When it comes to money, small changes may work better than big ones. That's because smaller, bite-size changes can be more likely to grow into new habits that stick.
Try these 10 small money moves to build habits that can have a major impact on your financial success.
1. Save a Little
Sure, saving a lot would be great. But saving whatever you can is even better. Maybe that’s $10 each month into the piggy bank on the kitchen counter, putting an extra $25 each month into your savings account, or beginning a 1% contribution to your 401(k).
It's easy to look at the budget and see nothing left over, but if you're honest, there's likely an extra $10 somewhere. Small moves like this can make a big impact over time.
2. Make an Extra Payment
What if you made one extra mortgage payment a year? Or rounded your car payment up to the nearest hundred dollars? A little extra here and there can mean your mortgage is paid off years in advance or your car is paid off months in advance.
With mortgages, you may have to make the entire extra payment at once rather than paying a little more each month. If you add a little extra each month, the lender may not apply the extra payment to the principal. Contact your lender to find out how to pay extra in a way that the excess payment reduces your principal balance.
3. Learn Your Tax Bracket
Taxes matter. If you pay them, you should learn how they work. Start by studying the tax brackets. When looking at the brackets, you'll see that the tax rates go up after taxable income exceeds certain limits. And after you understand this, you may find that contributing higher income amounts to a 401(k) or Traditional IRA can actually save you money on your taxes.
4. Switch to an Index Fund
Mutual funds deduct fees before they give your share of the investment returns, and just because you can’t see the fee being deducted doesn’t mean it doesn’t matter. It’s been proven that one of the best ways to find the best-performing mutual funds is to switch to lower-fee funds, which usually means using an index fund. As your account balances grow, this simple change can save you thousands year after year.
Speaking of investments—ask your financial advisor how they're getting paid. If they're charging you fees and putting you in funds with high fees, you might want to seek a few other opinions.
5. Track Your Progress
It can be hard to save for retirement without a sense of where your actions will take you. Online retirement calculators project your path—they help you see how your savings will grow over time and what kind of income might be available to you later. If you’ve never run a projection, get online and give it a go.
A financial advisor can help you with a detailed projection, but online calculators are a great help as well.
6. Read One Finance Book
A single book can impart knowledge that will serve you for a lifetime. The Behavior Gap by Carl Richards is highly recommended for its perspective on how our behaviors cause us to make potentially dumb decisions with our money. If you're interested in something else, consider the 10 best personal finance books of 2021.
7. Organize Your Financial Life
Financial stuff can feel overwhelming. A simple step you can use to make it more manageable is to get your financial information organized. When you're buried in debt, it can be tempting to ignore it so you don't have to face the reality. But after organizing your credit card statements and tallying up the totals, it can often be easier to begin making significant progress toward paying things off.
8. Buy Used
Cars, furniture, clothing … you can almost always find what you want and pay less for it by buying used. If you get in the habit of looking for used items first, you could save hundreds or thousands of dollars every single year.
9. Cancel Something
Too many of us have some type of recurring charge coming out of our bank accounts or being charged to our credit card—and it could be for something we don’t even use. It might be a magazine subscription, annual membership renewal fee, or something you signed up for accidentally. Scour your statements and set aside the time it will take to cancel those things you don’t use.
While you're at it, is there something you do use that you could live without? Canceling it could give you more money to put toward your savings goals.
10. Turn Off Financial TV
Many people find life to be more relaxing after turning off the financial TV shows. From stock market analysis to investing tips and more, these shows can turn out to be more stressful than they are helpful. Put a solid long-term financial plan in place and choose to watch stuff that will make you laugh—not stuff that will only stress you out.