Chances are, you’re not doing most of the things on this list. But what if you were? How much would your financial condition improve if you were doing all 50 of the following items?
1. Budgeting your money. People talk a good game (me included), and some people actually do live their lives according to a budget, but most do not. Most people I talk with write a budget, and intend to follow it, but encounter one bump in the road and it goes by the wayside.
2. Planning your financial activities with your spouse. When you have two people drinking orange juice out of the same container, it’s almost impossible to control the outflow. The same thing happens with a checking account when two people don’t communicate well yet spend money as if they are the only ones on the checking account. Planning and communication are two key factors in a marriage.
3. Reviewing your insurance needs regularly. Your needs DO change. It’s highly important that you update your life, health, disability, homeowner’s and renter’s, and other insurance needs on a regular basis.
4. Paying off your credit card each and every month. Most people in North America carry a balance on their credit cards. It’s how the credit card companies stay in business…and they’re doing quite well.
5. Looking for opportunities to increase your income. If your job is your ONLY source of income, resolve today to make extra money by acquiring another source (or two, or three) of income. It just makes good sense.
6. Exploring tax saving strategies. Taxes are a necessary component of a free society but your legislators have given you many opportunities to reduce them. Take those opportunities.
7. Estimating inflation’s effect on your retirement. One million dollars in the bank today isn’t the same as one million dollars in the bank in 30 years. Assuming only a 2.5 percent inflation rate (yeah, right) $1 million today is only worth $476,000 30 years from now. Ignore inflation at your peril.
8. Deciding what retirement means to you. This one will require some time to think and dream a little, but you need to have at least a rough idea of what retirement means to you and what activities and lifestyle you want to enjoy during your retirement.
9. Educating yourself on investing. Remember that you’re investing for yourself.It isn’t as difficult as the professionals want you to think it is.
10. Asking the right questions to eliminate your private mortgage insurance. If the balance on your mortgage has dropped to 78 percent of the appraised value of your home, you could be eligible to eliminate your private mortgage insurance, potentially saving yourself a large sum of money every month.
11. Consolidating your student loans. If you’re paying high interest rates on student loans, try consolidating them to get a lower rate and give your monthly budget a little breathing room.
12. Obtaining financing before car shopping. People don’t buy cars for the logical reason of getting from one place to another, they buy cars for the emotional reason of how they look or feel when they’re driving it. If you know beforehand how much you can afford because you’ve already obtained financing, you’ll be better equipped to make a more logical and wise decision.
13. Examining ALL of a vehicle’s cost of operation. Look at the cost of oil changes, regular maintenance, tires, tune ups, and brake jobs. The one time (or monthly payment) cost isn’t the only cost of operating that vehicle. Don’t get buyer’s remorse when you realize that replacing the tires will cost you $1,500 in a year. That’s like another $125 per month!
14. Controlling your emotional spending. Buying things can give you an emotional high, a rush, a feeling of superiority. But it never lasts. By controlling my spending during times I experience any emotional changes (good or bad), I’m building up my self control muscles. Feel the burn!
Fight the desire to acquire!
15. Learning to negotiate. Why does negotiation have a negative connotation? When I’ve visited other countries, I’ve been amazed at how willing and eager the consumers and the merchants are to barter, haggle, negotiate, and position themselves to get a better deal. If you want to REALLY get a handle on negotiation, read Roger Dawson’s awesome book, Secrets of Power Negotiating.
16. Setting up a Christmas Club account. We started our first Christmas Club account back in 1997 and it has been the one thing through the years that has consistently made our holiday season less stressful. Everyone wants to have a nice Christmas and setting aside just a few dollars helps you have one.
17. Saving for specific life events. Children’s college educations, weddings, after rehearsal dinners, 20 year anniversaries, your spouse’s 50th birthday – these are just a few of the major life events that can break your bank. By setting aside money NOW, you can reduce the chance you’ll turn to credit to enjoy these events.
18. Setting up a disability plan. If your income stopped for the next 5 years, what kind of shape would you be in financially. What if it only stopped for one year, how about 50? You have a statistically better chance of becoming disabled than dying in any given year so prepare for it.
19. Planning for long term care insurance needs. Hoping you won’t need long term care isn’t a plan. At some point, you probably WILL need it so factor that into all your plans for the future.
20. Saving ANYTHING. I wrote a post a few weeks ago about people that make over 6 figures but have no retirement plan and nothing in savings. Zero. I hope you aren’t one of those people, but if you are, start today.
You’ll never be younger than you are right now.
21. Asking for a raise (and deserving one). If you don’t deserve one, don’t ask! The kicker is to be the difference maker in your company and then use Secrets of Power Salary Negotiating to help you get paid what you’re worth.
22. Building a healthy emergency fund. Life will throw you curve balls — lots of them. And they almost always cost something. From a new head gasket, to a leaky hot water heater, you know there will always be something that will “pop up” and demand cash. Make sure you build a healthy emergency fund.
23. Investigating where your money goes. Do you ever run out of month before you run out of money? I do, and I have to begin an investigation into where it all went. When I find out what happened, I’ll make plans to cover myself in the future. We have to know where our money is going every month so we CAN make those needed changes.
24. Allocating half of all raises and bonuses to savings. I wish I had lived this one out. But wishes don’t change things so, I’m planning to allocate 50% of my raises and bonuses from this point forward to an aggressive savings plan. Why don’t you join me?
25. Teaching anything about personal finance to the next generation. It sounds cliche, but our children are our future and they are pitifully unaware of the ins and outs of personal finance. Teach them the dangers of credit, the importance of saving, how to spot a scam, how to spot a deal, and how to budget their money and YOUR kids will be light years ahead of their peers.
26. Having an estate plan. Do you have a will? Is it up to date. I’m still putting mine together after writing about it, but I’m getting there. There is a great deal more to estate planning than just a will.
27. Improving yourself through ground or online education opportunities. The ability to access information is astounding via the Internet. Take advantage of it by enrolling in some free courses, or in some courses or degree programs to help you improve yourself at work.
28. Installing a programmable thermostat. Controlling costs in your home is a great way to pad your bank account, and you can do it by yourself!
29. Putting in CFL light bulbs to save energy (and money). CFL’s not only use less energy but they cost less over the long term. I have installed CFL’s in every lamp in my home and am in the process of installing them everywhere (I have 40+ can lights inside and about 16 outside).
30. Setting up a Roth IRA for yourself, your spouse, or your children. So long as someone has earned income in excess of their allowed Roth IRA contribution (within specified limits), you, your kids and your spouse can have an IRA. Contributions of $500 from age 8 through 18 and then never touched again for 50 years (at 12%) is $2.7 million dollars. At 10% it’s over $1 million.
31. Donating or giving any money to those in need. Giving is hard to do, especially in hard times if you don’t budget for it. You’re always afraid you’ll need the money you feel prompted to give or donate. If you don’t have a plan (read: budget) for your money, how can you just give it away?
32. Cataloging your possessions in case of loss. Making a video and storing it in several places is the best way to insure that you’ll get properly reimbursed in the event a catastrophe (tornado, hurricane, fire, flood theft) happens to your home.
33. Opening an online savings account. It’s easy and it pays a higher interest rate than many traditional “grounded” banks. Plus you can monitor it online.
34. Paying off the mortgage, or at least planning a way to accomplish that. Don’t fall for the ridiculous trap that giving the bank $10,000 per year in interest so you can get the deduction and “get back” $2,800 from Uncle Sam is a wise move. I’ll make you this promise: give ME $10,000 and I’ll return TWICE what Uncle Sam does.
35. Having a yard sale. Here’s your chance to de-clutter and put a couple of bucks in your pocket from all those things you really don’t need anyway. Don’t go buy more stuff, though, invest it, give it to charity, or use the money to help you accomplish another goal.
36. Shopping at a yard sale or second hand shop. Here’s your chance to practice your negotiating skills you learned in #15 above. It’s also a great way to find deals and bargains on items such as baby clothes, gently used toys, tools, and many other items. I’ve been to many garage sales and secondhand shops where items STILL HAD THE TAGS ON THEM!
37. Brown bagging your lunch. Eating out for lunch can easily cost you $50+ per week and with the soaring cost of food and fuel, that number is sure to increase. You should be able to make your lunch for less than $2/day (a savings of 80 percent).
38. Reading ONE book per year. If you don’t use an online option to improve yourself, at least try to read one book per year. If you really want to increase your knowledge and understanding of any subject, read one book every two weeks on it. In less than two years time, you’ll have accumulated more knowledge on that subject than 99 percent of the population.
38. Figuring your hourly wage. How much does that shiny new washing machine/dryer combo cost you in hours? How about in life hours? If you make $60,000 per year, you gross about $28.84 per hour, net around $20.19 per hour, and earn only $4.79 per hour of life. Why not shop at a yard sale instead?
39. Figuring out your retirement date. Check out my post on the new Social Security calculator and figure out when is the best time for you to retire…if you assume that Social Security will still be solvent enough for you to retire.
40. Clipping coupons. Our lives are made up of paper it seems, but there are very few pieces of paper that make money for us. Coupons are one of them. Learn coupon strategies and you’ll save big money on your groceries. My wife joined the Grocery Game and has saved hundreds. And our pantry has never been more full.
41. Conducting online research before a major purchase. Part of the online research you should make is if there are any discount codes. You should also check multiple sites for customer satisfaction, recalls, problems with the product, new editions or upgrades that are coming out soon, etc. If there is a newer model about to be unveiled, and if the current model meets your needs just fine thank you very much, I sense an opportunity to score!
42. Estimating your retirement needs. How much WILL you need in retirement? It depends on how you want to live, what you plan to do, where you plan to live, and how much money you’ll spend doing all those things. Plan, plan, plan.
43. Starting a garden. Did you know that most produce in the grocery store was grown because of 3 things? Ease of shipping, size, and how much the plant could yield. Notice that flavor never got in the mix. When you plant your own garden, you can custom tailor your tastes to what’s about to be harvested. I still remember my wife saying, “I never knew broccoli could taste so good.”
44. Asking for a lower rate on your credit cards. Ask and you shall receive is how Jesus put it. It applies to your credit cards as well (imagine that!). If you don’t get the answer you want, become like a little child…ask another grown up (credit card employee) for what you want. Do that over and over and you’ll eventually get the answer you want. Follow up with a letter confirming what you were told, at what time, on such and such date, by whom (get their extension or some piece of identifying information), and that you’ll expect to see these changes on your next statement.
45. Canceling your land line. If you primarily use your cell phone, why keep the dinosaur land line around? That’s about $60/month you could use for something else.
46. Canceling your cable TV. Ouch! Do you watch it? Do you get $75/month out of it? Consider canceling the premium channels if nothing else.
47. Avoiding the mall. Why go to a place designed to separate you from your hard earned cash? I go to the mall for specific reasons but never to just wander aimlessly around.
Avoid the corridors of cash depletion!
48. Paying cash for all your purchases. Cash is and always has been KING! You get further with cash in hand than you do with credit plus it keeps you from overspending. According to the credit manager at my company, people with a credit card spend as much as 33 percent more than those spending cash. Why? There’s no immediate sting, it comes later and it hits you over and over and over and over and …
49. Waiting two days before a major purchase. When it comes to major purchases, I make it a rule to always wait at least two days to do some research and to think through the purchase. Do I really need this item? Do I want to part with my money? Will I regret this later? What are the possible alternatives I have at my disposal to satisfy my need for this item other than spending money?
50. Following through with your financial commitments to frugal living. Follow through is the hardest part of making any lasting changes in your life. I cannot tell you how to follow through except to continually be asking yourself, “What’s the next step in this process that I need to take?” and then taking that step.
Make this commitment to yourself: select five of the above actions that you aren’t currently doing and incorporate them into your life, then select another five, then another and another. Before long, you’ll find that your bank account is fatter, your mind is clearer, your focus is sharper, and your goals are within reach.
Go ahead. Take the next wise step!