You want to start saving more money but you just can’t seem to pull it off.
You set your goals and resolutions, and you stick to them for a while. But before you know it, you lose willpower or an unexpected expense comes up that sets you back.
I get it. It’s hard. And life happens. But it doesn’t mean that all hope is lost.
Here’s what you want to focus on to really kickstart a financial transformation:
- Easy wins. Quick ways to improve your financial situation that take an hour or less but improve your finances for months and years to come.
- Simple financial habits. With momentum on your side, you’ll then work to establish simple habits that will carry you through good times and bad.
Why this simple approach?
A recent study published in the Journal of Personality and Social Psychology shows that personality can be thoughtfully changed through setting goals and sustained effort.
In other words, when you set the right financial goals and then take action towards those goals, you start to identify yourself more and more as someone who is good with money.
And when you think of yourself in that way, you start making good financial decisions effortlessly.
So what exactly are some of these easy wins?
Let’s take a look at some of the most powerful yet simple financial habits you can start building today…
#1: Set Exciting Financial Goals
It all starts with your goals. But then again, most people get financial goal setting completely wrong.
The most common example of a bad goal is the objective to “get your finances in order.”
That’s because setting this objective doesn’t give you clear instructions about what to do next. Plus, it doesn’t give you a way to measure your success.
You want to be SMART when it comes to financial goal setting.
- S = Specific
- M = Measurable
- A = Achievable
- R = Realistic
- T = Time-based
So, instead of saying that you want to get out of debt, a SMART financial goal would be: “Pay off my current balance of $5,000 of high-interest credit card debt by June 1, 2021.”
#2: Know Where Your Money Is Going
What frugal people excel at is making the most of the money they have.
To do that, they have a plan for where they want their money to go. Then, they track their income and expenses to ensure they’re on target.
In the landmark book The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko spent 20 years studying who the real millionaires are in America. To their surprise, they found that the majority of millionaires are quite frugal.
When describing the traits of a typical millionaire, the authors explained:
They know that planning, budgeting, and being frugal are essential parts of building wealth, even for very high-income producers. Even high-income producers must live below their means if they intend to become financially independent. And if you’re not financially independent, you will spend an increasing amount of your time and energy worrying about your socioeconomic future.
Fortunately, tracking your money has never been easier.
With many free financial tracking apps available today, you can instantly know things such as:
- How much you’ve earned vs. saved this month
- What categories you’re spending in
- A list of all your transactions
As someone who has tested dozens of these apps, my personal favorite free financial tracking app is Truebill.
What I’ve come to enjoy the most about this app is its clean interface and ease of use.
#3: Shop For Your Home & Auto Insurance
When it comes to saving the most amount of money in the least amount of time, my favorite tip is shopping for your home and/or auto insurance.
In many cases, you can save hundreds of dollars in an hour or less.
In fact, with some of the newer, technology-focused insurance providers, it often takes just minutes.
Consider Gabi Insurance, which saves its new customers $961 dollars a year on average.
Gabi makes it easy to compare insurance quotes from different carriers by allowing you to upload or take a picture of your current policy. From there, they take care of the rest — shopping for coverage at over 40 companies to get you a better deal.
The whole process is quick and 100% free, and is a perfect/easy way to kickstart your financial transformation.
#4: View Money As A Skill
A mental habit that’s important for someone wanting to improve their finances is to view money as a skill. And specifically, to view it as a skill that takes patience and practice to learn.
As an example, most people fail at budgeting their first month of trying. But those who end up succeeding long-term don’t view this failure as proof that budgeting doesn’t work. Instead, they recognize that they need to get better at building the skill of budgeting.
Consider the skill of making money. Most people who have never made money outside of a job don’t go from zero to making thousands overnight.
You’re not going to replace your job with these, but what you’re doing is training that money-making muscle.
In a few months, you might be on to something bigger and better. But you wouldn’t have been able to do so without starting to build that money-making muscle today.
#5: Manage Your Credit Score
Most people know that the better their credit score is, the better interest rates they’ll be offered.
But having a high credit score keeps more cash in your pocket in other ways, too. For example, you can land savings on car insurance if you have a high credit score.
One great way to check your credit score and get recommendations on how to improve it is by signing up with Credit Sesame. This is the site I use to keep an eye on my score and get recommendations for boosting it.
When you sign up for Credit Sesame, you’ll get a very handy Credit Report Card that tells you exactly what you need to do to improve your score.
#6: Download This Browser Extension
My wife would tell you that I’m a bit obsessive about finding the best deal online.
I scour coupon sites, shop at different online retailers, and even watch prices to see if they drop.
All this takes time. But in the end, I usually find myself saving a lot of money.
Fortunately, there’s a new browser extension that can take care of this entire process for you. And it’s 100% free.
It’s called Capital One Shopping. (And no, you don’t need to be a Capital One account holder to use it.)
You start by downloading the extension. When you go to check out, it will test different coupon codes to see which one can save you the most money.
Also, for many large online retailers like Amazon and Target, Capital One Shopping will automatically scan other sites to see if what you’re buying is cheaper elsewhere.
#7: Protect Only What’s Important
What frugal people understand well is using insurance as it’s intended: to guard against true financial catastrophes, not minor inconveniences.
Frugal people don’t pay for cell phone insurance or warranties on appliances. These “risks” are covered by a fully-funded emergency fund.
Instead, frugal people protect themselves with the type of insurance that guards against TRUE financial catastrophe.
A good example of insurance frugal people buy is term life insurance.
Term insurance protects your loved ones in the event of your death. There are no gimmicks or bells and whistles. It simply protects against financial catastrophe.
It’s also super-cheap compared to other types of insurance (no-kidding: I pay $12.25 a month for my Wife’s $250K policy, which is cheaper than many cell phone insurance plans).
Your rate will vary by age and health, but most people are surprised at how affordable term insurance is.
You can get a free life insurance quote here (it only takes 2 minutes) with Policygenius.
Polciygenius saves you time by allowing you to shop policies from top companies all in one place.
While you may have big plans for your financial future, moving towards that future starts with small steps.
Once you get some momentum on your side, it’s then that you can start to tackle the more complicated financial tasks.
For now, however, focus on what you can do today.
*Capital One Shopping compensates us when you sign up for the service using the links provided.