Every year, we set up big audacious goals that we want to accomplish in the new year. Somehow, we are magically more likely to succeed because a number changed on the calendar. Personally, I subscribe to another method: achieving financial success is making the commitment to take a series of small steps in the right direction — money hacks — tricks, shortcuts, or creative methods that improve your finances.
How to do this? I have assembled a list of small achievable things you can do to move you in the right direction financially. Not all of these ideas apply to everyone, but you should be able to pick out a dozen or more ideas to keep you busy for a while.
My recommendation is to pick 2-3 ideas to do at a time, as you complete each, replace them with another one. For an idea that involves an amount, e.g., “save $50 a month” and “pack lunch to work once a week.” you can also try stepping it up, e.g., save $100 a month and pack lunch to work twice a week, etc.
Achieving financial success is making the commitment to take a series of small steps in the right direction.
The list is not in any particular order, so don’t feel obligated to do it in any particular order. The best way to do it is to pick out what you think is the easiest to complete and do them first.
To keep the list focused, we have separate lists for money making ideas and money-saving ideas.
1. Adjust Your Tax Withholding
If you ended up with a hefty refund last year, you are giving the government an interest-free loan for the entire year. You should adjust your tax withholding so that what you owe and the amount deducted end up being about the same (you can always err on the side of a small refund; you don’t want to be caught flat-footed on April 15th).
Instead of giving a 0% interest loan to the government, you can now put this money to work for you in an interest-bearing savings account or invest the money in the stock market.
2. Automate Your Savings
There are three main ways you can automate your savings — meaning you’re regularly adding to your accounts without making an effort:
- Make sure you’re contributing to your 401(k) plan.
- Set up an Automatic Investment Plan to fund your IRA.
- Set up an automatic transfer from your checking account to the savings account. You can start by transferring as little as $25 a week, this way you won’t even miss it. If you want to give it a little kick, make sure it goes into a high yield savings account, or you can set up an automatic investment with M1 Finance.
3. Save Up to Buy Things
Instead of using a credit card to buy things right away (and I am referring to discretionary purchases), do this instead:
- Make a list of things you want to buy
- Prioritize the list from the thing that you want the most to the least
- Save up enough money until you can afford it
- Buy it with a cashback credit card and use the money you saved to pay down your card at the end of the month.
4. Use the 30-Day Rule to Control Spending
Similar to the idea above, you cannot make a discretionary purchase (aka, an impulse buy) unless it is on your list for 30 days or more. The theory is by the time you have thought about it for that long, you’re unlikely to purchase the item because the moment has passed.
5. Drive for Free
If you save up to buy your car, you can drive for free for the rest of your life. With all the money you saved, you may even have a million or two in your account after 30-40 years. Be sure to read the article below to find out exactly how to do this.
6. Live for Free
You can also live for free by house hacking. House hacking is a method by which you buy a 2-4 units multi-family house using a residential loan. You can live in 1 unit as a primary residence and then rent out the other 1-3 units. If you do it right, rental income from the other units can cover your entire mortgage payment, or you may even make some money every month!
If there are no affordable multi-family homes in your area, you can also buy a normal house and rent out your rooms and basement. For maximum income, make sure your basement has a full bath.
7. Pay Yourself When You Spend Money
Whenever you spend money on something non-essential, pay 10% of the purchase price into your savings account. This will help you in two ways:
- It will help you build your savings faster, and
- It will make you think twice about making discretionary purchases.
8. Go on a Financial Fast
This can be a painful exercise, but it can help you save and learn what your spending habits are. For a set amount of time — anywhere from a week to a month — decide that you will spend absolutely no discretionary money.
- Only eat food that you have already purchased.
- Go shopping for clothes in your closet.
- Visit the library for books and DVDs.
- Check out local papers for free entertainment.
Once you have completed the fast, you will have a better idea of where you spend most of your discretionary money, because that will be what you craved the most while you were fasting. You will also have a tidy amount of money set aside. You might even find that you had fun finding creative ways to save money while going on your financial fast.
9. Take “The Extra One Percent” Challenge
Have you seen 212° The Extra Degree, which said that the difference between good and great is just 1 degree, i.e., water boils at 212° but no less? The idea of The Extra One Percent is similar. Go through your finances with a fine-tooth comb and try to make every aspect at least one percent better.
10. Get a Refund When Price Drop
Paribus is a free app from Capital One. Paribus is free to sign up. It tracks your confirmation emails and watches for price changes. If they detect a price drop, they will notify and help you get your money back.
I recently saved $232.25 when Home Depot dropped their flooring price by $6.26 per case.
11. Get Your Credit Scores for Free
There are many sites out there where you can check your score for free; the leading ones are Credit Karma and Credit Sesame. Tracking your credit scores will help you improve it, and better credit scores will help you get better deals with lenders and credit card companies.
Sign up is super easy; you can check out How to Check Your Credit Score for Free.
12. Check Your Credit Reports for Free
You can get three free credit reports every year, so there’s no excuse not to keep an eye on what the credit reporting bureaus are saying about you. Visit AnnualCreditReport.com for your official (FTC approved) information on getting your credit report for free.
Your credit reports give you detailed information about your credit which you can use to improve your scores.
Even if you’ve been saintly and punctual with your payments, you may still have some negative items on your credit report thanks to errors, identity theft, or something that’s slipped your mind. Take time to dispute anything on your credit report that is inaccurate, outdated, or doesn’t look quite right.
13. Costco Money Hacks
If you have a big household, shopping at Costco, or other warehouse clubs, is a good way to save money. In our article, Costco Membership Discount and Deals we feature more money hacks specific to Costco, including
- How to get free Costco membership (well…sort of)
- How to get Day Pass (actually Any Day Pass) to Costco
14. Get Free Wealth Management
Sign up for a free account with Personal Capital, and you can see everything about your finances in one place. Track your income, expenses, debt, and investments in one place. And it has tons of features to help you do a better job with your finances and retirement savings.
15. Get Free Performance Boost for Your Investment
In Personal Capital, use the Fee Analyzer tool to check your investment expense for each fund and ETF. Sell the expensive ones and swap them out for similar ones with a lower expense ratio. There are multiple funds and ETFs in just about any category you can think of. You can give your portfolio a big boost by saving even just 0.5% in expenses.
16. Use Debt Snowball
Owe money to several lenders? Use the Debt Snowball to hack your way out of debt. This is a way to help you get out of debt faster because it gives you a small win each time you pay a debt off.
17. Create a Budget You Can Stick To
Start a budget. A quick outline of your monthly income and expenses can be a reassuring guideline that lets you know that you’re are living within your means. On the other hand, a more structured budget can help you be more aware of your fiscal habits and give you a solid plan to follow. Whatever your leanings, a budget can be a significant first step to improve your finances.
18. Use the 80/20 Rule to Improve Your Finances
Use the 80/20 Rule (or the Pareto Principle) to identify your biggest opportunities. Working with this rule allows you to focus on the vital few ideas so that you can accomplish your goals faster and easier.
19. Get Some Good Advice
If you are in over your head with debt, it might be a good idea to talk to a debt counselor. If you are not sure how to invest your money, talk to a financial planner. Need to save some money on taxes, talk to a tax advisor. Not sure what to do as you approach your final years…talk to an estate planner.
Some times you have to admit that not everything can be a Do-It-Yourself project. Seeking out the right professionals to help you could be one of your best moves.
20. Get a Better Interest Rate on Your Credit Cards
For those who are in a position where you can’t pay off your entire credit card bill each month, a credit card with a lower interest rate will help you better manage your debt. You may be surprised at how much money you can save if you consolidate your loans, do some comparison shopping or pick up the phone and talk to your lender.
You can also borrow money to pay off higher-interest debt. There are a lot of people on Lending Club and Prosper doing this, e.g., borrow an installment loan to pay off credit cards.
More Ways to Improve Your Finances
- 40+ Ways to Save Money, Lower Your Bills, and Cut Expenses
- 40+ Extra Income Ideas and Ways to Make Money
- Organize your debt repayment.
- Freeze your credit cards, if you have a habit of getting into credit card debt.
- Or charge everything to your credit cards to maximize rewards.
- Start an emergency fund, or add more money to it.
- Start investing, and keep growing your portfolio.
- Start real estate investing — The easiest way is with a REIT, but there are many options.
- Start investing in commodities.
- Start investing in inflation-protected investments.
- Start dividend investing.
- Reassess your asset allocation and rebalance your portfolio. (Personal Capital will provide you with a recommendation.)
- Increase your 401(k) contributions, and try to reach the maximum contribution limit each year. At the minimum, you should try to reach the maximum matching limit each year.
- Start an IRA, and try to reach the maximum contribution limit each year.
- Start an HSA, and try to reach the maximum contribution limit each year. If you can avoid using it for medical expenses, it will eventually turn into a retirement savings account!
- Start a 529, if you have a child or if you are planning to go back to college.
- Ask for a pay raise.
- Volunteer for overtime.
- Get a part-time job.
- Declutter your home one room at a time.
- Get a Life Insurance Policy.
- Get an Umbrella Insurance Policy, if you have a higher than average risk profile, e.g., you’re a landlord, people work in your home, etc.
- Stop watching prime time news. 99% of them are bad news, so why watch it. Just read about what matters to you on the web.
- Switch to a better bank (or a credit union).
- Save money on health care.
- Create a will.
- Start living a minimalist lifestyle.
Hopefully, this will get you moving in the right direction, and inspire you to make this list your own by adding more ideas. Instead of making big audacious goals that will fail, why not print out this list and knock out a few things each week?
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.
I agree with a lot of your ideas but this year I am going to try and charge everything to my credit cards. That wouldn’t work to well if they were frozen.
I have been missiing out on lots of free money from my cash back Visa when I debit or pay cash. I am moving my car insurance to Visa and I am figuring out how to get other major expenses on to the card as well.
I see a few I had on my list this year including an IRA and getting life insurance. I had not thought about a will but that’s definitely one to include on my goal list.
Most of those in the list are actually what I am planning to do this year. It is really my ultimate goal to change a bit of my lifestyle and be more sensitive with my expenses.
The first step we did to improve our finances was to pay off our credit card debts. We only used them for large purchases that offer monthly installment at 0% interest.
Great list. In the New Year I always update my financial goals and look for ideas I have previously not been aware of. I prefer to have as few recurring monthly expenses as possible as I feel it decreases your monthly overhead.
Hey, I signed up for the LendingClub and it turns out I can’t do it from New Jersey. Do you have any experience using it through their partner service that allows New Jersey residents to participate?
Thanks for the great post! It’s definitely important to keep track of everything especially your credit reports. Last year I found out I had been a victim of fraud (identity theft). Because of the fact that I found out only a week after it happened I was able to fix the issue with my credit report quickly. The rep who helped me explained that the longer a person waits to file fraud (identity theft) the more difficult and lengthy the process is.
I’m going to treat this selectively as a sort of bucket list or achievements (like in video games) list 🙂
I find some of these tips really helpful, however I can’t apply all of them. But I recently switched to a different bank and I always work overtime whenever that’s possible. So just by doing these two things I managed to improve my finance.
Great list. Everyone, even people who are secure and good with their finances, can do at least one of these things. I would add cutting banking costs to this list. GO with a free bank like ING direct, which will save you the fees every month.
This is a very helpful list. Improving once finances is really hard since we are spending on so many things. But I realized I can do something to lessen the expenses.
Good list. I think the most popular one would be on making extra money on the side. I’ve seen similar ones on other sites as well.
Also, if you still find yourself buying books, think about going to the library instead. Or just make use of information online for free.
Building up an emergency fund is an excellent idea, u never know when you’ll need to dip into it to pay for unexpected bills and items. My view is to save as much as you can. 🙂
shopping for insurance is one of the things that I could probably save the most money. It’s been a long time since last I shopped. Sadly, it needs to be done often or else you wind up overpaying. Definitely, something you can’t set it and forget it.
Interesting post. I always like the small, actionable things that can make a big difference over time.
Those are a lot of steps. Overwhelming. I’d suggest cherry picking 10 from this list and tackle them. 🙂
I did some research on one of my new ebooks I’m writing, I found out the top 8 new year’s resolutions for 2013.
1. Eat Healthy Food
2. Get A Better Education
3. Get A Better Job
4. Get Fit
5. Quit Smoking
6. Take A Trip
7. Volunteer To Help Others
8. Debt Reduction
This was found at USA.gov… And is crazy that Debt Reduction is on the statistic.
Reading through your list… I really feel number 24 is the most important! You just never know when something could happen.
Great post! THank you
Awesome list of tips, Pinyo. If people started doing just a few of these they would be well on their way to financial success. Bookmarked!
Wow! That’s quite a list! Some things aren’t apropritate for some people, and others people may want to do in a different order, but it’s a great starting point for anyone.