Elevate your financial health: Master these 11 tiny money actions

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We often hear that making small lifestyle changes can have a great impact on our health, but the same principle applies to improving our financial well-being. Instead of waiting for a magic solution to turn your finances around, consider starting with these 11 tiny money actions that can help boost your financial health and provide you with more control over your personal economy.

1. Track your expenses better

Knowing where your money goes is the foundation of good financial habits. If you’re not already keeping track of your expenses, now is the time to start. Apps like Mint or YNAB make it easy to bring all your accounts together in one place so you can see exactly what you’re spending on – from groceries to entertainment. This can be an eye-opening experience and will help you identify areas where you can save.

2. Separate wants and needs

To build a strong financial plan, it’s essential to prioritize your spending between things you need and items you want. For instance, rent or mortgage payments, utilities, and groceries fall under necessities, while dining out, vacations, and shopping are typically considered to be wants. Being mindful of this distinction can help drive responsible spending decisions and reduce frivolous expenses.

3. Implement the 48-hour rule

A simple technique known as the 48-hour rule can be very helpful when trying to curb impulse purchases. The concept here is straightforward – whenever you’re tempted to buy something, wait 48 hours before making a decision. This cooling-off period will give you time to reflect on whether the purchase is necessary or worth it. You may find that after two days, the desire to buy has diminished, saving you from making an unnecessary expense.

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4. Create specific financial goals

Having a clear and attainable financial goal in mind makes it much more likely that you’ll stick to your budget and make smart financial choices. These goals could range from saving up for a new car, buying a home, or putting money away for retirement. Make sure your goals follow the SMART criteria – Specific, Measurable, Achievable, Relevant, and Time-bound. You’ll have a clearer sense of direction and motivation if you know exactly what you’re aiming for.

5. Adjust your tax withholding

If you consistently receive a substantial tax refund year after year, it may be worth adjusting your tax withholding. While a tax refund might feel like a bonus, this money is ultimately an interest-free loan to the government. By claiming a higher number of allowances on your W-4 form, you can reduce the amount of taxes withheld from your paycheck and increase your take-home pay, thus giving yourself a better opportunity to save or invest that money throughout the year. Consult with a tax professional to ensure you are not under-withholding your taxes and possibly facing fines.

6. Save automatically

One of the most effective ways to save is by making it automatic. Set up direct transfers from your checking account to a savings account each time you get paid. This way, you won’t forget or get tempted to spend the money before it’s saved. The key here is to pay yourself first and adjust your spending accordingly.

7. Negotiate for lower rates and fees

Many people accept bills and fees at face value without realizing they can negotiate for lower prices. Whether it’s your credit card company, cable provider, or car insurance company, be proactive about asking for discounts or lower rates. A simple phone call or email inquiry might save you hundreds of dollars over the course of the year.

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8. Consolidate high-interest debt

If you’re dealing with high-interest credit card debt, consider utilizing a balance transfer to move your higher interest balances to an account with a much lower interest rate, ideally one with a 0% introductory offer. This can help you save on interest charges and pay down your debt more efficiently. Just be mindful of balance transfer fees and understand that the low introductory rate is usually temporary, so plan accordingly.

9. Increase your income

While it’s important to focus on cutting expenses, don’t forget about the other side of the equation – generating more income. There are plenty of ways to achieve this, whether that means negotiating a raise at work, taking a part-time job or freelance gig, or selling things accumulating dust in your home. Diversifying your sources of income can provide financial stability and peace of mind.

10. Make manageable lifestyle changes

Small actions like cooking at home more often, opting for free entertainment options, or skipping your daily coffee shop visit can lead to significant savings without sacrificing too much enjoyment from life. The key here is finding a balance between living frugally and enjoying what life has to offer, while making sure you’re consistently moving the needle on your financial plans.

11. Continuously educate yourself

The world of personal finance is vast, and there’s always something new to learn. Keep up with financial news, listen to podcasts, read blogs, or take online courses to deepen your understanding of topics such as investing, budgeting, and retirement planning. The more knowledgeable you are about your finances, the better equipped you’ll be to make informed decisions and achieve your financial goals.

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Remember, Rome wasn’t built in a day, and neither will your perfect financial portfolio. Start tiny by incorporating these financial tweaks into your life bit by bit, and watch as your financial health begins to soar!

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