While there’s a lot to be said on the topic of personal finance, most of the time smart money management comes down to following simple principles. By tweaking habits to develop money-friendly routines, your savings can add up long term.
To find quick and simple ways to improve your financial health, GOBankingRates challenged finance experts to share their best money tips in under a minute. Check out the best pieces of advice from the #MoneyMinute Video Challenge, and see how you can start improving your finances today.
1. Use Apps to Find Extra Savings
Clark Howard said he has a favorite smartphone app that helps him save a little extra every month. He suggested Digit, an app that analyzes how you spend money. “When they think you have a little extra cash there, they swipe it into a Digit savings account,” Howard said. “Sounds weird, doesn’t it? But it’s FDIC-insured, and it’s a method of forced savings so that you don’t have money sitting there that you are tempted spend.”
2. Make Sure You Have Some “Chicken Money”
Terry Savage said that even the smartest investment plan needs a safety net. She calls this fund “Chicken Money.”
“Everybody should have some Chicken Money,” Savage said. “Put it in FDIC-insured bank deposits, in a money market account or a money market mutual fund. And you have to remember the mantra of the Chicken Money investor. You can all say it with me: ‘I’m not so concerned about the return on my money as I am about the return of my money.’ If you have Chicken Money, you’re more likely to stick with your investment program, whether that’s inside your 401(k) or IRA.”
3. Make Budgeting Simple With Money Chunking
David Auten of DebtFreeGuys.com suggested “chunking” monthly budgets into bite-sized pieces to help you pace spending better. “So for example, let’s say you set aside $50 for the weekend,” said Auten. “We encourage you to challenge yourself to spend just that $50. Come up with some creative ways, maybe looking for some free activities that allow you to have a lot of fun with just that $50… Plan out your weekend activities so that you can stay within your budget and avoid budget creep.”
4. Understand How Your Financial Planner Gets Paid
Jeff Rose from Good Financial Cents said the most important question to ask a financial planner is, “How do you get paid?”
“Financial advisors get paid in so many different ways,” Rose said. “Some are commission-based, some are fee-based, some are fee-only, some are a combination of everything that I just mentioned. So to ask that specific question to that advisor, you better get a direct answer. If they don’t answer directly and most importantly, if their answer doesn’t make sense to you — do you want to hire somebody that you don’t understand how you’re paying for their services? I don’t think so.”
5. Increase Your Means Through Investing
Robert Kiyosaki of Rich Dad said, “There are many, many people who will always tell you, ‘Live below your means.’” But he advised listeners: “Increase your means and you can have anything you want.”
The best way to do that is by investing and buying new assets. “My goal, my wife’s goal every single year is we increase our assets,” Kiyosaki said. “So we buy more rental property, we invest in oil, gold, stocks that pay dividends and all this. So every year, our income or our cash flow keeps increasing.”
6. Stay On Top of Your Credit Score
Mike Delgado and Christina Roman of Experian suggested visiting AnnualCreditReport.com each year to get free copies of your credit report. “You want to think of your credit score as your financial GPA,” Roman said. “So the better it is, the more likely you are to get a lower interest rate on a loan, like a car loan or home loan.”
“And the better interest rate you have, the more money you’ll save,” Delgado added.
7. Put Your 401(k) on Auto-Pilot
“Most 401(k)s offer something called target-date funds,” said Mandi Woodruff of Yahoo! Finance. “Think of them like putting your savings on auto-pilot. Based on your age and when you want to retire, target date funds adjust your investment mix as you get older to make sure you’re always carrying the right amount of risk. They’ll load you up on risky investments like stocks when you’re young and shift more to bonds and fixed income the closer you get to retirement.
“Another big advantage of target date funds? They come with very low fees,” said Woodruff, “which means you get to keep more of what you save.”
8. Live in a City With Low Costs
Cameron Huddleston, a columnist for GOBankingRates, said, “The best way to save a lot of money is to live in a place with a low cost of living.” By living in low-cost Kentucky, “I save money on practically everything,” Huddleston said.
A key to living somewhere cheap is to get a work-from-home job. “There are plenty of work-at-home and telecommuting options — so you can have a job in another city, you don’t have to live there. You can take advantage of a lower cost city, so you can save money to do things you really enjoy.”
9. Focus on Repaying Student Loans
Sharon Epperson of CNBC gave her tips on handling student loans wisely. First, “Make sure you are making all of your payments on time,” she said.
“You want to make sure you look into income-driven repayment plans,” Epperson added. “These plans will lower your monthly payments. You basically pay about 10 percent to 20 percent of your discretionary income. And then after 20 to 25 years of making payments on time, your loan will be forgiven — the balance completely erased.
For private loans, “What you have to try and do is negotiate a lower payment with your lender,” Epperson said. She also suggested looking for other places to cut monthly expenses to be able to devote more funds to paying off student loans.
10. Make and Follow a Financial Plan
“Everything you do — or don’t do — today will make a big difference to future-you,” said Donna Freedman, who manages Surviving and Thriving. “Specifically, if current-you piddles away every dime earned and uses credit cards for the rest, future-you is going to pay the price.”
Making a financial plan — and following it — is key to achieving your dreams. “The things we want most don’t just happen. We make them happen,” Freedman said. “That takes creativity, planning and work. So think ahead, already. Build a budget. Follow it. Grab that 401(k) match. Educate yourself about money.”
11. Get Free Money From Your Employer
Barry Choi from Money We Have suggested looking to your employer for free money.
“If your employer sponsors a 401(k), consider yourself lucky,” Choi said. “Always invest enough to get the full match from your employer so you’re not leaving any money on the table. Three percent is the most common matching amount, but every plan is different so get the details from your company.” Another source of free money could be employee stock plans.
12. Pay Bills Online
Camino Federal Credit Union representatives suggested using online bill pay to stay caught up on monthly expenses. “You can pay your bills in one convenient place. You can even set up recurring payments for fixed expenses so you don’t even have to think about it.” This helps avoid late payments and the fees that come with them.
13. Remind Yourself of Long-Term Financial Goals
“Have a financial goal that’s long term, be that debt pay-off or a savings goal,” said Kirsten Whittingham of Indebted and In Debt. Wittingham and her husband aimed to pay off $150,000 of student loan debt. The two set up a visual reminder of their goal.
“In order to make sure that we always keep our goal in mind, we actually decided to allow our debt to sit at our kitchen table with us,” Wittingham said. They set up a balancing scale with a penny for every $100 of student loan debt. For every $100 she and her husband paid, she would move a penny to the other side of the scale. “Making your goal physical gives you control over it and ensures you’ll never forget it.”
14. Weigh the Opportunity Cost of Your Spending
Deacon Hayes of Well Kept Wallet said his best one-minute money tip is to “understand the opportunity cost of every purchasing decision that you make.” To illustrate this, Hayes used the example of spending $4 a day on buying coffee at a cafe, five days a week — which adds up to $80 a month. If that money were instead saved in an investment account, it could add up to over $1 million over your lifetime.
“So when you’re making purchases, every purchase you make is going to affect your financial independence — whether or not you’re financially free, whether or not you can provide for your kid’s college, whether or not you’re gonna have money for retirement, etc. So understand that opportunity cost.”
15. Only Spend on What You Really Want
Writer Terence Loose suggested this money trick: When tempted to spend, “I pull out my phone where I keep photos of the things I really want,” Loose said.
“If I’m in line to get something I’m not sure about it, I think, would I rather have this or a fishing trip? Would I rather have this or dinner with my friends? Would I rather have this or that guitar that I really want? This way, I stop myself from buying the stuff I don’t really want and will regret the next day, and stay on track to save for what I really do want.”
16. Pay Off Credit Card Balances Each Month
Ben Edwards of Money Smart Life said that a rewards credit card can help save money — but only if used wisely. “If you can’t pay off your credit card each month then don’t use a credit card,” Edwards said. “It’s not an easy tip to follow, but it is a simple one.”
“If you’re going to use a credit card, get a rewards card,” Edwards said. “How do you know which rewards card is best for you? I’ve always been a ‘cash back’ guy myself, but it depends on your situation.”
17. Make More Than the Minimum Payment
“Nearly 20 million Americans have about $15,000 on their credit card bills, and if they’re only making the minimum payments it’s going to take them 27 years to pay that off,” said Patrick Long from Payoff.com. “Stop making minimum payments. Even $30 more can save you 13 years.”
18. Follow This Plan to Get Out of Debt
Certified Financial Planner and author Steve Repak gave a four-step plan to get out of debt.
- “First step: Quit charging. You’re never going to get out of credit card debt unless you quit using your credit cards.
- “Step two: Spend less money than what you make. Start tracking your expenditures for the next two weeks and find out the things that you can cut out, or at least reduce.
- “Step number three: Take that extra money and build your savings. Say what? Yes! Build your savings first. You’ll never get out of credit card debt unless you have money in savings.
- “Step four: Get a get-out-of-debt plan. I like using PowerPay.org. I have no affiliation with them, but you can get a get-out-of-debt plan to either pay off the highest interest [loan] or the one with the lowest balance. Which one is best? Whichever one works for you!”
19. Use Your Credit Report to Improve Your Score
“You should get a credit report and go on there and start attacking every single debt that’s on there,” said John Rampton of invoicing service Due.com. A credit report will give you a complete view of your debts so you can start paying them down, which will be great for your credit.
Second, look for credit report errors. “When I looked at my credit report last, there was a $15 charge that was sent to collections because I had moved from a place a long, long time ago and not paid $15 on a bill,” Rampton said. Mistakes like that “can hurt you credit significantly,” so make sure to watch out for these and fix them right away. “There’s forms that you can send to get those taken off, and you can significantly improve your credit rating,” said Rampton.
20. Live Off of Last Month’s Income
Stephanie Jones of Six Figures Under gave her one-minute money tip in the form of a poem: “You can budget without trouble, on one income or double, when you’re a month ahead.” Staying a month ahead of expenses will help you build a fund to cover unexpected costs.
To get a month ahead, Jones suggested saving a bit extra each month until you have a buffer of one month’s worth of income in your account. “Now you’ll spend what you’ve saved up while you’re saving for the next month, and you’ll be a month ahead,” Jones said.
21. Save Money for Emergencies — and Opportunities
Jeff Haywood, CPA and founder of finance blog The CPA Superhero, said savings are vital to protecting finances and building wealth.
With an emergency fund saved, “if something happens and you lose your source of income, because you have been saving money now you have money at your disposal to live off of for the next six months, a year or maybe even longer,” Haywood said.
“The second powerful reason to save money is to take advantage of opportunities. Perhaps you can invest in a business, or you may have an idea to improve one of your existing businesses. In any of these cases it’s going to cost money to take advantage of these opportunities, but because you’ve been saving money you can take advantage of these types of opportunities.”
22. Start Tracking Your Finances
Joshua Dorkin of real estate investing site Bigger Pockets gave this money tip: “You’ve got to track your finances if you want to grow the amount of money that you have in the bank.”
“So many of us just go out there and spend money on luxuries, on things that we don’t need,” Dorkin said. “But if we actually track everything that we spend and we see where our money is going, then we can cut back and put more money in the bank and use it for the things that matter. We can use it for saving, and we can use it for investing. So, everything begins with tracking.”
23. Follow the 10-30 Rule for Car and Housing Expenses
Louise Biron of SUNY Cobleskil offered the “10-30 Budget Rule,” which can help keep home and car costs under control.
“Car payments and rent are often your two highest budget expenses,” Biron said. “If your rent or car payments are too high, you feel squeezed.” Biron suggested limiting car payments and expenses to 10 percent of your gross income each month, and rent or mortgage costs to 30 percent of your gross income.
24. Try the 50-30-20 Rule for Your Overall Budget
Mission Fed suggested the easy “50-30-20 Rule” to guide your budgeting decisions. Of your budget, “50 percent is going to be for your needs — That’s rent, that’s car payments and that’s food,” said Mission Fed.
“Now the 30 percent, that’s going to be for your wants: entertainment, fun stuff and giving back to charities. And that 20 percent is going to be for saving up for maybe a large purchase or a nice vacation.”
25. Look for Extra Sources of Income
Crystal Hammond of SophisticatedSpender.com said she follows a strict budget. She sets a spending limit, and if she gets close to it, she either stops spending or, “I think of creative ways to make extra money. Like I’m a fitness instructor, so I’ll pick up extra classes to make extra money,” she said.
26. Make More and Desire Less
“There are only two ways to get rich: Make more or desire less,” said Nick Loper of Side Hustle Nation. “Want to accelerate the process? Do both.”
You can start by earning extra money on the side. “Get a raise, freelance, sell something, invest in yourself — in other words, hustle,” he said. That’s the “make more” side of the equation. “And on the other side, don’t buy crap you don’t need,” said Loper. “Hint: That’s almost everything.”
27. Figure Out the Cost-Per-Use Before Making a Purchase
When undecided whether a purchase is a good value, Renee L. Chin, an estate lawyer and personal finance writer, suggested calculating the cost-per-use of the item. “That helps you decide, is this item really worth it,” Chin said.
“For example, I fell in love with an $800 wedding dress, which was a lot of money for me being as I was a poor law student,” she continued. But Chin said she’s worn her dress enough times that she’s brought down the dress’ cost-per-use to $66 so far.
28. Start Saving a Little Each Week
“I put $50 to $100 in savings and never touched it,” said Jose Pizzaro of his best money tip. “It basically became the ‘rainy day’ fund.”
Eventually Pizarro saved enough to follow his dream to move to New York City. He said you can also work toward your goals by saving just a little extra every week. “It doesn’t have to be 50 to 100 dollars,” he said. “It could be $10 to $20, or $5 or $10, as long as you’re saving it all adds up.”
29. Negotiate a Lower Interest Rate on Your Debt
“Call your creditors to negotiate a lower rate,” advised Natasha Campbell, a personal finance expert and founder of Lifestyle Success Unlimited. She also advised others to be patient and stay positive when speaking to creditors. “Your attitude toward the process will determine your success, so treat others the way that you would like to be treated,” she said.
“Be sure that you also have your current statement with your rate and your account number,” added Campbell. Make sure to mention “any introductory offers that you might have received and your good credit standing history. Convince them to lower your rate by at least 25 percent. You might be surprised how they might be willing to work with you.”
30. Use Your Smartphone as a Money-Managing Tool
Cary Carbonaro, CFP and author, suggested, “Use your smartphone to make you smarter when it comes to your finances.”
“I want you to take your phone with you and use it for tracking your spending for your budgeting,” Carbonaro said. “For example, an application like Mint, which will tell you if you’re over budget or under budget.”
Then there is shopping. Carbonaro said that credit card issuers might even offer cash-back bonuses when you shop at certain stores, which you can find with a quick smartphone internet search. “Then you can use Shopular, for example, a shopping application — when you walk into the store it will tell you what’s on sale and if there’s a coupon you can use, which is fabulous.”