Savvy Money Moves to Put Money Back in Your Pocket This Year

There are many ways to put money back in your pocket throughout the year as you work to build credit, pay off debt, and manage your money wisely. You can do so passively or actively, and we’ve got five savvy money moves that can help you get started.

In This Piece

• Make a Budget and Stick to It
• Start a Side Hustle
• Cut Down Your Debt
• Improve Your Credit Score
• Cut Your Monthly Expenses

Make a Budget and Stick to It

The first leg of any money-saving marathon begins with setting a budget that works for you so you can stick to it. Many people think listing all their income and expenses creates a budget, but that’s not true.

Those lists are just the data-gathering part of budgeting. Once you have the information gathered, you use it to create a budget strategy. Here are a few budgeting strategies to consider—choose one that sounds right for you to get started.

50/30/20 Budget

With this strategy, you break your budget into three major categories. Half of your income goes toward needs, which include bills, groceries, fuel and other necessities. The other half is divided—20% to savings and 30% to wants, which include entertainment, eating out and non-necessity purchases.

Envelope Budgeting

With this system, you allocate what’s left after paying your bills to different envelopes to help manage other spending. Start with envelopes for necessities such as groceries and gas. Then, add discretionary spending such as eating out, buying new clothes or other fun items.

The goal is to find amounts that work well for each month and stop spending on each discretionary category when you run out of money in that envelope. You can use actual cash in envelopes or keep track of different money amounts in a notebook or spreadsheet.

Zero-Sum Budgeting

With this method, you allocate all your income every month. The idea is to pay your bills and yourself so that nothing is left over that can be “wasted.” Typically, you start by saving a certain amount before allocating enough to cover all bills and necessities. What’s left is discretionary income you can divide up among wants or use to save for larger wants, such as big purchases or vacations. 

Start a Side Hustle

If you find your income doesn’t stretch enough to make any budget viable, it may be time to make a savvy money move to increase it. One way you can do this is by starting a side hustle. The internet and the gig economy make it easy to earn a few extra bucks outside your 9-to-5. Here are some options to consider:

• Write for cash. Sign up for content companies that connect freelancers with clients that need content, or start your own blog and work on monetizing it.
  Drive for Uber/Lyft. Provide transportation services to people in your area and earn extra money.
• Delivery food or groceries. Don’t want other people in your car? Go with DoorDash or Instacart instead.
• Buy and sell items at a profit. Browse thrift stores to find great items you can sell in online marketplaces at a profit.

Cut Down Your Debt

Boosting your income isn’t always the answer to a budget issue. You might look at your budget and realize a lot of your income goes toward debt. If you’re spending a lot every month on personal loans and credit cards, for example, you may need to get debt under control before you can make more savvy money moves. Consider these savvy debt payoff moves:

• Use the snowball method to pay down debt. This is a strategy that can help you pay down a lot of debt quickly by leveraging the extra money in your budget.
• Get a balance transfer credit card. You may be able to transfer higher-interest credit card debt to a balance transfer card so you can pay it off faster and at a lower overall cost.
• Get a debt consolidation loan. You might be able to reduce the total cost of your debt and make it more manageable by refinancing it or getting a debt consolidation loan.

Improve Your Credit Score

Savvy credit choices can help you improve your credit score, which can lead to lower-cost debt in the future. That’s because a higher credit score often opens the doors to lower interest rates. Start by getting a copy of your free credit reports at AnnualCreditReport.com. You can also sign up for services such as ExtraCredit to get in-depth insight into your FICO scores and information on what you need to improve for your score to go up.

Cut Your Monthly Expenses

In some cases, you may not have debt to cut and you’re already doing what you can to increase your income. When this is the case, look for ways to cut your monthly expenses to make more room for savings in your budget. Some items you might be able to cut back on include streaming services and other subscriptions, takeout, dining out or other discretionary spending. Do this as strategically as possible so you’re not cutting out all your enjoyment or comfort—that can lead to binge spending later that isn’t good for your budget.

Start Small to Make Big Changes

Trying to overhaul your entire financial life can be stressful. Instead, start small. Choose one of the savvy money moves above and work hard on it before incorporating other habit changes into your financial life. 

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