Financial freedom may seem like an unattainable dream, but it’s actually very achievable if you’re willing to prioritize your finances.
Sometimes it’s doing the little things that can lead to big results in the long run. If you’re willing to take a few simple steps to set yourself up on the right foundation you can be in much better shape for the future.
If you’re a person of action I’m sure you love tips and advice that you can implement right away. This article covers 13 different things you can do right now to improve your financial life. So let’s get started.
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Easy Ways to Improve Your Finances Today
The steps covered in this article can be done quickly and will have a long-lasting impact that will set you up for the future.
1. Set Up an Emergency Fund
One of your first financial priorities should be to establish an emergency fund that can cover your necessary bills for at least a few months. How much you need in your emergency fund will depend on your situation. If you’re supporting a family you’ll obviously need more than if you’re single. If you have an unpredictable income it’s wise to have a few extra months worth of expenses set aside.
In my case, as a the head of a one-income family of four (and with an unpredictable income), I feel like I need to have enough in an emergency fund to cover at least six months of living expenses. Your situation may be different and you may not need to have that much on hand in case of an emergency. Many people feel comfortable if they can cover 3 months of living expenses with their emergency fund. Regardless of how much you should have set aside, the most important part is that you have an emergency fund and that you’re working to add to it if it’s not already sufficient.
My recommendation is to have a separate bank account that’s easy to access but not used for any purpose aside from an emergency. Rather than having all of your savings in one account, I suggest having a separate account set up specifically as an emergency fund. That way it’s easy to see exactly how much you have saved for emergencies and that amount is set aside and not touched for other purposes.
None of us want to think about situations like losing a job, being in an accident, or an unexpected and serious health issue for a family member. But the reality is, most of us will face some sort of emergency that impacts our income at some point in time. Being prepared can make it a lot less painful and less damaging financially.
2. Open a High Yield Savings Account
My recommendation is to keep your emergency fund in an account that is low risk and easy to access at any time. You wouldn’t want to work hard to build up an emergency fund only to lose half of it because of a bad investment or because the stock market drops suddenly.
That means that your emergency fund will most likely be kept in a savings account or money market, which are both easy to access and low risk.
But not all savings accounts and money markets are the same. If you’re keeping your money with a local bank, chances are you could be doing much better with an online bank that offers high yield accounts. My wife and I keep our emergency fund in a money market account with CIT Bank. Right now the interest rate is 1.85%. CIT also offers savings accounts with 1.55% APY, which is more than 22x the national average!
While 1-2% interest isn’t going to make you rich, you might as well earn as much interest as possible. The minimum deposit to open a savings or money market account with CIT is only $100, and it’s quick and easy to do online (and no fees). I’ve been very happy with CIT and I definitely recommend them as a great place to keep your emergency fund.
3. Create a Budget
If you don’t already have a budget, this is something that you should definitely do as soon as possible. Making a budget may sound intimidating, but it’s really not hard or complicated. It will actually help you to clearly see your priorities and to think about how you’re using the money that you make.
The easiest way to create a budget is to have the help of a template. If you enter your email address below to subscribe to the Vital Dollar email newsletter you’ll be able to download a free template that you can use to create your own budget in Excel or OpenOffice.
And for a step-by-step breakdown of how to do it, please read How to Create a Budget that Works.
4. Start Tracking Your Spending
Creating a budget is an important step, but it’s equally important that you know how you are actually spending your money. To do this, you’ll need to track all of your expenses. If you’ve never done this before you may be surprised to see how you are actually spending money. Expenses add up, and it can be eye opening to see the end result.
You don’t need anything fancy, just use a simple spreadsheet and record your expenses at the end of each day. After tracking your expenses for a while you may want or need to adjust your budget, and you may find that you’re more careful with your money after seeing how you are really spending it.
5. Get a Free Analysis of Your 401(k)
For most Americans, a 401(k) is the primary method of saving for retirement. Most of us set aside money from each paycheck to help build a 401(k). But are you sure that your 401(k) contributions are being invested in the best way possible?
Blooom is a robo advisor that specializes in 401(k)s, but the cool thing is that Blooom will give you an analysis of your 401(k) absolutely free. It’s very simple to do, and in just a short time you’ll have a detailed analysis and some ideas about how you can improve your 401(k) investments.
I went through the free analysis and found it to be very helpful. In fact, I recommend it to anyone who has a 401(k). You don’t need to sign up for their robo advisor services in order to get the free analysis.
6. Create a Free Account with Personal Capital
Personal Capital is an incredible free app that will help you with several different aspects of your financial life. I started using Personal Capital a few months ago and it’s quickly become one of my favorite financial resources. The information that you can get from this free app is amazing!
There are a number of different ways that personal capital can help you, including:
- Tracking your net worth
- Tracking your weekly/monthly cash flow
- Keeping track of upcoming bills
- Tracking the performance of your investments
- A retirement planner that will help to make sure you’re on the right path
- A retirement fee analyzer that helps to identify if you’re paying too many fees on your retirement accounts
My 401(k), IRAs, and most other investments are currently with Vanguard. I’ve found the Personal Capital interface and reports to be much more helpful than what I can get directly from my Vanguard account.
Tracking net worth is also something that’s become really valuable to me. Personal Capital makes it easy to see my net worth at any time, and it helps me to stay motivated to keep moving forward.
Use this link to create your free Personal Capital account and you’ll get a $20 Amazon gift card as soon as you link at least one bank account.
7. Check Your Credit Report
It’s a good habit to check your credit report at least once per year. With identity theft being so common and so potentially damaging, it’s important to make sure that your credit report is accurate.
Go to AnnualCreditReport.com to get a copy of your credit report for free. If you find anything that is not correct be sure to contact the credit bureaus and start the process of getting it corrected. If you wait until you want to apply for a loan it could take too much time to get the correction made and reflected on your credit report.
→ Credit Sesame is a free tool for monitoring your credit score.
8. Sign up for a Good Cash Back Credit Card
Cash back and rewards credit cards make it easy to earn money, gift cards, or travel rewards for things you’re already doing. The standard cash back credit card will give you 1% cash back, but some cards allow you to do much better. Maximizing your cash back is not that hard, but does take a small amount of effort.
There are a few cards or types of cards that I recommend having in your wallet:
A Good Everyday Credit Card – First, you should have a card that gives you at least 1.5% cash back on every purchase. This will serve as your main credit card that you’ll use unless you can beat that percentage for a specific purchase. Personally, I use the Citi Double Cash card as my go-to credit card, and I earn 2% cash back for every purchase. There’s no annual fee so the Citi Double Cash is a great choice.
Top choices for everyday credit cards:
A Card That Pays Up to 5% Cash Back – There are a few different cards that typically pay 1% cash back, but they pay 5% cash back on purchases in specific categories that rotate each quarter. For example, you may earn 5% cash back on gas purchases in the first quarter and 5% cash back on groceries in the second quarter. The best approach is to use these cards for purchases in the 5% category and use your everyday card for other purchases.
Top choices for 5% cash back cards:
- Chase Freedom pays 5% cash back on purchases in rotating categories and 1% cash back on all other purchases. It also offers a $150 sign up bonus.
- The Discover It card pays 5% cash back on purchases in rotating categories and 1% cash back on all other purchases. There is no sign up bonus, but Discover will match all of the cash back that you earn during your first 12 months with the card.
Other Specialty Cards – Depending on your spending habits you may want to have other cards that can earn a high percentage of cash back on certain purchases. For example, some cards pay a higher amount of cash back for purchases at restaurants, gas stations, etc.
Personally, I have an Amazon Prime credit card. If you’re a Prime member this card will pay 5% cash back on all of your Amazon purchases. If you do a lot of your shopping on Amazon this can add up quickly!
→ Learn more about the best cash rewards credit cards here.
9. Open an Investment Account
Earlier we looked at the importance of an emergency fund and how to get the most out of your 401(k). If your emergency fund is already at an adequate level and you want to invest money outside of your 401(k), you can do so with an investment account at a company like Vanguard or Fidelity. Investing in mutual funds or ETFs is a good, easy way to get started.
If you’d like to invest in individual stocks you may want to open an account through Robin Hood. Robin Hood offers zero commission trading, plus it’s easy and fast to use.
→ Sign up for Robin Hood through this link and get a free stock.
10. Set Up Automated Refunds
Many stores and websites offer low price guarantees and will give you a refund for the difference if you find a lower price somewhere else. The problem with this is it’s pretty unlikely that you’ll ever notice if another store or website offers a lower price on that item. Paribus is a free app that will automatically look for lower prices on your behalf, and it will work to get the refund for you. All you need to do is connect it to the email address that you use for online shopping and it will do the rest.
Another great feature of Paribus is that it will track your Amazon shipments. If you’re a Prime member you probably have a lot of 2-day shipments coming from Amazon. It’s not unusual for one of these shipments to be late, but do you notice it or do anything about it? Paribus will tell you if a shipment arrives late and it will attempt to get you compensated with a gift card or a free month of Prime.
11. Cut Your Monthly Expenses
Saving money is great, but saving money on monthly bills is especially great. When you reduce your recurring bills you’ll be saving money each and every month!
Trim is a free app that helps to reduce your monthly bills in a few different ways.
First, it will look for subscriptions that you don’t use that can be canceled.
Second, Trim will actually work to negotiate lower rates on some of your bills, like cable or internet access.
Third, Trim will try to find lower rates on some bills like insurance premiums.
12. Change Your Mobile Phone Carrier
One of the easiest ways my wife and I ever saved money was by changing our cell phone carrier. A few years ago we used one of the leading providers and we literally cut our monthly bill in half by switching to a prepaid carrier. We used Boost Mobile for a couple of years, but about a year ago we switched to Cricket Wireless because they have better coverage (at least from my experience). I’ve been extremely happy with Cricket. The coverage is great and the price is outstanding as well.
13. Set Financial Goals
This may sound simplistic, but one of the best things you can do for your finances is to set some goals. Having specific goals can help to motivate you to manage your money more effectively. Goals can also help to clarify your priorities, and to give you a roadmap that you can follow throughout your life.
There is no exact way that you need to create your goals, but the most effective goals are specific and measurable. Here are a few examples:
- Have $25,000 in an emergency fund by a certain date.
- Reach $1,000,000 net worth by a certain age.
- Contribute $10,000 to your 401(k) this year.
All of these goals have an end date and can be easily measured to know if you were successful or not.
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What Are You Going to Do to Improve Your Finances Today?
Now that we’ve looked at several possibilities, decide which ones you should focus on today. Take action and you’ll be one step closer to financial success.
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