I'm like Captain Ahab in search of his white whale; always on the prowl for the tips, money habits, or money tech that changes lives and makes it easier to stay out of debt, save, and live my life without overwhelming money stress.
I can't speak to what works for everyone, but the eight money habits below are kid-tested (by me… not actual children) to have a profound impact on the way you manage your dollars and cents. I've also listed the time it takes to do each one. While an afternoon spent negotiating bills may not seem like a quick money fix, when calculating the year-long effects implementing these habits has, it's clearly very well worth the effort.
Nine Small Money Habits That Make the Biggest Difference
Commit to Writing Things Down
Bad money habit: Not knowing where any of your money goes ever. You put your credit card statements in the trash.
Good money habit: Reviewing your card statements at the end of each month.
Better money habit: Taking two minutes each day to write down your spending and saving expenses. Do this for one month.
Time Required: 2 minutes each day x 30 days = 60 minutes.
No one loves apps more than I do, but there's science behind writing things down. Not only does it help us to brainstorm better, but we remember more when we put pen to paper. This year, develop a habit of writing down your finances on a sheet of paper, even if it's just a few financial goals.
My “Separate Bill Pay Account” Hack
Bad money habit: Being late to pay your bills.
Good money habit: Manually paying all your bill on time.
Better money habit: Automating your bill payments out of a separate bill pay account each month.
Time required: 4 hours (you can knock this out in one weekend!)
I gave this piece of money advice in this great article by Natalie Bacon. The other women featured in the round up gave really profound, meaningful advice. I missed the boat and went with something more tactical, but I'm going to continue to evangelize this tip because it has truly made the biggest difference of all the things I've done in managing my own finances.
I know in the name of streamlining things people usually only like to have 1 checking account, but if you're prone to overspending (like I am) keeping your cash for bills separate from what's okay to spend can be a game changer. (You can also use this as an opportunity to sign up for a bank account offering a cash bonus. Ca-Ching!) It can take a minute to set up this whole process, but if you break it out into 20-minute chunks it gets easier.
- Open a separate bank account (if you don't already have one).
- Tally up how much all of your bills cost each month.
- Figure out how much you need from each paycheck to go into separate bill pay account to ensure all these bills get paid in full.
Start Leveraging Apps (If You Haven't Already)
Bad money habit: Not saving any money each month.
Good money habit: Saving $100 each month.
Better money habit: Saving more by using automatic saving apps.
Time Required: 5 minutes
Flipping over couch cushions and looking for extra change is so 1993. I've even tried keeping change in a jar in my house, but that jar has sat neglected for a few years now that my cash usage has dwindled to nothing. The truth is, even though I'd like to be better about keeping cash on hand, mostly I deal in digital currency (Venmo, Paypal and Debit Cards).
So, what about all of that “extra change” from my purchases? Enter in new apps that help you save seamlessly by mimicking this “couch cushion” effect. Most of them function in the same way: by analyzing your checking account and removing super small amounts you wouldn't miss. Apps like Qapital allow you to set rules like rounding up to the nearest dollar or saving a dollar a week. Here's how I quickly saved $1000 by using these apps and any extra “found” money.
Commit to Learning About How You Really Feel About Money
Bad money habit: Keeping your finances on autopilot.
Good money habit: Tracking your spending.
Better money habit: Spending five minutes each day for one week learning about your money mentality.
Time required: 5 minutes for 7 days, so 35 minutes for one week.
I'll admit it – this one isn't so much of a “money habit” as it is a commitment to really learning about your money habits. How do you feel about money? What in your past has influenced the way you feel about your finances? There really is no better time to discover your deep-rooted connections and attitudes toward money.
Best of all, I've written a series dedicating to discovering those answers. You can find them below.
- On the Right Financial Path? Here are 5 Ways to Tell You're Doing What Matters Most
- The Four Main Money Mentalities and How to Find Yours
- Why Knowing Your Money Motivation is the Best Thing You Can Do For Your Finances
Make a Mantra to “Live Lean”
Bad money habit: Living beyond your means.
Good money habit: Staying on budget, but you give away stuff instead of selling it.
Better money habit: Periodically selling unused items for extra cash.
Time Required: 2 seconds to set the mantra, 20 minutes each week ongoing maintenance.
I like to live minimally, and I credit my days as an actor for why I live lean in terms of “stuff” I have around the house. When you're a “working” actor, you move around so much to take jobs across the country that it doesn't make sense to have a lot, so you get used to living with very little. (You're also freaking poor, but that's another story for another day. )
Even still, I obsessively like to cull my belongings so that only the truly purposeful items: the ones being loved, used and valued consistently stay in my home and creative space.
I know I'm different from most in my views on this, but I also believe that modern consumers just keep too much “stuff” around. I like to consume, don't get me wrong, but I'm happier with fewer, more high quality things.
And while getting rid of your stuff is an opportunity to live more meaningfully, it's also an opportunity to make a little extra cash. Whether it's a holiday gift you didn't like, or a dress you bought and wore once, there are many ways to repurpose your unwanted belongings into an extra $25 or $40.. That “extra” cash can go a long way to debt payoff (as seen in my $8k in 90-days challenge) or toward funding a savings goal.
An Annual Audit of Your Expenses
Bad money habit: Never negotiating your utilities.
Good money habit: Negotiating discounts on new services.
Better money habit: Periodically calling and asking for discounts on existing services.
Time required: 1 hour for the audit, 2-3 hours if you want to call to negotiate expenses
Here's how to do an audit for your own expenses, and there is no better time than the start of a fresh year to make this happen. I recently switched cell phone providers and nabbed $40/month in savings. That's $480 back into my budget in 2017 for a half hour of work (and yes, I actually went into the store. Some things you just can't outsource with an app, unfortunately.)
Cut Back…For Real this Time
Bad money habit: Buying things you cannot afford or putting new purchases on a credit card…and then not paying it off every month.
Good money habit: Paying off your balance in full each month.
Better money habit: Trying to live frugally a few times each year in order to reset your spending habits.
Time Required: The time it takes to not give into temptation.
I know, I know. This isn't very fun, but after the decadence of the holiday season, it feels like everyone is in “cut back” mode come January. Shoppers spent an average of $967.13 this recent holiday season (source: National Retail Federation), which means January is the perfect time to find ways to save money and start paying off holiday bills.
- 82 Ways to Save Money in 2019
- How to Stop Spending Money – The Ultimate Guide
- Do a no spend challenge
Brainstorm Ways to Make More Money
Bad money habit:
Good money habit:
Better money habit:
Time Required: 15 minutes
I'm not asking you to start a side hustle right now. As a new money habit for the year, try thinking of additional ways to make your little money tree grow. Set 15 minutes on a time, grab a pen and a piece of paper, and for those fifteen minutes ONLY WRITE DOWN ways you can earn more. No distractions, no stopping. It's surprisingly effective.
Automate your savings
Bad money habit: trying to “remember” to put money in a savings account
Good money habit: calendar reminder to put $100 in a savings account each month
Better money habit: automatically transferring $100 out of your account to savings each month + using a money-saving app like Qapital or Acorns to save even more money automatically
The power of automating your savings is profound. Make it easy on yourself by scheduling an automatic transfer so your savings can grow without any additional brain power or worry from you!
*this post originally appeared in January 2017. It has been updated in January 2019.