This 1 habit could transform your finances. Plus 3 ways to create real wealth
voronaman / Shutterstock
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Are you aiming to get a better handle on your finances? Are you trying to save for an important goal or want to grow that nest egg for retirement?
For some of us, financial matters can seem daunting — we think they’ll take too much time or require specialized knowledge.
Whenever you want to make a major change in your life and create a plan of action, it starts by taking a full (and honest) accounting of where you stand right now. In the case of your finances, that means understanding your income and expenses.
For most people, income is easy. Expenses, on the other hand, are often underestimated. Once you start adding up how much you spent on takeout over the course of a year, the results may surprise you — and not in a good way.
When CNBC Make It asked Certified Financial Planners (CFPs) to name the top way to improve finances in only five minutes, many said you need to know where your money is going. And that means keeping track of how much you spend.
Tracking your expenses is helpful for many aspects of financial planning, and it takes only minutes a day. You can save yourself the trouble of logging expenses with an app that tracks activity directly from your accounts.
With Rocket Money, you can track your expenses to the last penny and keep an eye on where your money is going.
All you have to do is link your checking, savings and credit cards accounts. You can also get balance alerts if your checking account balance falls below a certain limit, or when you spend above a set limit on your credit card.
Rocket Money’s subscription management algorithm can help you identify your recurring subscriptions that may be draining your budget. With their concierge services, you can access their subscription cancellation assistant, and cancel any unwanted subscriptions with a couple of taps. This way, you can potentially save up to $740 per year.
Rocket Money’s concierge service can also help you lower your bills. Their negotiator works on your behalf to get the best rate on your cell phone and cable bills.
Many people feel motivated to plan a budget, but never follow their spending to track how well they’re following it, or how they can improve it. Tracking your expenses ensures your budget is realistic, and that you’re getting the most out of your money. Here are three benefits of tracking your expenses:
While there are several approaches to budgeting, they all benefit from having a detailed account of your expenses.
Proper budgeting can help you track how much money you have after meeting all monthly expenses, and begin saving accordingly.
You don’t have to start by saving and investing with huge amounts of money. One of the easiest ways to invest is to open a self-directed trade account with SoFi. This DIY approach allows you to invest with no commission fees, plus, for a limited time, you can get up to $3,000 in stock when you fund a new account.
SoFi is designed to help you learn investing as you go, with real-time investing news, curated content and the data you need to make smart decisions about the stocks that matter most to you.
Tracking expenses can help you find areas where you could cut your spending and save for your goals. For example, in 2023, American households spent an average of $3,933 on dining out and $3,635 on entertainment, according to the U.S. Bureau of Labor Statistics (BLS).
If you’re looking for extra savings, these are areas where you could potentially cut your spending.
Another avenue where you might be overspending is insurance. Home insurance rates have skyrocketed in recent years. According to research published by the National Bureau of Economic Research (NBER), average home insurance premiums have jumped 33% between 2020 and 2023.
Shopping around for rates can be an excellent way to lower your insurance premiums. According to a ValuePenguin survey of over 2,000 consumers, 54% of homeowners who shopped around for their insurance reduced their bill, saving roughly $474 annually.
In under two minutes, this free service can help you find the best rates for you in your area. How it works is simple: Just answer a few questions, like about your ZIP code and property type, and OfficialHomeInsurance.com will connect you with providers in your area.
Even better, this side-by-side comparison tool can save you an average of $482, depending on your situation.
If you own a car, chances are car insurance payments have also been leaving a dent in your bank account. The median cost of full coverage car insurance rose by 26% year-over-year in 2024.
Shopping around for car insurance plans can help you cut this cost. With OfficialCarInsurance, you can compare rates offered by vetted lenders like Allstate, Progressive, and GEICO. The best part? This process is completely free and won’t impact your credit score.
A popular rule of thumb says you should expect to spend 80% of your pre-retirement annual income each year in retirement.
If you want to know if you’re saving enough for the future, you’ll need to know how much you’re spending and how much of your nest egg you’ll need to withdraw each month in retirement.
Consulting a vetted and trustworthy financial planner can help you figure out where you stand regarding your retirement goals.
Finding the right advisor is simple with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.
A professional advisor can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations—two key factors in building the right asset mix for your portfolio.
