- The Next Web/Flickr
Managing your money successfully to start accumulating wealth doesn’t require a financial planner or MBA.
In fact, there are several actions you can take today to set yourself up for future financial success – and many of them aren’t even time intensive.
We rounded up 13 simple strategies that won’t take more than 60 minutes to implement, but will significantly better your finances:
Make your finances automatic.
- Flickr/Scarleth Marie
Most bills today can be paid online, and you often have the option of setting up automatic payments. Try automating consistent payments for fixed costs – cable, internet, Netflix, and insurance – so that you don’t have to think about them every month, and never miss a bill. You can do the same for variable costs such as credit-card bills, although you’ll want to check in on your account regularly to make sure things are going smoothly.
Making your payments automatic should be an option on your provider’s website. If not, give them a call.
For payments that can’t be made online, such as rent, set up calendar reminders and get in the habit of paying them around the same time each month so that it becomes an ingrained routine.
Look into the benefits offered by your employer.
- Oli Scarff/Getty Images
Employee benefits are often not tapped into, mostly because people don’t fully understand what’s offered to them.
Most companies offer 401(k) plans – a type of retirement account that gives you large tax advantages and allows you to compound more money over time – and in many cases, employers will also offer a 401(k) match, which is essentially free money.
Another employee benefit to consider is a health savings account (HSA), into which you can put pre-tax money and use it toward medical costs whenever you want. This option is particularly advantageous for those who are generally healthy and don’t have to go to the doctor’s office or hospital that often, such as 20- or 30-somethings without children who are looking to save for future healthcare expenses.
Also, if you have younger children, check to see if your company offers a dependent-care flexible spending account (also known as FSAs), into which you can put pre-tax money and save significantly on childcare with the tax deduction. In some cases, you’ll receive a debit card from the company to use toward services such as daycare and summer camp. If you’re paying a nanny or babysitter, you can pay them with cash and then apply for a reimbursement from the FSA.
Take some time to look into company benefits, or call your human-resources department with any questions. You might find a useful benefit you’ve been overlooking.
Increase your 401(k) contribution.
- Flickr/Nana B Agyei
You should already be contributing to your employer’s 401(k) retirement account if you have the option, but it’s also good to get in the habit of upping your contribution at the end of each year. Even a 1% increase can make a difference in the long run.
Check online to see if you can set up “auto-increase,” which will automatically increase your contributions every year. If not, call your plan provider to find out if it’s possible.
Another good rule of thumb: If you get a pay raise, increase your contribution right away by the amount of your raise – if you get a 4% raise, increase your contribution by 4%.
Choose and set up a method to start tracking your expenses.
Cash flow is one of the most important things to be aware of – you’ve got to make sure more money is not going out than is coming in. One of the best ways to monitor cash flow is by recording expenses.
“Write out all of your spending and analyze it,” explain Jeremy Jacobson and Winnie Tseng, who retired in their 30s with multimillions in the bank. “Track your dollars. I guarantee you’ll find something that either you didn’t know you were spending your money on, or you felt was unnecessary.”
It’s worked for other everyday “millionaires next door,” helped one family of four live comfortably off $14,000 a year, and is highly recommended by financial adviser and bestselling author David Bach.
If you don’t want to keep a spreadsheet on your computer, consider an app or website that will automatically track your expenses for you (Mint, You Need a Budget, and LearnVest are popular options) or even write your expenditures down in a notebook.
Negotiate lower fees for cable, internet, and insurance.
- Flickr / Keirsten Marie
“Any of the more common, day-to-day monthly bills – whether it be your cellphone or TV – are really easy to negotiate, because these companies recognize that there is a lot of competition out there,” Alex Matjanec, CEO of personal finance and banking hub MyBankTracker, tells Business Insider.
At the end of the day, companies want to keep their customers, and it never hurts to ask for a discount or lower rate. Call up your cable and internet company, and you may find that negotiating isn’t as hard as you think.
Additionally, auto insurance and renter’s insurance are negotiable, Matjanec explains. He recommends looking at the rates from competitors and using that as leverage when negotiating with your provider. Even if they don’t give you a lower fee, oftentimes they’ll boost your coverage: “If you can’t always win from a dollar value, there are opportunities to maximize what you’re getting for your dollars,” he says.
Open a high-yield online savings account.
- Flickr / dawolf-
The “big banks” out there usually offer an interest rate of 0.01%, meaning any savings just sit there, growing by a negligible amount. To give you an idea: If you let a $10,000 deposit sit in your standard savings account for one year, you’d receive a mere $1 of interest, and that’s before taxes.
However, if you’re using a high-interest savings account at an internet bank such as Ally Financial, your $10,000 deposit would generate $100 of interest over one year, thanks to the 1% interest rate.
This is by no means a sound investment strategy, but it’s a better way to earn money on liquid savings like your emergency fund. If you’re interested in trying out an online bank, Magnify Money lists some good options, and allows you to compare how much you would save with a high-interest account compared to a savings account offering a rate of 0.01%.
Check your credit score, and ask your credit-card company to increase your limit.
A strong credit score – a three-digit number between 301 and 850 – will allow you to make big purchases later on, such as insurance, a car, or a home. Generally, you don’t want your credit score to dip below 650, as potential creditors may consider you less trustworthy with their money and less deserving of the best rates.
One of the biggest factors that influences your score is called your utilization rate, which measures how much of your total credit you’re using. The less, the better. By that logic, if you have more credit but don’t increase your spending – and that part is key – you’ll have a lower utilization rate, which will have a positive affect on your credit score.
“The biggest way to really maximize your credit score is by staying under that 30% utilization,” Matjanec explains. For example, if your card has a $10,000 limit, you should try to spend under $3,000 a month. He recommends going online to your credit card’s site and requesting a credit-limit increase, which you can do once a year. Note that your request will trigger an inquiry into your score, which will ding it temporarily, so try not to request your increase when you need your score immediately.
Check the rewards balances on your credit cards.
On average, one-third of the rewards from credit cards go unused, yet many cards offer cash back and travel perks that can add up significantly over time.
First, make sure you’re using the best credit card for your lifestyle – check out the best options for travelers and college students. Also, look into the single best card for rewards in general. Next, figure out exactly what perks your card offers and ensure you’re taking advantage of them.
Other memberships may offer rewards, too. For example, some car-insurance plans offer discounts at major retailers. Look into the places you belong to as a member – Costco or your gym, for instance – and if anything stands out, set a calendar reminder for when it will apply. Another good rule of thumb is to always check for perks before you make any big purchases.
Open up multiple savings accounts to start saving for specific goals.
Bigger purchases – a car, home, wedding, vacation, or your kids’ education – are bound to pop up, if they haven’t already, and require diligent saving.
The best way to prepare for these expenses is to start setting aside money as early as possible into specific savings accounts. The same online tools that track your spending (Mint, LearnVest, and You Need A Budget) provide an easy way to create savings goals and track your progress.
Take an hour to determine what you need to save for and how much you need to save, and then open up savings accounts for each goal. If you’re saving for college, you’ll want to consider contributing money towards a tax-advantaged 529 savings plan, rather than a standard savings account.
Cancel your underused subscriptions.
- Wikimedia Commons
Ramit Sethi, author of “I Will Teach You To Be Rich,” calls this the “à la carte’ method,” and could save you $10 to $100 a month by just picking up the phone or going online, he explains.
“Cancel all the discretionary subscriptions you can: your magazines, TiVo, cable – even your gym,” Sethi writes. “Then, buy what you need à la carte. Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $1.99 each off iTunes. Buy a day pass for the gym each time you go.”
It works for three reasons, Sethi writes: You’re likely overpaying already, you’re forced to be conscious about your spending, and you value what you pay for.
Check out cheaper alternatives to cable if you’re tired of excessive channels and outrageous bills.
Optimize your cellphone plan.
“Many of us pick a cell phone plan, then never check to see if it’s the right one for us based on our usage,” writes Sethi. “Because the average cell phone bill is about $50 a month, that’s $600 per year of money you can optimize.”
When buying a new cellphone, Sethi likes to pay a little bit more upfront by choosing the unlimited data and text-messaging plan. He then sets a three-month check-in on his calendar, and analyzes his spending patterns after a few months to see where he can cut back.
You can use this method for any usage-based services, he says, and save from $20 to $600, depending on your plan.
Look at your past few grocery bills and figure out how to lower them.
- Stephen Chernin/Getty
The grocery bill can add up effortlessly, thanks in part to tricks that supermarkets use to get you to spend more.
A good starting point for lowering your grocery bill is to simply determine how much you typically spend on groceries. “Go back and look through old receipts or check your online banking to see how much you have been spending on groceries,” encourages Danielle Wagasky, who stretched $14,000 a year to cover her family’s needs for five years and cut her grocery bill from $800 a month to $400. “Look at the number and decide if it is a realistic number, or ask yourself if maybe you’ve been spending too much on groceries in the past. For most, the latter will be the case.”
If you still have time left, read up on some strategies to shave your monthly grocery bill significantly.
Write down three specific goals for your money.
- Flickr / Dave
If you want to start accumulating wealth, you need to take action. Start by writing down specific goals for your annual income and net worth, bestselling author T. Harv Eker writes in “Secrets of the Millionaire Mind.”
“Your intention should be to create abundance, not mediocrity,” he explains, so while you should be realistic when setting a time frame to attain these goals, don’t be afraid to think big and challenge yourself.
“The number one reason most people don’t get what they want is that they don’t know what they want,” he writes. “Rich people are totally clear that they want wealth.”