Learn to manage your money wisely with these straightforward tips to cut spending and budget better. Despite higher incomes, many still struggle with financial challenges and living paycheck to paycheck. Take control of your finances starting today to achieve a more feasible budget.
1. Prioritize Essential Bills and Expenses
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Identify which expenses are truly essential for your livelihood. Prioritize these over non-essential expenses like entertainment or eating out to ensure financial stability and mindful spending habits.
To learn more: What is Zero-Based Budgeting and How Does It Work?
2. Participate in a No Spend Challenge
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Joining a No Spend Challenge not only helps you save money rapidly but also increases awareness of your spending habits, leading to a minimalist lifestyle. Start with a no spend month to jumpstart your frugal living journey.
To learn more: No Spend Challenge: The #1 Fastest Way To Save Money
3. Reduce your Housing Expenses
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Housing costs can burden your budget significantly. Explore options like downsizing, negotiating rent, or getting roommates to lower expenses and free up funds for other financial goals.
To learn more: Get Paid to House Sit and Find Lucrative Housesitting Gigs Easily
4. Be Cognizant of Bad Spending Habits
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Become aware of detrimental spending habits like impulse purchases or overspending on conveniences. Break the cycle by making conscious choices and embracing mindful spending practices for long-term savings.
To learn more: 12 Things I Quit Buying to Save Money
5. Skip the Expensive Coffee Shop
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Foregoing daily coffee shop visits can yield substantial savings. Just this change alone could save you over $600 a year, demonstrating the impact of small adjustments on your budget.
To find more: 175+ Simple and Easy Frugal Living Tips to Save Money
6. Use Public Transportation to Save Money
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Opt for cost-effective alternatives to owning a car, such as public transportation, cycling, or carpooling. By reducing transportation expenses, you can allocate more funds towards savings and financial goals.
To understand further: Is a Car an Asset or Liability?
7. Take Advantage of Free or Cheap Entertainment
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Embrace free or inexpensive entertainment options to avoid draining your budget. Enjoy activities that don’t require spending money, allowing you to have fun without compromising your financial health.
To learn more: 105 Fun Things To Do With No Money
8. Cut Back on Grocery Spending
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Employ strategies like meal planning, cooking at home, and using discounts to slash grocery expenses. By being mindful of your food budget, you can save money while maintaining a nutritious diet.
To learn more: 100+ Frugal Meals for When You’re Broke or on a Budget
9. Stick to Your Shopping List
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Plan purchases in advance to resist impulse buying. Sticking to your shopping list helps you stay focused on essentials, preventing unnecessary spending and promoting responsible budget management.
10. Start Meal Planning
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Meal planning is a practical approach to budget-friendly eating. By organizing your meals ahead of time, you can minimize grocery costs and reduce food waste, ensuring efficient use of your food budget.
To learn more: Become a Pro at How to Meal Plan for a Month
11. Stockpile Goods That Will Stay Stocked Up Long Term
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Strategically stockpile essential items to save money and ensure preparedness. Focus on purchasing long-lasting goods in moderate quantities to maximize savings without cluttering your living space. Only buy what you plan to use when it is on sale!
To learn more: What is the Best Cheap Food to Buy When Broke?
12. Avoid Impulse Purchases
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By resisting impulsive buying, you create opportunities for significant savings over time. Prioritize needs over wants to safeguard your budget and maintain financial stability, especially during tight financial situations.
Find more ideas to Cut Spending
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Discover practical tips to cut spending & budget wisely. Start saving money effortlessly with these 12 straightforward strategies!
To learn more: 20+ Tips to Cut Spending when Budgeting on a Low Income
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A simple change to when you make your mortgage payments can save you thousands of dollars—and a few years—on your mortgage obligation.
Many people dream of saying goodbye to their mortgage and living debt-free. Perhaps the most popular method for doing this is making biweekly mortgage payments. These are just what they sound like. Instead of paying your mortgage once a month, you pay every two weeks.
Here’s how it works: You take your required monthly mortgage payment and divide it evenly in two. Then, you make that half-payment every two weeks. If your mortgage payment is $3,000, for example, you’d pay $1,500 today, and then the other $1,500 two weeks from now.
You’d then continue that process every two weeks for the rest of the year—ideally with automatic payments you can set and forget. Because the calendar doesn’t split months evenly, you’ll end up making 26 half-payments over the course of the year, or 13 total monthly payments, instead of 12.
“I’m a big proponent of biweekly mortgage payments,” says David Johnston, a certified financial planner and managing partner of Amwell Ridge Wealth Management in Flemington, N.J. “It’s a way to accelerate your mortgage payoff without hefty lump sums.”
How much can you save with biweekly mortgage payments?
The exact amount of savings you’ll see by making biweekly mortgage payments depends on your loan size, interest rate, loan term and other factors.
“Paying biweekly will save you thousands of dollars over the term of your loan, since it’ll be paid off earlier,” says Steven Conners, founder and president of Conners Wealth Management in Scottsdale, Ariz.
Here’s a look at how making biweekly payments would alter a $500,000 mortgage loan with a 6.5% rate.
Monthly payments
Biweekly payments
Loan amount
$500,000
$500,000
Payment amount
$3,160 monthly
$1,580 biweekly
Payments per year
12 full payments
26 half payments
Payoff date
Year 30
Year 24
Total interest paid
$637,722
$486,076
Savings
–
$149,646
While cash savings are likely the biggest benefit of making biweekly mortgage payments, there are other perks, too. Paying your loan off earlier, for example, can lighten your financial load as a household, freeing up cash flow to put toward other things—such as investments or your retirement account.
Biweekly payments also allow you to build equity faster. “They act as an equity booster,” says Mike Roberts, co-founder of City Creek Mortgage in Draper, Utah. “The quicker you pay down the principal, the more equity you build in the home.”
Roberts says this extra equity could prove “invaluable” later on if you opt to refinance your loan or take out a home-equity loan or Heloc. (Lenders typically won’t allow you to do either unless you’ll still have at least 20% equity.)
Finally, for many homeowners, biweekly payments just line up with some paycheck schedules better. For example, if you get paid every two weeks, it may be simpler to manage cash flow if your mortgage payments align with your pay days.
“By dividing the payment in half and aligning it with your pay cycle, it may be easier on your overall budget,” says Rachel Caballero, community development manager at TruWest Credit Union in Tempe, Ariz.
There can be downsides to biweekly payments, too. There may be fees from your lender, it could be hard to remember the payments (unless you set up autopay) and you might be taking away cash from other financial goals, such as paying down higher-interest debts or saving for retirement.
Setting up biweekly mortgage payments
With all their benefits, it might be tempting to just divide that payment in half and start biweekly payments right away. But before you dive in, you’ll need to contact your lender or loan servicer.
First, not all servicers will allow you to make biweekly payments. And if yours does, you need to make sure they’ll apply the payment to your principal at the time of payment—not just on your payment’s due date.
“You need to confirm with your servicer that the biweekly payments will actually be applied to your principal,” Roberts says. “Some servicers might hold the extra payments in an escrow account until the end of the month, negating the benefits.”
This essentially means they’ll put the payments in a holding account until your actual due date rolls around. This would keep your earlier-in-the-month payments from reducing your principal balance (and the interest you’re charged on it) as intended.
You should also ask if there’s a fee for setting up or processing biweekly payments. It might seem silly to charge a fee when the lender is actually getting bigger payments from you, but remember those interest savings.
“Less interest cost for you is less interest income for them,” says Troy A. Young, a certified financial planner and founder of Destiny Financial Group in Atlanta.
Ready to achieve millionaire status without a cent to your name? Let’s kickstart your journey with these 15 genius strategies. Each step brings you closer to your goal, building wealth through dedication and strategic moves. It’s not just about money, but the lessons learned and connections made along the way that pave the path to financial success.
Create a Financial Plan
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Craft a financial plan that charts your path to millionaire status. It’s not just a dream but a calculated strategy based on your goals and timeframe. Establish clear objectives and a roadmap to reach financial independence.
Positive Mindset for Success
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Cultivate a positive mindset to unlock financial success. By fostering optimism and clarity, you empower yourself to manifest your aspirations with confidence. Maintain a can-do attitude to navigate challenges on the road to wealth.
To learn more: 125+ Money Affirmations to Attract More Money into Your Life
Start Saving – Even Small Amounts
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Kickstart your savings journey with small but consistent contributions. Embrace mini-saving challenges that gradually accumulate wealth without disrupting your daily life. These incremental savings lay the foundation for financial independence.
To learn more: 15 Mini Savings Challenge Printables To Save More Money
Pay Off Debts ASAP
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Prioritize debt repayment to accelerate your journey to financial freedom. Eliminating debt releases resources for wealth-building endeavors and boosts your net worth. Experience the transformative power of debt freedom on your path to millionaire status.
To learn more: How to Get Out of Debt in 5 Easy Steps
Find High Income Skills
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Discover lucrative skills to boost your earning potential. In today’s dynamic economy, capitalizing on your abilities can open doors to additional income streams. Invest in developing valuable skills that align with market demands for long-term financial success.
To learn more: Top High Income Skills Without a Degree to Learn
Grow Your Income with Side Hustles and Entrepreneurship
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Expand your earning capacity through diverse income streams. Side hustles and entrepreneurship offer flexible opportunities to leverage your talents and time, paving the way for financial abundance. Explore avenues to grow your income outside traditional employment.
To learn more: Find The Perfect Side Hustle for You
Learn Investing 101
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Master the fundamentals of investing to build wealth over time. Unlock the power of compound interest and passive income by venturing into the world of stocks and investments. Equip yourself with the knowledge and skills to navigate the financial markets effectively. Don’t delay!
To learn more: How To Invest In Stocks For Beginners: Investing Made Easy
Adopt a Growth Mindset
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Foster a growth mindset and learn from successful individuals. Embrace opportunities for personal and professional development to accelerate your wealth-building journey. Surround yourself with mentors and peers who inspire and challenge you to reach new heights.
Pick Your Community
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Surround yourself with like-minded individuals committed to financial success. Build a supportive community that encourages wealth accumulation and mutual growth. Engage with peers who share your aspirations and values to stay motivated on your path to millionaire status.
Stay Debt Free
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Maintain financial stability by avoiding debt traps. Free yourself from debt burdens to enhance your ability to save, invest, and accumulate wealth. Embrace a debt-free lifestyle that propels you toward financial independence and long-term prosperity.
To learn more: 7 Simplistic Habits Needed for Debt Free Living
Avoid Lifestyle Inflation
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Resist the temptation of lifestyle inflation to safeguard your financial future. Balance increasing income with disciplined spending habits to maximize savings and investments. By curbing lifestyle inflation, you preserve resources for wealth-building endeavors.
To learn more: Avoid the Trap of Lifestyle Creep and Reach Financial Freedom
Take Advantage of Compounding Interest
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Harness the power of compounding interest to grow your wealth exponentially. Let your investments generate returns that fuel further growth, accelerating your journey to millionaire status. Start early and leverage the magic of compounding for long-term financial success.
Focus on Your Long Term Vision
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Cultivating a long-term vision is important to know what you are striving towards. Develop a comprehensive financial plan that encompasses savings, investments, retirement, and estate planning. Stay committed to your vision and adapt your strategy as you progress towards millionaire status.
To learn more: Host a Vision Board Party: Plenty of Ideas for Success
Take Immediate Action
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Seize the moment and take proactive steps towards financial success. Avoid the pitfalls of procrastination by prioritizing saving, investing, and debt repayment. Embrace immediate action to overcome inertia and propel yourself towards your financial goals. Then, you will become a millionaire.
To learn more: How to Become a Millionaire with No Money
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
A prime credit score typically refers to a high credit score, usually above 720. It shows lenders that you have a history of responsibly managing credit and can qualify you for better loan terms and lower interest rates.
Few numbers are as important as your credit scores. Lenders use them to determine if you qualify for auto loans, home loans, credit cards and other products. In some states, insurance companies use credit scores to calculate your premiums. You may even have to undergo a credit check to qualify for some jobs.
Whether you just got your first credit card or have more than a decade of experience managing credit, it’s important to understand the score ranges and how they’re used. Keep reading to learn more about prime credit scores in particular.
What Is a Prime Credit Score?
A prime credit score is any score that falls into the “prime” category, and according to the Consumer Financial Protection Bureau, prime scores range from 660 to 719. Some lenders may have slightly different ideas of what is classified as a prime score. Although a prime score isn’t the highest credit score you can have—credit scores generally range from 300 to 850—it’s high enough to help you qualify for many loans and credit cards.
Additional Score Categories
Prime is just one of the five categories used to classify consumer credit scores in the context of lending. The others are deep subprime, subprime, near-prime, and super-prime. Here’s what they mean:
Deep subprime (579 or lower): If you have a deep subprime score, banks view you as highly likely to default on your financial obligations. In other words, there’s a good chance you won’t repay loans and credit cards as agreed. With scores in the subprime category, you’ll find it difficult to qualify for credit. Even if you do qualify, you’ll pay the highest interest rates, making it more expensive to borrow money.
Subprime (580 to 619): Subprime scores are a little better than deep subprime scores, but you’ll still find it tough to qualify for loans and credit cards. People with subprime scores also pay higher interest rates than people with scores in the prime and super-prime categories.
Near-prime (620 to 659): If you have a near-prime score, you’re getting closer to qualifying for the lowest interest rates. With a little effort, you can make the leap from near-prime to prime, making it easier to reach your financial goals.
Super-prime (720+): If you have a score of 720 or higher, you pose the lowest amount of risk to lenders. As a result, super-prime borrowers qualify for the most favorable interest rates and loan terms.
Note that these score ranges are slightly different from the official FICO® score ranges:
Poor: 579 or less
Fair: 580 – 669
Good: 670 – 739
Very good: 740 – 799
Exceptional: 800+
Factors Used to Calculate Your Credit Scores
FICO scoring models use the following factors to calculate your scores.
Payment History
One of the best ways to boost your score is to make on-time payments, as payment history accounts for a whopping 35% of your FICO scores. If you borrow money, the lender expects to be repaid as agreed. A history of on-time payments shows that you follow through on your financial commitments.
Amounts Owed
Another major factor, accounting for 30% of your credit score, is the amount of available credit you are using on a regular basis. To maintain a prime credit score or super-prime credit score, avoid using a high percentage of your available credit. Maxing out your credit cards affects your utilization rate, which is a comparison of how much credit you have available versus how much you’re using.
For example, if you have balances totaling $5,000 against credit limits totaling $10,000, you have a 50% utilization rate. Lenders typically like to see utilization rates below 30%, so paying down debt and requesting credit limit increases can help you optimize your scores.
Length of Credit History
FICO’s models also consider your average age of accounts, along with the age of your oldest and newest accounts, when determining your scores. You don’t need a long history to achieve a high credit score, but it can help. This determines 15% of your credit score.
Credit Mix
The term credit mix refers to how many types of credit accounts you have. Some people have one or two credit cards, while others have a full portfolio of credit cards, personal loans, and auto loans. Credit mix doesn’t make up a huge percentage of your score (10%), but it’s one of the factors used to assess your creditworthiness.
New Credit
Every time you apply for a loan or a credit card, the lender checks your credit report. This is known as a “hard inquiry” on your report. There’s nothing wrong with an inquiry or two, but applying for multiple lines of credit in a short amount of time is a red flag for lenders. If a lender sees four or five inquiries in a matter of weeks, they may wonder if you’re running out of money and relying on credit to pay your bills. New credit accounts for 10% of your FICO credit score.
Benefits of Having Good Credit
Having a prime credit score opens many doors for borrowers. For example, you’re likely to qualify for the best interest rates, reducing the total cost of borrowing money. Lenders may also be willing to offer more favorable loan terms, such as more time to pay or reduced fees.
Good credit also gives you more freedom. If your car breaks down, a prime credit score makes it easier to qualify for a vehicle loan. Without a good score, you might have to rely on an unsafe vehicle or take out a loan with an extremely high interest rate. Prime credit scores may even help you secure lower rates on your auto insurance, homeowners insurance or renters insurance coverage.
Maintaining a Prime Credit Score
Once you have a prime credit score, it’s important to maintain it. You can maintain good scores by making on-time payments, keeping your credit utilization rate as low as possible and applying for credit only when you truly need it. Over time, these good financial habits may help you jump from a lower credit to higher credit.
Get your free credit score from Credit.com today to see where your credit currently lies and determine what you can do to maintain or improve it.
Some of the best budgeting methods include proportional budgeting, zero-based budgeting, and reverse budgeting.
This article was originally published on Arrest Your Debt and has been republished here with permission.
A budget method sets out how an individual, company, or organization plans to spend money over time. Budgeting for beginners can be an extensive process, but a failure to budget is a quick path to long-lasting debt problems.
Multiple budgeting methods address different needs—some people might only need to set a budget for a specific purchase, while others might be looking for long-term financial strategies. Here, we’ll explore several different budgeting methods and valuable personal finance resources to help you address future financial questions.
The Traditional Budgeting Method
The traditional way to budget is rooted in the business and corporate world. Those who are willing to invest the time can use this method to handle their personal finances.
With this method, you study the income and expense figures from a previous month or year to help you plan out an upcoming period. You subtract the expenses from your take-home income, the funds in your checking account, or cash in your savings account. With this method, you’ll also need to account for inflation and any significant changes to your income.
Track Your Expenses
Check with your bank for options to get spending reports, and use banking apps to help streamline this process. You can then update your expenses daily or weekly for the most accurate results.
This type of accounting helps you understand what you’ve brought in, what you’ve spent, and what you have left each period. You can then decide where you may need to trim spending—especially if you find that your funds are running low each month. For example, you might see opportunities to lower food expenses by:
Using store-label or generic brand groceries rather than national name brands
Cooking more and eating out less
Opting for water instead of sodas at the restaurant
Change Your Shopping Habits
Switching up your shopping habits based on sales and price hikes is an excellent way to save money. Some common habits to target include:
Driving less can help lower your monthly gas or EV charging expenses.
Ordering online, especially if you can avoid shipping and handling charges.
Purchase foods that can serve multiple meals to reduce the time and money spent at grocery stores.
Wait to grab extra supplies until you’re already commuting from work or running errands.
Zero-Based Budgeting Method: AKA Zero-Sum Budget
In this approach, you give a task to every dollar you bring home. Since you account for every dollar of income, you should not have any money left over in your budget at the end of the month.
Here, you don’t simply rely upon expense categories. However, you would identify specific categories for food spending and then set funds aside for that distinct purpose.
Below is an example of a zero-based budgeting system for a particular month:
Total Monthly Income: $3,000.00
(-) Expenses:
Rent – $700.00
Electrical – $100.00
Water – $50.00
Cable and Internet – $175.00
Wireless/Cell Phone – $200.00
Grocery Shopping – $400.00
Dine out – $75.00
Car Payment – $200.00
Gasoline – $200.00
Car Insurance – $150.00
Credit Card 1 – $75.00
Credit Card 2 – $100.00
Doctor’s Visit – $25.00
Church Offering – $100.00
Deposit to Savings Account – $450.00
(=) $0 leftover after paying all expenses
You have all of your $3,000 in take-home pay allocated to various expenses and items in this example.
The zero-based method might not involve as much detail and time as you think. Remember that you have many fixed expenses such as mortgage or rent, car payments, and phone or cable bills. If one-time expenses crop up that are high priority, you can briefly pull funds from non-essential items.
Proportional Budgeting Systems
In a proportional budget, you devote a certain amount of your monthly income to specific categories. Unlike the zero-based method, you focus less on specific items. Instead, general areas of expenses guide the budgeting process.
The 50/30/20 Budget Method
The 50/20/30 method calls for you to reserve 50% of your funds for fixed expenses (i.e. rent & car notes), 20% for emergencies, long-term savings goals, and paying extra on your debts. The remaining 30% can then go to your wants.
Suppose you have a monthly after-tax income of $3,000. In the 50/20/30 budget, you distribute your money as follows:
(50%) Essentials: $1,500
(20%) Savings, Retirement, Emergency-Fund: $600
(30%) Discretionary: $900
The 50/30/20 helps you keep long-term savings in mind, but it might not be effective if your income is low and inflation is high. When the cost of living increases, it’s easy for the essential budget to exceed 50% of your monthly income.
The 60/40 Budgeting Style
The one-time MSN Money Editor-in-Chief Richard Jenkins developed another proportional budget. In the 60/40 approach, you spend 60% of your net income on committed expenses. This categorization of spending includes mandatory expenses and non-essentials to which you commit.
You then dedicate savings and money that might not have any utility beyond “fun” to the remaining 40%. Ideally, you can distribute these funds in 10% increments across three 401(k) or retirement plans, including a tax-free account. In developing his budgeting plan, Jenkins expressed a strong preference for saving well above the recommended 5% of income.
With enough income and the ability to shave expenses from your committed expenses, you might reach significant savings goals and future spending power in a few years.
Proportional Budgets for Would-Be Homeowners
If you plan to buy a home, your monthly debt payments should not exceed 43% of gross (pretax) monthly income. In calculating this debt-to-income ratio, you include car loans, student loans, credit card debt, and the anticipated monthly mortgage payment in debt. For example, your debt payments should stay at or below $2,580 per month on a monthly gross income of $6,000.
Also, consider the cost of maintaining your home. Some financial or home experts suggest budgeting 1% of your home’s price for maintenance. Other advisors include maintenance costs with mortgage payments and suggest that your housing costs do not exceed one-fourth of your income.
Reverse Budgeting: AKA Pay Yourself First Budget
Reverse budgeting makes saving the top priority. Most budgets have you start with mandatory expenses such as debt payments, food, and utilities. When you put the budget in reverse, you first decide how much to save and then set funds aside for your other expenses.
Reverse budgets should include a mixture of short-term and long-term savings goals. If you’re planning to buy a home or car or save a certain amount for college or retirement, start the process by estimating the cost of the particular benchmark.
Envelope Budget AKA Cash Envelope Method
Many budgeting techniques focus on determining how much to spend on particular categories depending on your financial goals. With the cash envelope system, you’re mentally forcing yourself into a planned spending limit.
Specifically, you label envelopes according to spending categories. Your take-home pay goes into particular envelopes based on your budget for each category. To that end, you might use some of the methods we’ve discussed, especially a proportional budget method, to decide how to allocate the money.
As you want or need to pay for something, you take money out of the envelope for that category and pay for the items with cash. Once you have emptied the envelope, you no longer spend on that category. With discipline and commitment, you resist the urge to borrow from another category.
Calendar Budgeting
Calendar budgeting encourages you to base your spending on your paydays and your monthly due dates. For example, if you get paid on the first and the fifteenth of each month, you would mark down those days on your budget along with the amount you expect to receive.
Next, you can mark down each fixed payment that will be due during your payment periods. If you receive $1,500 on the first and you have an $80 smartphone payment due on the 10th, you’ll want to jot down $1,500-$80 on your budget. Knowing how to read your paycheck stub is vital to effectively using this method.
Value Proposition Budgeting
Value proposition budgeting, also called “priority-based budgeting,” prompts people to measure the importance of every item they spend money on. The more integral an expense is, the more it’s justifiable if a large percentage of your budget is spent on it.
Businesses and entrepreneurs might favor this method, as it illustrates which expenses are worth their weight in revenue and which you can trim down. Using this method before applying for small business loans can also help you stay within your limit.
Budgeting Methods FAQ
A lot of questions can surface when you’re building out a budget. Here are some of the most common questions we’ve encountered.
What is the best budgeting model?
Budgeting isn’t a one-size-fits-all process, so there isn’t one model that beats the rest. It helps to learn about as many different budgeting strategies as possible to help you construct a plan that suits your specific needs.
The following information will highlight some of the most prominent budgeting methods people use. However, incorporating ideas and budgeting categories from multiple different methods is also a fantastic strategy.
What Things Do I Need to Include in My Budget?
Excel spreadsheets, Google Sheets, a printable monthly budget template, or a budgeting app can all help you account for your income and expenses. Start by listing your take-home pay and other income you received in a given period. If you’re basing the budget on a year, find your W-2 form and subtract all of the taxes withheld from the gross income. As an easier approach, use your final pay stub for the calendar year or total the paystubs in the particular previous month.
Next, list your common expenses for each month. You might have debt payments such as mortgage, car, student loan debt, and credit cards. Other categories of expenses include transportation, food, clothing, utilities, entertainment, television, and other media and insurance.
Build a Better Budget with Credit.com
The budgeting method that works best for you is a personal preference and depends on your financial situation, goals, and ability to be detail-oriented. Whatever you use to create your budget, budgeting should enhance your financial literacy, help you find approaches to debt repayment and other financial goals, and afford you discipline and structure in your spending habits.
A successful budget involves total buy-in and a belief that you can achieve financial independence and finally fix your debt payoff problems. Choose one of these simple budgeting methods to take control of your financial future and reduce your overall money stress.
Check out Credit.com’s guide for managing debt if you need help recovering from a financial setback. When you’ve got the funds, our investing guide can help you learn more ways to strategically increase your income.
In the pursuit of financial stability and prosperity, setting clear goals is paramount. In this guide, we’ll explore ten essential financial objectives that can pave the way to a secure and fulfilling future. Whether you’re aiming to build wealth, eliminate debt, or achieve financial independence, these goals will serve as your roadmap to success. Let’s embark on this journey towards financial empowerment together.
Be A Constant Learner
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Make continuous learning a priority in your financial journey. With so much to discover about money management and personal finance, adopting a mindset of constant learning equips you with essential knowledge for making informed financial decisions.
Pay Yourself First
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Prioritize your financial well-being by committing to paying yourself first. By saving a portion of your income before anything else, you safeguard your financial future and ensure you have resources available for future needs and opportunities. Start small and keep saving more.
Multiple streams of income
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Diversify your income sources to safeguard your financial stability. Whether through side hustles, investments, or additional employment, creating multiple streams of income provides financial resilience and opens up avenues for wealth accumulation beyond traditional income streams.
To Learn More: Explore the Many Ways to Make Money
Get Out of Debt
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Break free from the shackles of debt to regain control of your financial future. Eliminating debt not only relieves financial stress but also paves the way for future financial growth and stability. By prioritizing debt repayment, you clear the path for building wealth and achieving your financial goals.
To learn more: How to Get Out of Debt in 5 Easy Steps
Spend less Than You Earn
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Achieve financial stability by ensuring your expenses remain below your income. Embrace the practice of spending less than you earn to avoid debt accumulation and cultivate healthy financial habits. Consider participating in a no-spend challenge to reinforce mindful spending and bolster your savings.
To learn more: No Spend Challenge: The #1 Fastest Way To Save Money
Increase your Saving Percentage
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Boost your financial well-being by incrementally increasing your savings rate. Saving a significant portion of your income, ideally 20% or more, contributes to long-term wealth accumulation and financial security. Adopting this habit allows you to gradually grow your net worth while maintaining financial flexibility and resilience.
To learn more: How Much to Save Monthly – Your Savings Percentage
Give Money Away
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Cultivate generosity by incorporating charitable giving into your financial plan. Whether through donations to worthy causes or acts of kindness, sharing your resources with others not only benefits those in need but also fosters a sense of fulfillment and abundance in your own life. Prioritize giving as a cornerstone of your financial journey.
Keep a Financial Journal
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Track your financial progress and milestones by maintaining a financial journal. Recording your financial goals, achievements, and challenges provides valuable insights into your financial journey and serves as a source of motivation to stay focused on your objectives. Regularly reviewing your journal empowers you to make informed decisions and stay on track toward financial success.
Teach others About Money
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Share your financial knowledge and empower others to achieve financial success. By imparting solid money management skills to those around you, you not only contribute to their financial well-being but also reinforce your own understanding and commitment to sound financial principles. Serve as a mentor and advocate for financial literacy within your community.
Retire on Your Terms
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Take control of your retirement planning to ensure you retire on your own terms. By diligently saving and investing for retirement, you create the financial foundation necessary to maintain your desired lifestyle without relying on earned income. Start planning and saving early to secure a comfortable retirement that aligns with your goals and aspirations.
To learn more: What Happens If you Don’t Save for Retirement
Smart Financial Goals that You Need
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Discover the importance of setting smart financial goals to transform your financial future. Utilize our setting financial goals worksheet to define clear objectives and develop a roadmap for achieving them. Setting smart financial goals empowers you to take control of your finances and pursue a path towards long-term financial success.
To learn more: 10 Smart Financial Goals That You Need
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Empower, formerly Personal Capital, is a client-centric robo-advisor offering investment and wealth management services. The company distinguishes itself from the competition by combining automation with personal service. With over 2.7 million users, Empower currently holds $16 billion in assets under management.
Unlike many financial apps designed to make investing more accessible, Empower is a robo-advisor for those who already have some established wealth. They’ve gone back and forth on the minimum investment required, which is now set at $100,000.
Get started with Empower
on Empower’s secure website
Its goal is to provide a more transparent and affordable investment platform. However, its wealth management service does target clients with larger assets, with higher fees being assessed with the fewer assets you let the company manage.
In this Empower review, we’ll get into the specifics shortly, but the upside to potentially paying higher fees is the access you get to financial advisors to help with your investment strategy.
The company utilizes five principles for investing:
the modern portfolio theory
personalized asset allocation
tax optimization
equal sector and style weighting
disciplined rebalancing
No matter how much in assets you’re looking to invest, consider Empower if you prefer a hands-on experience or if you have a large portfolio to open or transfer. Either way, we’ll take you step-by-step through the different types of accounts you can have with Empower, as well as the fees you’ll pay at different asset levels.
You’ll also learn about the special features that make Empower unique, including financial tools and expertise. If you’re looking for an online advisor for any or all of your wealth management, see if Empower is right for you.
Available Plans at Empower
There are three different plans available at Empower, which are divided up based on the amount of investable assets you have. If you know how much you’d like to invest, find the correct category to learn about the benefits and services you’d receive from Empower. Then keep reading to learn more about the fee structure.
Investment Service Plan
The first plan is targeted for those with up to $200,000 in assets to be invested. Services include access to a financial advisory team, a tax-efficient ETF portfolio, dynamic tactical weighting, 401k advice, and cash flow & spending insights.
You’ll also get to use Empower’s free wealth management tools. You do, however, need a minimum of $100,000 to get started investing with Empower.
Wealth Management Plan
The next option is the Wealth Management plan, for those with investable assets between $200,000 and $1 million. You get access to all the benefits from the Investment Service plan, plus several others.
The Wealth Management service includes two dedicated financial advisors, customizable stocks and ETFs, a full financial and retirement plan, college savings and 529 planning, tax-loss harvesting and tax location, and financial decisions support.
The financial decisions support refers to help with insurance, home financing, stock options, and compensation. Also, note while your financial advisors can help you plan for investment accounts like a 401k for retirement or a 529 for college savings, Empower doesn’t actually offer these accounts.
Private Client Plan
If you invest more than $1 million, you qualify for the Private Client Plan. Again, you receive all the perks of the previous two plans, in addition to several more.
To begin, you’ll get priority access to CFP, financial advisors, investment committee, and support, plus an investment portfolio mix of ETFs, individual stocks, and individual bonds (in certain situations).
You also receive family tiered billing; private banking services; estate, tax, and legacy portfolio construction; and donor-advised funds. Empower also offers private clients a private equity and hedge fund review, deferred compensation strategy, as well as estate attorney and CPA collaboration.
Get started with Empower
on Empower’s secure website
Fee Structure and Accounts
The more money you invest through Empower, the more money you’ll save in fees. If you invest up to $1 million, your fee comes to 0.89% of the assets being managed. If you invest more than $1 million, your first $3 million in assets are only charged a 0.79% fee. Then, your next $2 million is charged 0.69%.
The $5 million after that are charged 0.59% and the next $10 million are charged 0.49%. However, there aren’t any charged beyond the account management fees, so you don’t have to worry about annual, transfer, or closing fees.
So what types of investment accounts are supported through Empower? There are many: both individual and joint non-retirement counts; Roth, traditional, SEP, and rollover IRAs; and trusts.
Through your Empower investments, you can expect a healthy range in your portfolio. For example, when buying U.S. equities, they buy a diversified sample of at least 70 individual stocks that epitomize their tactical weighting approach and optimize your account for tax purposes.
Empower also only purchases liquid securities, so that if you ever need to access cash quickly, you can receive funds within a settlement period of just one to three days.
Funds are held by Pershing Advisor Solutions, a Bank of New York Mellon Company. It is one of the largest U.S. custodians and currently holds more than a trillion dollars in global client assets.
Tax Optimization Strategies
Empower uses several techniques and strategies to ensure clients are optimizing their taxes on investments. First, they entirely avoid mutual funds, which they regard as inefficient for tax purposes. Their asset location is personalized whether you have taxable accounts or retirement accounts.
For example, Empower typically places high-yielding accounts and fixed income into a tax-deferred or exempt account. REITs are also generally placed in a retirement account because they pay nonqualified dividends.
Finally, Empower utilizes tax-loss harvesting, meaning they use individual securities that realize losses and can, therefore, offset gains or provide a tax deduction.
Special Features
You can take advantage of some of Empower’s online resources without even becoming a client. Just by creating a Empower account, you can link all of your financial accounts for an investment checkup.
The program analyzes your bank accounts, credit cards, and investments to create recommendations on your asset allocations. You can then choose whether to make those adjustments to your investments.
Additionally, you can check holistically on how your investments are performing by considering how much you’re charged in fees. You can do this in one of two ways.
The first is through the Mutual Fund Analyzer, which you can compare performance (with fees) against the broader markets. Then you can use the general Fee Analyzer to see what you’re being charged on your non-taxable retirement accounts.
You can also use Empower for a budget check-up that analyzes your saving and spending. You can even incorporate their Retirement Planner for long-term savings projections.
You’ll be provided with several scenarios, including best-case, worst-case, and most likely. It gives you a good idea of what you could potentially expect when you’re finally ready to retire.
All of these features run through the Empower financial dashboard, so you can get a holistic view of your entire financial picture. You can use them on their mobile app or website.
Some of their investment management tools include a 401(k) Analyzer, Retirement Planner, Investment Checkup, Net Worth Calculator. Moreover, you still have the ability to contact a personal financial advisor.
As we mentioned earlier, Empower implements five distinct strategies for investing. Learn a bit more about each one to get a better grasp of how your money would be managed by this advisor.
Modern Portfolio Theory
The prime directive here is to create an efficient portfolio for clients while yielding the highest possible return for the lowest possible risk.
Empower works with six asset classes to provide this equilibrium, which are all meant to be liquid and broadly investible. These asset classes are U.S. stocks and bonds, international stocks and bonds, alternatives (including ETFs and commodities), and cash for liquidity.
Personalized Asset Allocation
There’s a reason the company is called Empower: they understand that no two investors are exactly alike. That’s why they look at your individual data and financial goals to balance your portfolio’s risk and growth.
They use a proprietary Retirement Planner software that analyzes your spending and savings habits in addition to your projected income. This helps you determine what your financial future looks like and what you may need to change to reach your future goals.
Tax Optimization
We mentioned earlier that Empower optimizes your taxes by using tax-loss harvesting and asset location, as well as avoiding mutual funds.
In fact, these steps could boost your annual returns by as much as 1%. While many financial advisors use one or two of these tactics, Empower offers a truly robust strategy to make your portfolio more tax efficient.
Equal Sector and Style Weighting
Empower’s strategy for diversification involves equalizing the composition of your portfolio by sector, size, and style.
The goal is to prevent bubbles and other volatile conditions from adversely affecting your investments too much. Likewise, they don’t rely on a few large companies, but instead spread out U.S. stock investments between 70 and 100 different stocks.
Disciplined Rebalancing
Your portfolio receives a daily review for any potential rebalancing needs. For high-level assets, they’re typically rebalanced when they deviate more than a few percentage points from the target.
Specific securities receive a smaller margin and are reviewed after just a 0.5% move from the target. Having a systematic review allows you to maximize your ability to buy low and sell high.
Who is Empower best for?
Empower offers truly extensive services for high net worth investors, particularly considering the low percentage of fees charged. This is especially true if you’re an investor with several million dollars in assets and who likes to have easy access to a dedicated financial advisory.
After all, in the Private Client tier of $1 million+, you can get advice on just about anything related to your finances, whether it’s about retirement, real estate, or anything in between.
That’s on top of the personalized asset management, so you have a one-stop-shop of both automated algorithms and a human point of contact who understands the larger picture concerning your finances.
Empower also makes it easy for this type of investor to remain passive. If you appreciate their investment management and like how the allocation and review processes, then you don’t have to do much on your own.
If you received a raise at work, first things first: Congratulations! Your first impulse may be to celebrate with a big purchase or party. But rather than blowing your salary bump right away, it’s wise to be strategic. Take a little time and consider how you might use that extra cash. It could help you reach some short- and long-term financial goals.
There can be a lot to consider, but keeping a few things in mind may help you figure out the best course of action.
How to Financially Handle a Pay Raise
To help you decide what to do with a pay raise, you’ll want to think broadly, and about the future. Here are a dozen tips that may help you be better informed as you make your decision about what to do when you get a raise.
1. Using It to Get Rid of Debt
Having extra cash is a perfect opportunity to build an emergency fund if you don’t have one or if yours could use a boost. Financial experts advise having at least three to six months’ worth of basic living expenses in the bank. This can tide you over if, say, a big medical bill or car repair hits or if your family were to endure a job loss.
A raise can allow you to set a lump sum of money aside or motivate you to regularly allocate toward your emergency fund so you are financially secure in times of need. 💡 Quick Tip: As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
2. Using It to Build Your Emergency Fund
Having extra cash is a perfect opportunity to build an emergency fund if you don’t have one or if yours could use a boost. Financial experts advise having at least three to six months’ worth of basic living expenses in the bank. This can tide you over if, say, a big medical bill or car repair hits or if your family were to endure a job loss. A raise can allow you to set a lump sum of money aside or motivate you to regularly allocate toward your emergency fund so you are financially secure in times of need.
3. Re-Evaluating and Updating Your Budgeting
When you get a raise, you may be wondering how to manage this extra cash. There are probably a lot of wish-list items tempting you to increase your spending. Instead of shopping, it may be a good time to reevaluate your budget to see how you can best put your money to work.
Typically, budgets recommend that you first allocate funds toward your mandatory monthly expenses like mortgage, rent and other bills. Next, don’t forget to pay down debt, followed by adding some money to your emergency stash if needed. Have you also thought about retirement funds?
Make sure to figure out how much to save every month and put some of your money to work in a 401(k) or another retirement fund. With the money that’s left, you can spend as you see fit, invest it in the stock market, make charitable donations, or decide other ways to use it.
If you need more guidance on budgeting, look online at different techniques, such as the 50/30/20 budgeting rule, or test-drive some apps that help you see where your money is going and determine how to best manage it.
4. Avoiding Lifestyle Creep
If you are contemplating what to do with a raise, one thing to sidestep is lifestyle creep. That happens when a person makes more money but also spends more of it, typically on luxuries. So if you get a raise and then rent a more expensive apartment or sign up for a luxury-car lease, that’s lifestyle creep. You have bought into some of life’s finer things, but you may wind up just breaking even. In fact, even with more money, you may feel as if you are living beyond your means.
It can be smart to try and avoid this behavior because you don’t want to spend every penny you make. That’s not a healthy financial habit; it doesn’t help you build wealth over time. Yes, you can allow yourself to enjoy some discretionary spending (more on that in a minute). But if you let lifestyle creep happen, it may be hard to make ends meet and find opportunities to save for longer-term goals.
5. Re-Evaluating Your Retirement
When you get a raise, you have a prime opportunity to increase your retirement savings. It may not sound like fun compared to taking a vacation, but allocating money this way can be a good financial strategy to reach your goals.
If you have, say, a 401(k) plan with your employer, you can increase your monthly contribution and possibly snag the employer match, too, which is akin to free money. While it may not feel like a fun use of your raise now, your future self will thank you when you see how well your retirement savings are growing.
6. Invest in Yourself
Consider how your raise might help your long-term wellbeing, your mood, and your quality of life. Would it be wise for you to get in better shape? Have you been having trouble sleeping for a while? Do you feel hungry to learn a new skill? A bit of extra money might help you resolve those situations. Sometimes, not having enough money is a common and valid reason for not doing more of this kind of self-care.
Maybe, with your raise, you can now afford to take a few fitness classes and learn some moves you can do on your own. Perhaps you can work with a therapist on what’s keeping you up at night. Or maybe it would bring you joy to take some guitar lessons or pursue a continuing-ed class in a topic that has always fascinated you. Putting a portion of your raise to work this way can be rewarding on so many levels. 💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.
7. Considering Inflation
Inflation has been very much in the spotlight lately. In recent years, inflation has reached highs not seen in decades. When inflation is high, your purchasing power declines. Simply put, your dollar doesn’t go as far.
If you get a raise during a period of high inflation, do the math. If you receive a 5% raise and inflation is 3.6%, then you are staying (just barely) ahead in terms of your finances. That raise is helping to protect your money against inflation but unfortunately it won’t stretch much further. This perspective is good to keep in mind so you don’t overspend and wind up with debt.
8. Preparing for Taxes
Getting a bump in your salary may impact your tax liabilities; it may nudge you into a higher tax bracket. If this is the case, your tax rate will rise, and you may need to pay out a higher percentage in taxes. Typically, this will only take your effective tax rate up a couple of percentage points, but it can make a difference to your bottom line.
To offset that, you may want to adjust your withholdings with your employer. If more money is withheld during the year, you could owe less or get a refund at tax time. This could help you avoid an unpleasant surprise (namely, a tax bill) come April.
9. Saving up More for a Large Expense
Are you saving for a vacation, a wedding, a home renovation, or a new car? If you have a big-ticket item on the horizon, you may want to put part of your raise towards that goal. It can be a good move for your finances in the long-run. The extra money can help you afford what you are saving toward. You can sidestep debt as you make your dream a reality. By doing so, you’re likely improving your credit and building wealth — it’s a win-win situation.
10. Investing Your Money
Investing your hard-earned money is historically one of the best ways to build wealth. For some, that can be a good reason to allocate some of your raise to increasing their investments.
A good place to start is by creating an investment portfolio with stocks, bonds, exchange-traded funds (ETFs) and other assets. This can be a vital part of making your financial plan.
11. Funding and Starting a Side Hustle
If you dream of building your own business from a hobby someday, you could use money from your raise to start a side hustle. If, say, you love making pastry, you might invest in cookware that will take your game up a notch. Or if creating apps is your passion, perhaps there’s a weekend class that could boost your skills. Keep tabs on how much money you allocate toward this side hustle and make sure these funds put you on a path to building a business.
12. Enjoying Your Financial and Career Successes
Many of these tips for using your raise wisely revolve around paying down debt, achieving long-term financial goals, and building wealth. But of course, do use a portion of your raise to reward yourself. You’ve received a financial award because of your hard work and dedication. You deserve to treat yourself! Whether that means having a fantastic dinner out with a couple of close friends or buying a coat you’ve been eyeing for a while now, you should find a way to mark this happy moment.
Managing Your Finances with SoFi
Getting a raise is an exciting life event. It shows that your hard work has paid off and your career is making progress. But it also means that you need to make some decisions about what to do with your money – it can be both exciting, and nerve-wracking.
Making some smart decisions about saving, investing, or even investing in yourself may be a good path. But again, it’ll come down to you, your goals, and your preferences. It may be helpful to speak with a financial professional, too.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
How do I avoid spending too much after I get a raise?
Create and stick to a budget. Even though you are making more money, you still have to be conscious over where your cash goes and avoid lifestyle creep, which involves spending more as you earn more. This can make it harder to achieve your financial goals.
Is it okay to treat myself when I get a raise?
It’s definitely reasonable to treat yourself when you get a raise; you earned it! But it’s not a habit that you want to get out of hand. You want to make sure you’re spending within your means and not accumulating debt.
Can a pay raise be a negative?
A raise can potentially be a negative if you spiral into unreasonable spending. You could wind up with debt to deal with. Also, take note if your raise pushes you into a higher tax bracket, which still means you’re making more money, but you’d be paying a higher tax rate on a portion of your earnings.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Discovering financial independence doesn’t have to be complicated. In this guide, we’ll explore 10 incredibly simple methods to help you achieve financial freedom effortlessly. Whether it’s through saving, budgeting, or increasing your income, these easy strategies will set you on the path to financial independence in no time. Then, you can enjoy time freedom and not stress about the 9-5 grind.
How to Become Financially Independent to Create the Life you Want
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Learn the essential steps to achieve financial independence and build the life you desire. Take action today to build wealth and secure your financial future. With the right strategies and tools, financial independence is within reach, and you can take control of your financial destiny.
Find more ideas: How to Become Financially Independent: Create the Life You Want
Become Financially Sound
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Achieving financial soundness is the first step towards effective money management. Learn how to improve your financial health and become financially sound within the next 30 days. Take proactive steps to enhance your financial stability and secure a brighter financial future starting now.
Learn How: How Quick can you Become Financially Sound?
Are you Financially Stable?
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Discover the exact habits needed to achieve financial stability and take control of your finances. Financial stability means being in charge of your money, and this guide provides easy ways to attain it. Explore these simple yet effective tips to achieve financial stability and transform your financial future.
To learn more: 32+ Simple Hints Someone is Financially Stable + How You can be too!
Money Mantras to Repeat to Boast Your Mindset
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Harness the power of these top money mantras to cultivate a mindset of wealth and achieve financial freedom. Affirm your success and transform your financial situation with these powerful mantras. Pick your money mantra and unlock the keys to ultimate financial freedom with these empowering affirmations.
To Pick Your Money Mantra: Top 50 Money Mantras to Boost Your Financial Freedom
What is Your FI Number?
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Discover your FI Number Calculator and unlock the path to financial independence. You may be surprised you are closer than you thought! This tool is crucial for anyone seeking to change their financial future. Learn how to calculate your FI number and take control of your financial destiny today.
To calculate yours: How to FI and Know Your FI Number Calculator
Become Debt Free to Grow Wealth
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Discover the keys to financial independence by uncovering why living debt-free might lead to true wealth. Gain practical insights and strategies for achieving lasting financial security without the burden of debt. Perfect for individuals seeking to take control of their finances and build a solid foundation for future wealth.
To read more: Is Being Debt Free the New Rich & Secret to True Wealth?
What Are Your Smart Financial Goals?
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Gain valuable insights into setting smart financial goals and transforming your financial future. Learn how to create a roadmap for success with our downloadable financial goals worksheet. Start taking control of your finances today and pave the way towards achieving your financial aspirations.
To learn more: 10 Smart Financial Goals That You Need
Do You Use the Key Components of Successful Budgeting?
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Unlock the secrets to successful budgeting with our comprehensive guide. Learn about essential budget tools, strategies for adjusting your budget, and setting financial goals for transformative money management. Discover the freedom that comes with creating budgets tailored to your expenses and financial aspirations.
To learn more: What are Key Components of Successful Budgeting?
Time to Budget Your Money With Percentages
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Master the art of budgeting your money with percentages using the simple and flexible Cents Plan Formula. Take charge of your finances and manage your money in a way that works for you. Learn practical tips for budgeting with percentages and start on the path toward financial stability today.
To learn more: How to Budget Your Money With Percentages with the Cents Plan Formula
Learn How to Make Money Online
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Explore 65 easy ideas on how to make money online for beginners and kickstart your online income journey. This guide offers a variety of options, from starting a blog to selling products, to help you make money from the comfort of your home. Discover simple yet effective ways to increase your income and achieve financial independence.
To learn more: 50+ Ways How to Make Money Online for Beginners
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
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You want to learn how to be frugal but not cheap… then, you are in the right place.
Simply put… frugal living is saving money at it finest.
To be honest, though, learning how to be frugal can come with spending more money than you planned in the name of frugality. The truth can hurt. But, in order to be frugal, you must save what you would normally spend.
That means you are economical with money.
The list of 175+ frugal living tips seems like a great place to start when you are learning how to be frugal, right?
Wrong!
You need to focus on a few basic habits first. Set yourself up for success. And then, slowly incorporate more frugal ways to save money.
In this post, that is exactly what you will learn.
The frugal habits you need to be successful along with the best frugal life hacks to guarantee success.
Let’s dig in…
Can being Frugal make you Rich?
Absolutely yes!
The key is to save money from your frugal hacks.
Remember the age-old saying, “A penny saved is a penny earned.”
Every penny will slowly add up to the next money milestone.
If you don’t believe me, then check out this millionaire’s story of being frugal.
How Being Frugal can Cost You?
It can IF you are not careful.
Being frugal is about saving money. However, it is possible to spend more money in the name of frugality.
The first example would be being more than you need just because it is a good sale, deal, or clearance price that you don’t want to miss out on.
Next, in your search to find the cheapest option, you actually spend more over time replacing it because the quality isn’t quite the same.
There is a fine line between frugality, being cheap, and simply overspending on deals.
Just be weary of overspending money in the hunt of saving money.
How to be Frugal with Money
These are the habits you want to embrace to become a frugal person.
Personally, I like to think being frugal is being picky with my money.
I loathe my investment accounts going down, so why would I want to buy things that we don’t need or don’t matter in the long wrong. That is why I choose to be frugal with money.
Specifically, I choose to be economical with how we spend money.
Now, let’s dig in to understand how to be frugal with money.
1. Know Your Goals
First, you must know your goals. If you don’t have a goal, then you aren’t going to make any progress. Period.
In today’s society, it is SO easy to spend money without even realizing it. That is the point of business – they are out to market for your money (and they are good at it, too).
You must prioritize you first.
This is something we hear over and over. Prioritize your self-care before taking care of others. The same holds true for your money.
Action Step #1 – Sit down and write out your financial goals.
If this is something you haven’t done before, then check out our helpful guide to rocking your financial goals.
2. Understand your Spending Habits & Triggers
This one is HUGE!!
If you don’t know how and where you spend money without thinking, then you will never be able to stop the spending. You can’t slow the bleed.
First of all, I will admit that uncovering your spending habits is hard. It is introspective. It can be painful. Maybe even demoralizing.
But, until you let go of your previous financial failures, you won’t be able to move on.
This is an important step to make serious progress in your life. You may be amazed how this seemingly simple things will hold you back.
Action Step #2 – Review bank statements or credit card transactions. Look for things you bought without planning for them.
This will highlight your spending habits.
As for your triggers, watch your emotions and think what you automatically do when you are happy, sad, mad, and celebrating.
3. Save First
Oh my, pay yourself first.
This is something I focus on a lot at Money Bliss and for good reason. Saving money is the backbone to financial success.
If you don’t save money, then you are left scrambling when you need cash or stuck going into debt. This is a vicious hamster wheel that debt will overtake you.
Start by saving $10 a day. Many times you can find that money by uncovering your spending habits.
From there, look at increasing your saving percentage each month.
Action Step #3 – Figure out how much you save each week, each month, and your saving percentage. Brainstorm ways to increase how much you save.
To help our readers, you will find many spreadsheets and printables to help you figure out how much you save and track your savings progress. Once signed up on our email list, you will receive the password.
4. Spend Less Than You Make
Your expenses must be lower than your income. Period.
If you are currently spending more than you make, then you must look at ways to drastically cut expenses. Stop hoping that your situation will change and actually do something about it.
This seems like a very easy math concept. Yet, most people struggle with basic money management.
If you don’t believe that saving an extra $5 day, then think about having $1825 in your pocket.
Now, let’s flip it the other way, if you are overspending by $75 a week, then by the end of the year, you are in the hole $3900 plus interest if you took out debt.
Action Step #4 – Figure out your bare bones budget. Then, decide what fun spending items to keep to make sure you spend less than you make.
Here is a guide to help you figure out your bare bones budget. Also, you will find bare bones budget printable in our free library area.
5. Patience
Lastly, you must have patience.
Changing your money management won’t happen overnight. While you can have quick wins and successes, this is the race won by the turtle.
Patience comes with planning and that is one thrifty habit you should pick up.
When you become frugal with money, you plan how you spend your money and save your money. Many times, that means waiting for a sale to buy an item you need or accumulating money for another date.
Action Step #5 – Show self-restraint and try a no spend week or month.
By holding a no spend challenge, it will help you reshape your finances as well as help you prioritize what is important. As a reader, you have access to our no spend printables, too!
Frugal Life Hacks
These are the specific frugal hacks to save money.
These are the key areas you need to focus your energy on. Over time, they will become habits.
1. Pay Yourself First
Yep, this one again.
If you are frugal, then you pay yourself first.
You are focused on two things – how to save more money and how to make more money.
This pay yourself first concept will have you winning at money management – guaranteed!
2. Budget
A frugal person always has a plan on how they plan to spend their hard-earned money.
This makes sure that spending is always below income.
While many people hate the term “budget,” it doesn’t have to be constricting. We like to call it a “Cents Plan.” You make a plan for your money.
Just like you make a plan for your time on the weekend. Same concept.
The more you save now, the greater freedom you will have later.
3. Cook Meals at Home
Cooking food at home costs at least 25% of eating out. While the convenience of eating out is nice, it comes at a monetary and wellness cost.
You can make healthy meals under $10 for six servings. And not be a slave in the kitchen.
Shop the outer area of the grocery store. The expensive stuff is in the middle.
Hint: Try to incorporate a meatless meal 1-2 times per week. Plant based meals are cheaper to make.
4. Shop Less Often
This goes for general shopping, buying groceries, and adding items to your Amazon cart. The more often you go, the more likely you are to spend more money.
Decide ahead of time when you plan to shop (remember that patience concept from earlier).
For example, to get groceries for our house. I plan two pickups per month at the local grocery store and then have organic produce delivered on odd weeks with Misfits Market. Then, Costco run every month to 6 weeks. (Mind you… I have two children that are hitting the pre-teen phase.)
For me, I have shaved 30% off my grocery budget by implementing the strategy to shop less often.
5. Use Cash for Key Categories
If you are tempted to spend more than you should in certain areas, then you need to look at using cash.
When cash has been spent, you must wait until you full up that envelope again.
This helps so much with overspending.
You can do this with the cashless envelope system as well.
6. Own Less Stuff
The more items you have, the more it cost to buy and maintain.
So, by owning less stuff, you are accomplishing one of the most frugal life hacks to save money.
You don’t even need to become a minimalist. You just need to own what you need and that is it.
If you don’t believe me, look around and pack up anything you haven’t touched in the past 30 days.
7. Don’t Buy New
Buying new can be expensive. The best example of buying new is cars, trucks, and SUVs. The price instantly goes down the second you leave the dealership.
If at all possible, always look for used items that you can get at a discount or even for free.
With online forums and groups, it is much easier to find used items.
Of course, there is a caveat to this life hack; there are some things that are worth the investment and should be bought new. Just watch for sales or discounts.
8. Check your Receipts
It absolutely amazes me how many times I can be charged inccorectly. You would think with technology that this wouldn’t happen, but it does.
It takes a quick thirty seconds to scan your receipts and check for errors.
Sometimes, it may be the warranty you declined or double charged for apples. Other times, the sales price not have been rung up correctly.
Don’t hesitate to ask for the correct price!
9. Review Insurance and Ongoing Subscriptions
This may seem like a mundane task to do, but you could save yourself money.
This past summer, our homeowner’s and auto insurance went up again. We shopped around and ended up saving $1800. The same is true for cell phone and cable service.
You have to call and ask for discounts.
More often than not, these companies want you to continue as a customer and will lower your rate.
Insurance Options:
Automated Options to Save Money:
10. Switch to Reusable Products
When you throw something out, you have to buy new again.
This can fall into many categories. However, here are the main things you can reuse and ditch the waste.
This is what you want to look for:
11. Drink Water
Nothing is more frugal than drinking water.
The costs of various drinks can be a drain to any budget.
If you don’t like your tap water, then you can invest in a cheap filtration pitcher or even an under-mount filtration system. This is the one we installed and have been very happy with!
12. Watch Out for Fees
There are so many little pesky fees that can add up. Some examples include shipping, account maintenance, service fees, banking fees, etc.
While $2-8 may not seem like much, they will balloon over time. Look for promo codes or alternative ways to skip the fees.
13. Cut Cable or Unused Subscriptions
If you don’t use, then don’t spend money on it.
You can’t save money if you spend on things that don’t matter to you.
This is hard for many of us to do because we like conveniences and we don’t want to be seen as different.
Ways to Cut Cable:
The key when cutting cable is not to replace it with more subscriptions that end up costing more.
14. Collect Your Pennies
A true life hack to get you ahead financially is to know your money.
You know where you money goes. You know when you spend it. When you save it.
Also, you will never leave money on the table. If you see a penny, you pick it up and save spare change. If you lose a dollar, you want to get it back.
This means you are actively looking for ways to make more money. You want more pennies to collect that will add to your net worth over time.
15. Free Things to Do
The last frugal life hack is to always look for free things to do.
Here is a little secret… having fun doesn’t need to cost money!! We have been trained that having fun costs money. But, it is so not true!
Some of the best things in life are free.
For all of you, here is a guide of over 101 things to do without money.
Which Frugal Life Hack Will Save Money for You?
Being frugal is a lifelong habit. Yes, there are quick wins you can have here and there. But, in the long run, these frugal life hacks will have the biggest bank for your time.
Learning how to live frugally and be happy is about understanding your priorities and how you want to spend your money.
If you are serious about learning how to be frugal with money, then plan a time to examine your finances. In less than 30 minutes, you will uncover things to change the trajectory of your spending and saving habits.
Just remember… pennies do add up. So, watch your pennies and watch your net worth grow.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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