sport instead of just watching it. Go on a walk or a hike. There are literally infinite ways to entertain yourself for free, so spending hundreds a month on entertainment is kind of silly when you’re struggling to make progress toward any of your life goals.

Kill off some of those entertainment bills – or, better yet, all of them. Learn how to find sources of free entertainment and then use that money to fund some of the other misplaced priorities.

• Read more: Our Experience Cutting the Cord and Eliminating Cable TV

#2: Underprioritized Emergency Fund

If your financial house would fall apart if you missed a couple of paychecks, then you’ve drastically underprioritized having an emergency fund. This is even true if you would be able to survive through the use of credit cards.

As we learned during the recent federal government shutdown, a lot of American families are just a paycheck or two away from crisis. In fact, 78% of US workers live paycheck to paycheck. If they were to miss a single paycheck, there would be significant financial distress in their life.

That’s an enormous problem on many fronts. Emergencies are going to happen. Winter is always coming. If you are so woefully unprepared for an unexpected job loss — or illness, or automotive failure, or some other common issue — that such an emergency would push you into a cycle of high-interest debt or to start missing payments, then that problem is compounded both financially and in terms of personal stress.

The solution is simple, but it’s one that many people overlook and bypass while spending money on less important but more urgent things (like, say, entertainment). All you need is an emergency fund, which is just cash in a savings account somewhere that you can tap if things fall apart. (If you can’t get a savings account, then it’s cash stowed away somewhere safe.)

It’s easy to set up, too. Just have your bank start transferring a small amount each week from your checking account to your savings account. $20 a week turns into $1,000 in your emergency fund after a year, which can help you with a car problem. $50 a week turns into $2,500 at year’s end, which can get you through a month without a job. Just leave that transfer in place permanently.

Then, when things go bad in your life, tap that emergency fund. You won’t find yourself going into emergency credit card or payday loan debt. You won’t find yourself missing payments. You won’t find your life majorly disrupted. You’ll keep rolling through those inevitable bad things that life will eventually throw at you.

• Read more: Build Your Emergency Fund by $100 a Month, Get 2.45% Interest With This Savings Account

#3: Overprioritized Food

By “food,” I don’t mean the basic staples. I mean foods that go beyond basic healthy and tasty meals and basically any beverages besides water. That absolutely includes meals eaten or prepared outside the home. That includes junk food. That includes soda. That includes alcohol.

The most financially sensible diet is one where you’re eating healthy, inexpensive staples for most meals and drinking just water. Healthy, inexpensive staples include things like rice, beans, peanut butter, pasta, oatmeal, chicken, eggs, fresh produce that’s on sale, flash frozen vegetables, and so on. Those ingredients, along with just a handful of herbs and spices, can be remixed into almost infinite delicious meals. While it’s a bit presumptuous to assume that all meals should stick to that dietary backbone, it does make sense to have most of your meals stick to that, saving other meals for genuinely special occasions such as social gatherings.

However, many people live on a regular diet that’s very expensive and nothing like that. Most Americans eat at restaurants and get takeout or delivery multiple times a week. They eat tons of prepackaged foods (read: expensive), meats, alcohol, and so on. Those items are not only expensive in the moment, but they have a long-term health cost, too. There’s no problem with eating them occasionally, but the backbone of your diet – what you eat for most meals outside of special occasions – should be made up of healthy, low cost staples.

What if you don’t have time? Learn how to use a slow cooker. Do some meal prepping on the weekends. Learn how to actually cook efficiently. Not only that, a lot of those things are very quick to cook anyway. It takes 10 minutes to boil pasta.

Switching to having most of your meals made up of basic staples like those listed earlier isn’t a big life change, but it is a huge financial shift that can free up hundreds of dollars a month. It just takes a reboot of the routines that many people think of as normal.

• Read more: Six Simple Steps for Cooking at Home if You’ve Never Really Done It Before

#4: Underprioritizing Debt Repayment

Every time you choose to spend money on something else other than rapidly paying off a debt, you’re essentially leaving that money as part of the balance for the remainder of the loan.

Got a credit card balance that won’t be zeroed out for the next five years that charges 30% interest? If you spend $50 frivolously now instead of making an extra debt payment (or add $50 to your credit card balance), that $50 sticks around for five years, accumulating and compounding 30% interest each year. That adds up to $185 in extra debt payment you’re going to have to make at the end to pay off that debt. A night on the town turns into half of your paycheck.

Once you have your absolute necessities taken care of, you’re building an emergency fund, and you have just a little bit more set aside for some spontaneity in life, you should be prioritizing debt repayment, particularly on your high-interest debts. The financial impact debt has on your daily life is enormous, and the financial benefit of early payment (in terms of the reduction in interest you’ll pay) is enormous.

• Read more: In What Order Should I Pay Off My Debts?

#5: Overprioritizing College Savings

This is a lesser issue, but it’s still an important one: If you’re saving for your child’s college education but not saving for your own retirement, you’re making a financial move that will end up putting you at a serious disadvantage while not giving your child as much of a boost as you think.

A much better approach is to adequately save for your own retirement using a Roth IRA, from which you can withdraw the balance for your own needs at any time without penalty. Then, have your child go through the financial aid process and see what their situation is and their needs are, then you can supplement that financial aid package if needed with money from your Roth IRA or other sources.

Putting money into a 529 college savings plan is helpful, but it locks the money down solely for their educational use. If your child chooses to go to a trade school or earns a lot of scholarships, that money could have been used to help you retire easily. In effect, 529 contributions – if you don’t already have adequate retirement savings – means that you’re locking down your money for one purpose when flexibility would be much better.

Saving for your child’s college education is great, but given the flexibility of student financial aid, you should allow that process to happen before making big decisions with your money. Put money into a Roth IRA for yourself so that you’re securing retirement for yourself no matter what and then can make the choice later, when you see how your child’s educational situation turns out, to use some of that money for their education.

Obviously, the best of all worlds is to save adequately for your own retirement and contribute to your child’s 529, but if you’re constrained by finances to have to choose between the two, prioritize your own retirement savings.

• Read more: Why New Parents Shouldn’t Stress About Saving for College

Final Thoughts

In my view, someone who is carrying a credit card balance month over month and doesn’t have an emergency fund while going out to eat multiple times a week and carrying a cable bill is creating their own financial prison. That’s a cavalcade of misplaced financial priorities, and they’re adding up by the thousands each year, and yet it’s a common story for many Americans.

If you take one lesson home from this story, it’s this: Think seriously about the relative importance of what you’re choosing to spend money on and what you’re not. I can’t define for you what’s important in your life and what isn’t, but I can say with some confidence that really thinking about what you find to be truly important will offer some valuable financial direction for you.

Good luck!

Read more by Trent Hamm:

• ‘The Magic System for Getting Out of Debt and Building Wealth Quickly!’
• The Power of Deep Prioritizing
• Personal Finance and the 80/20 Principle
• ‘I Am Not Making This a Priority in My Life’

The post Five (Potential) Misplaced Financial Priorities appeared first on The Simple Dollar.

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