Money Moves: Small steps for big financial gains
September 18, 2023
Taking control of your financial future can be overwhelming. It’s easy to feel like you need to take big, radical steps to get ahead. However, the truth is that the most significant financial gains often come from small, consistent steps over time. Whether you’re just starting out or looking for ways to improve your current financial situation, this post will give you the tools you need to make smart money moves. We’ll explore small steps you can take to improve your credit score, save more money, and increase your income. By implementing these simple strategies, you can achieve big financial gains and create a more secure future for yourself and your loved ones.
1. Start with a budget plan
Creating a budget plan is the first step towards taking control of your finances. A budget plan is like a blueprint for your financial future. It helps you understand where your money is going and where you can make adjustments to save more and spend less.
To start, you should begin by tracking your income and expenses for a month or two. This will give you a clear picture of your spending habits and allow you to identify areas where you can cut back on unnecessary expenses.
Once you have a clear understanding of your income and expenses, you can start creating a budget plan. This will involve setting realistic financial goals and figuring out how much you need to save each month to achieve them.
You should also prioritize your spending, putting essential expenses like rent, utilities, and groceries at the top of your list.
It’s important to remember that your budget plan should be flexible and adaptable. As your financial situation changes, you may need to adjust your budget to reflect new priorities or unexpected expenses. But by starting with a budget plan, you’ll be taking an important first step towards achieving your financial goals and building a more secure future.
2. Cut down on your expenses
One of the most effective ways to improve your financial situation is to cut down on your expenses. It may seem like a daunting task, but the truth is that there are many simple and effective ways to do this.
Firstly, you should take a close look at all your regular expenses, such as your monthly bills for rent or mortgage, utilities, and subscriptions. Are there any areas where you can reduce your spending? For example, can you switch to a cheaper energy provider, move to a smaller apartment, or cancel subscriptions you no longer use? These small changes can add up to significant savings over time.
Another way to cut down on expenses is to be more mindful of your spending habits. Start tracking all your expenses and categorize them into needs and wants. Needs are essential things like food, shelter, and transportation, while wants are non-essential things like clothes, entertainment, and dining out. By identifying your wants, you can prioritize your spending and cut back on unnecessary expenses.
Finally, you can also consider ways to increase your income. This could be through a side hustle, selling unwanted items, or negotiating a raise or promotion at work. By increasing your income and reducing your expenses, you can start to build a more stable and secure financial future for yourself.
3. Review and eliminate unnecessary subscriptions or services
In the age of subscription-based services, it’s easy to sign up for a free trial or promotional offer and forget to cancel before the trial period ends. Before you know it, you’re paying for a service you may not even be using.
Take time to review your monthly statements and identify any recurring charges for services you no longer need or use. Canceling these unnecessary subscriptions or services can help you save money and increase your cash flow.
Additionally, consider negotiating with service providers for a lower rate. Many companies are willing to work with customers to retain their business and may offer a discounted rate or promotional offer if you ask.
It’s also important to regularly review the fees associated with your bank and credit card accounts. Are you paying high fees for ATM withdrawals or monthly account maintenance? Consider switching to a different provider with lower fees to save money each month.
By taking the time to review and eliminate unnecessary subscriptions or services, you can keep more money in your pocket and make small steps towards big financial gains.
4. Learn to cook at home
Learning to cook at home can be a great small step towards big financial gains. Eating out can be very expensive, especially if you do it frequently. Cooking at home not only saves you money, but it also allows you to control the quality and nutritional value of your meals.
Start by creating a meal plan for the week and making a grocery list based on that plan. This will help you avoid buying unnecessary items and reduce food waste. Look for recipes online or in cookbooks that are budget-friendly and easy to make.
Investing in some basic kitchen equipment like a good set of knives, a cutting board, and a few quality pots and pans can also make a big difference in your cooking experience.
Another benefit of cooking at home is that it can be a fun and creative activity. Get your family or friends involved and make it a social event. You can also experiment with different cuisines and ingredients, which can be a great way to expand your palate and save money on expensive restaurant meals.
By learning to cook at home, you can not only save money but also improve your health and expand your culinary skills. It’s a small step that can lead to big financial gains in the long run.
5. Stop using credit cards
Credit cards can be a double-edged sword. They can be a great tool for building credit and earning rewards, but they can also lead to debt and financial stress. If you’re struggling to keep up with credit card payments or find yourself relying on credit cards to make ends meet, it may be time to stop using them altogether.
One way to do this is by setting a budget and sticking to it. Determine your monthly expenses, such as rent, utilities, groceries, and transportation, and allocate a specific amount of money to each category. Then, withdraw cash for each category and use only that cash for the entire month. This can help you avoid overspending and relying on credit cards to make up the difference.
Another way to stop using credit cards is to pay them off and then cut them up or store them away in a safe place. This can help you avoid temptation and prevent future debt.
It’s important to remember that using credit cards responsibly can be a good thing, but if you’re struggling with debt and financial stress, it may be time to take a break from them. By taking small steps like setting a budget and paying off your debt, you can make big financial gains and achieve financial stability.
6. Open a savings account
Opening a savings account is one of the best money moves you can make. It’s a small step that can lead to big financial gains in the long run. A savings account provides a safe and secure place to keep your money while earning interest on your balance. In addition, it can help you build an emergency fund, which is essential for unexpected expenses such as a car repair or medical bill.
When choosing a savings account, look for one with a competitive interest rate, low fees, and easy access to your money. Online banks often offer higher interest rates and lower fees than traditional brick-and-mortar banks. Some banks also offer automatic savings plans, which transfer a set amount of money from your checking account to your savings account each month. This makes it easy to save money without even thinking about it.
It’s important to set savings goals and regularly contribute to your savings account. Even small amounts of money can add up over time, especially when you take advantage of compound interest. By making saving a habit, you’ll be on your way to achieving financial stability and security.
7. Invest in stocks or mutual funds
Investing in stocks or mutual funds can be a great way to grow your wealth over time. It’s important to note that investing involves risk and you should always do your research before making any investment decisions.
One of the benefits of investing in stocks or mutual funds is that they have the potential to yield higher returns than traditional savings accounts or CDs. However, it’s important to remember that with higher potential returns comes higher risk.
If you’re new to investing, it’s a good idea to start small and do your research. There are many resources available to help you learn about the stock market and how to invest. Online brokers such as Robinhood or E-Trade offer low-cost trading and can be a good place to start.
Another important factor to consider is diversification.
It’s important to invest in a variety of stocks or mutual funds to spread out your risk. This way, if one investment doesn’t perform well, you won’t lose all of your money.
Overall, investing in stocks or mutual funds can be a great way to build wealth over time. It’s important to do your research, start small, and diversify your investments to minimize risk.
8. Start an emergency fund
Starting an emergency fund is one of the most critical steps that anyone can take towards securing their financial future. Life can be unpredictable, and unexpected expenses such as a medical emergency, car repair, or even a job loss can happen at any time. Without an emergency fund, people often turn to credit cards or loans to pay these expenses, which can lead to financial stress and debt.
To start an emergency fund, it’s important to determine how much money should be saved based on individual circumstances. Financial experts recommend saving at least three to six months’ worth of living expenses. This can be calculated by adding up monthly bills such as rent/mortgage, utilities, food, and transportation.
Once the target amount is identified, it’s time to start saving. One way is to set up an automatic transfer from a checking account into a savings account each month. This ensures that a portion of the income is set aside for emergencies and helps establish a habit of saving.
It’s also important to keep the emergency fund separate from everyday spending accounts. A high-yield savings account or a money market account is a good option for an emergency fund as it earns interest and provides easy access to the funds when needed.
Starting an emergency fund may seem overwhelming, but even small contributions can add up over time. The key is to be consistent and make it a priority. Having an emergency fund provides a sense of security and peace of mind, knowing that unexpected expenses can be covered without resorting to debt.
9. Keep track of your credit score
Your credit score is an important aspect of your financial life. It is a reflection of your creditworthiness and can determine whether or not you are approved for a loan, credit card or even a rental application. Keeping track of your credit score and making improvements to it can have a significant impact on your financial future.
You can obtain a free credit report from each of the major credit bureaus once per year. Reviewing your report can help you identify any errors or fraudulent activity that may be impacting your score. It is important to note that each bureau may have slightly different information so it is important to check all three reports.
Once you have your credit report, look for areas where you can make improvements. This could include paying down high credit card balances, disputing any errors on your report, or making sure all of your accounts are in good standing.
It’s also important to make sure you are making all of your payments on time. Late payments can have a negative impact on your credit score and can stay on your credit report for up to seven years.
If you need help improving your credit score, consider working with a financial advisor or credit counselor. They can provide you with guidance on how to make the right moves to improve your credit score and achieve your financial goals. Remember, small steps can lead to big financial gains, so don’t let a low credit score hold you back. Start taking action today!