10 Quick Steps That Could Improve Your Finances
Time is a commodity most of us are lacking. Between work, chores, raising kids, taking care of ourselves, and hopefully finding a few minutes to unwind each night before getting up to do it all again, it can be tough to find the time to improve our situation. Particularly when it comes to finances, which, let’s face it, can be even less appealing than working out at your overcrowded gym after a long, tiring day.
The good news is that you don’t need hours upon hours to make some of the moves that could put you on a path to better finances. There are several quick steps you can take that require only minutes of your time to get the ball rolling. And, once you take them, you may be surprised at the inertia you gain to keep things moving—especially if you start to see results.
Here are 10 steps that are easy on your schedule you may want to consider.
1. Download & Review Your Credit Report
Estimated Time: 30 minutes
You are entitled, by federal law, to a free copy of your credit report from each of the three major credit reporting agencies: Experian®, Equifax®, and TransUnion®. All you have to do to get yours is go to annualcreditreport.com and follow the download instructions. You can download all three at once, or you can stagger when you get each one throughout the year.
But it’s not the getting of your credit reports that could help your finances—it’s reviewing them and disputing any inaccuracies you may find that could give you a boost. According to a study by the Federal Trade Commission, one in five Americans has a mistake in their credit report. And errors that paint a less-than-flattering picture of your credit history could prevent you from getting credit or result in you receiving less-favorable terms and higher interest rates, which could cost you thousands of dollars more over your lifetime.
How much more? Compare your estimated lifetime cost of debt for different credit score ranges using this handy calculator.
If you do find any errors, disputing them is going to take longer than 30 minutes. But first you need to know if there’s anything to dispute, which can be done in a half-hour or less.
2. Research Financial Advisors
Estimated Time: 30 - 60 minutes
Let’s face it, we’re not all good with money. Luckily, there are plenty of professionals out there who are and who can help you develop a plan to improve your financial situation. But first you’re going to have to do a little legwork to find the right one.
The good news is that, thanks to the internet, the legwork is relatively painless and shouldn’t eat up more than an hour of your free time. A little research should yield a short list of viable candidates to contact near you. There are plenty of helpful online resources, like this one from the Wall Street Journal, to help you find the right match.
3. Open an IRA
Estimated Time: 30 minutes
If you’re looking to start building a nest egg, you may want to consider opening an Individual Retirement Account, which offers tax advantages. There are two types of IRAs to choose from—traditional and Roth—the major difference being when you pay taxes on your contributions.
Once you decide which type of IRA works for you, and which bank or brokerage firm you’d like to use, opening an account can be done online in 30 minutes or less.
4. Make a Budget
Estimated Time: 60 minutes
If you have no idea what you’re spending in relation to what you’re bringing in as income, it’s nearly impossible to know how much disposable income you have available to pay off debt, save, or invest for your future.
The hardest part of making a budget is actually sitting down and doing it. But once you resolve to dedicate an hour and crunch the numbers, it’s really not rocket science…unless you’re actually a rocket scientist and your paycheck enters into your budget calculations.
5. Ask for a Raise or Start Looking for a Better Job
Estimated Time: 30 minutes
Cutting back and spending less isn’t the only way to improve your financial picture. Making more money is just as effective.
It only takes a few minutes to ask the boss for a raise—although you’ll definitely want to spend some time before that meeting refining your strategy on getting a “yes” from him or her.
If a raise is out of the question but you still need to bring in more income, it may be time to seek employment elsewhere. Spend 30 minutes checking out job sites like LinkedIn, Indeed, or Glassdoor. Yes, you’re going to have to spend additional time filling out applications, uploading resumes, and writing cover letters, but first you have to do some scouting to see what’s out there.
6. Apply for or Accept a Credit Line Increase
Estimated Time: 5 minutes
How can a credit line increase improve your finances? Because it could raise your credit score, which, as mentioned in #1, could save you thousands of dollars over the course of your lifetime. Here’s how.
Having a higher credit limit can decrease your credit utilization ratio (CUR), which can contribute to a higher credit score because CUR plays a big role in calculating your credit score. But here’s the caveat. It will only help lower your CUR if you don’t increase your spending to the point where your increased outstanding balances negate the effect of the increased credit limit.
Requesting or accepting a credit line increase can typically be done online and is usually just a matter of signing in to your account, providing a bit of information, including your income, and submitting your request.
7. Open Another Credit Card
Estimated Time: 15 minutes
Getting another credit card basically does the same thing as a credit line increase—it can contribute towards lowering your credit utilization ratio because its credit limit increases the denominator of the ratio. But, again, only if you don’t also increase your total outstanding balances to the point where the ratio stays the same or even goes up.
Applying for a credit card can be done in a quarter-hour, especially if you receive a pre-qualified or pre-approved offer.
8. Sign Up for Automatic Payments
Estimated Time: 10 minutes
Every time you miss a payment due date, your credit score can take a hit. Let it get to a point where your account is 90 days or more past due, and it can be just as damaging as a bankruptcy to your credit.
Signing up for automatic payments—either through your bank or the companies with which you have recurring balances—helps ensure that your payments are received on time, every time.
9. Find a Tax Preparer
Estimated Time: 30 minutes
If you’re doing your own taxes, you may be missing out on deductions and other money-savers that make it well worth having them professionally done. A half-hour spent researching tax preparers in your area could really pay off come tax time. Here are a few things to consider when looking for one.
10. Decide to Pay Off Your Debt
Estimated Time: 20 minutes
Let’s say you’re considering investing $5,000 in a certificate of deposit (CD) that pays 2.25% if you hold it for one year. Yet you still owe $5,000 on the last year of your auto loan at an interest rate of 5%. It is a better investment to pay off your auto loan than it is to invest in the CD because you’ll net (save) an additional 2.75% on your “investment”!
Carrying debt costs you money. So if you have a choice of paying off a debt or investing, and the debt costs you more to carry than you’ll make on the investment, consider paying off the debt instead. Paying off credit card or other revolving debt can also help to lower your credit utilization ratio, which we now know can raise your credit score.
But first you have to crunch the numbers, which should take no more than 20 minutes of your time.
So what are you waiting for? Why not take a few minutes and try a couple of these suggestions to get on the road to better finances? Remember, even a journey of 1,000 miles begins with a single step.