3 Steps to Improve Your (Financial) Health In 2018

One of my most loyal readers requested I write this post. And when she suggested it, the topic became a top priority. Thanks again to everyone out there for reading and sharing my posts. Having people I know in real life – along with those of you I don’t know personally – read my stuff feels amazing. I hope this list of three steps to improve your financial health helps you start the year off on the right foot!

Financial Health

Grow Your Income

Want to become a millionaire this year? All you have to do is earn two million dollars and save half. Sure, it’s harder than it seems, but the point still stands: if you want to grow your personal wealth, it starts with the top line – your earnings. Very few of us max out our earning potential. Let’s review a few ways you can increase your income:

Earn a Raise

If you are reading this blog, I already know you kick a$$ at work. You’re smart. You’re looking for ways to improve your life. You want to win. All these things help you to be successful in your profession. If you’re like most and have a boss, make sure the two of you document the expectations of your role. Make it known that you would like to be considered for a raise and promotion by reaching these goals. Then go blow them away.

Show your boss your worth to the company. Also, do some research and know what you’re worth on the open job market. If you’re not making close to that amount, do something about it. Suggest a number you think is fair with whomever controls your compensation. Remember, nobody wants to lose a top performer.

Help your company win. Advocate for yourself. Earn more money.

Work More

If you get paid hourly, put in some extra time to earn more. If you’re salaried, ask if you can take on more responsibility outside of your current role for some extra pay. One friend of mine works in retail. She makes extra money from her employer on the side by running the website and social media accounts. She even gets to do it from home. I know working more is not fun, but it will help your finances.

Work More

Change Jobs

Unfortunately, there are times you can’t get paid what you’re worth at your current employer. Maybe they’ve fallen on hard times. Maybe their hands are tied when it comes to compensation by a corporate policy. Who knows why?

I’ve seen so many people (myself included) earn big pay jumps by changing companies. If you think your current gig is shortchanging you, get that resume together and find a new one. Very few people like their jobs enough to not get fairly paid.

Start a Side Hustle

Have you exhausted opportunities to improve your income from your day job? Find an opportunity to earn on the side! Chances are you have a hobby that you can turn into a side hustle.

I have another friend who’s a great singer. He spends some weekend nights playing music with his band in bars. He loves it. He’d do it for free. But he doesn’t have to because he gets paid for it. Even though he can’t make this his full-time job, getting paid to have fun is a win in my book!

That’s the dream right? Making money from something you would do for free! Do you love dogs? Figure out how to get paid to walk them or dogsit. Are you crafty? Start an Etsy business. You can do this. If you do it really well, that side business you love may even replace your income one day.

Budget & Spend Based on Priorities

Most people hate budgeting. They think it’s restrictive. THIS IS NOT TRUE. Since you set your budget, YOU choose where the money goes. It’s about prioritization not sacrifice.

Set Your Goals

Want to retire early? Want to surf in Hawaii? Want to be a stay at home parent? You set the goals first and build the budget second.

Build a Budget

You pick where you want your money to go. Start with your income and make a plan for every dollar. First decide how much you want to save to reach your goals. Then figure out the other expenses.

What if there is not enough money to go around? Rethink your planned spending in terms of priorities. If savings and vacations are the highest priority for you, maybe lower cost housing or a less expensive vehicle is in order. Did you know that owning a brand new SUV or living in a $1M home are not necessities? Really! I kid you not. You can almost always find a way to have your highest priorities met, but may not be able to have it all.

Track Your Spending

OK, so you set your goals. You built a budget. Now what? You have to track it each month. Did you budget $200 for eating out in January and then spend $1,000? You need to catch that ASAP. By budgeting only $200, eating out was not a priority for you. Did your priorities change? Then change the budget. Maybe you want to move money from the vacation fund to eating out. That’s OK. Just keep track and nail those goals. Tracking the numbers will help you stop spending in areas that are not as important to you.

When you spend on what’s most important to you, it’s called Winning Personal Finance!

Related Posts:
Chasing FI is Not About Sacrifice
My $121K mistake
How do you define winning?

Make your Money Work For You

You didn’t think I’d get through this post without talking about investing right? I’m going to keep this section as simple as possible.

Get Out Of Debt

Are you paying high interest on a credit card, auto loan or student loan debt? Any high interest debt is an emergency and needs to be eliminated. Use your budget to prioritize an elimination plan and get it done. Compound interest is a beautiful thing but only if you’re earning the interest. It’s a nasty virus if you’re the one paying.

Asset Allocation

The mix of investment types you hold is a key to achieving the returns you want. Are you sitting on cash in your 401(k) because you never picked an investment? Are you 22 years old with 50% of your money in bonds and not more heavily weighted toward stocks? You may want to rethink those choices. I don’t have nearly enough space here to opine on what proper asset allocation is for everybody. I suggest you do a quick evaluation to make sure you’re on track. A good place to start would be to compare your asset allocation to an age appropriate lifecycle fund.

Invest

Investing Fees

Enemy number one to your portfolio is fees. Wait…actually enemy number one may be yourself. OK, enemy number two to your portfolio is investment fees. Some of these are easily seen up front. Others may be hidden. You need to know what you’re paying for your investments.

Are you paying an advisor a percentage of your assets under management? If you’re paying 1% on a $1M portfolio, that means your paying $10K per year. Make sure you’re getting your money’s worth.

Do you invest in actively managed mutual funds? Check the prospectus. They also could be charging you a big fee. You can get exposure to the total stock market by investing in VTSAX that charge a nominal 0.04% fee. If you are paying much more than that, make sure it’s for a good reason.

Related Posts:
The Stock Market Will Always Go Up Over Time
Don’t Let Fear Prevent You From Winning
Super Coin Flip Risk Assessment

Take Action

Congrats! You made it to the end. I really appreciate you reading, but that’s not enough. You need to take action. First copy this post into your calendar with a reminder on two separate occasions. The first should be around two weeks from now. The second should be around four weeks from now.

Then pick the topic on this list that most suits you and get to work. Improve your financial life today. In two weeks, tackle the next one. In four weeks the third. Then come back and tell us all about it. Reading about self improvement is great. Taking action is better. Take some action today!

Love this? Want to thank me? Share this post on your personal Facebook page. Your friends want to improve their financial health, too!

24 thoughts on “3 Steps to Improve Your (Financial) Health In 2018”

  1. Great organization this post and content! (Love me a good reading layout!)
    “Making money from something you would do for free” <– that is the key right there man!
    I also had to laugh at the statement, "make your money work for you." I say this. all. the. time. We were just in one of those required HR/human kindness focused meetings the other day when the topic of Diversity came up. I got put on the spot and asked to define it. Without hesitation, I'm like, "Diversify your portfolio! Don't have all your eggs in one basket!"
    I don't think I won any of the presenters over…I think they'll be making me repeat the training session. Sooooo it's on my brain all the time too- you have to say it. until you believe it. all. the. time. And keep reminding others to do it as well! 😉
    🙂

    1. Wow, you really flipped diversification in an HR meeting to be about investing!?! That’s hilarious. I’d never play that card…well at least until I no longer need my job.

  2. Nice list, Jason. A number of good points.

    I think growing your income can have the largest impact in terms of overall financial growth capacity, but the other points are needed to help sustain or at least prevent that growth from eroding.

    While one’s income growth potential can arguably be “limitless” vs. how far one can stretch expense cutting, I really like to focus on the make your money work for you areas.

    Yes, I’d like get or earn more income, but I want to make sure what I’m currently receiving is working as effectively and efficiently as possible.

    Thanks again. – Mike

    1. I think it really depends on the person. I know people who could cut thousands from their spending if necessary. I did so myself. Growing your income is the ideal scenario, especially if you can do so without working more hours. Time is our most limited resource.

  3. Excellent list again Jason. Amongst your list, this year it is all about tracking our spending habit. We intend to do more grocery shopping and eat at home. Our plan is to reduce our “eating out” habit by a minimum of 50% this year. We already did our math based on our previous years’ expenses and man it was huge. The money we can save here will be used to finance our future travels instead.

  4. Great tips. It’s tough for my wife and I to increase our income as we work in government. Salary in government is pretty much set based on the union contract and increases are mainly determined by seniority rather than merit. Side hustle might be a better idea but it’s tough to find time with 2 little ones! The blog could be a side hustle but I’ve yet to figure out how to earn much income from that. It appears I’m full of excuses! As for the investing side of things…I’ve really been interested (obsessed) in real estate.

    1. Earning Money from a blog is harder than it seems. I do think you will get there though. I think it’s one of those compound interest like things that starts small and will multiply.

  5. Perfect list Jason!

    Straight and to the point. It really is that simple! You must find a way to first increase your income. Then budget that income and save a good amount. Then once you do those, invest that money so it can begin to grow.

    You did an awesome job of breaking all of this down!

  6. Great post. You are so right on all fronts. And I’m glad to say that I’m checking those boxes myself. I always love seeing people recommend Vanguard. I’ve been using Vanguard for almost 30 years now, and I haven’t regretted it for a second. I don’t know why anyone would pay higher fees voluntarily.

  7. Switching jobs is a quick and dirty win for those in the corporate world. Depending on your industry it most likely is good time to do it now too. It is much harder in a down economy.

    Make sure you take advantage of the strong economy and move and get paid what your job is worth!

    Great suggestions all around though, what has worked best for you?

    1. Thanks DM. I’ve done well with all of these. Well except side hustling. That’s what 2018 is for. I’ve done really well pushing for salary growth and jumping ship with my job. Tracking and cutting expenses has been life changing. Las year I did best with passive income. The stock market returns were amazing!

  8. All good tips. I think the one I have to focus on is working on my writing side hustle and seeing if I can make a bit more money from that. I gave it a go a bit this year but gave up super early and got burned out so I have to get back to it.

  9. “Want to become a millionaire this year? All you have to do is earn two million dollars and save half.”

    It really is that simple, yet for some seems so unobtainable, when in reality it is (although maybe not this year).

    Also, I can’t sing – so maybe I can get a side hustle where people pay me to not sing?

    1. Getting paid not to sing would be an awesome side hustle. If you pull it off, make sure you report back here.

      The two million dollar thing was a bit tongue in cheek. It’s clearly not easy to do. If we all take these steps though, we all can eventually become a millionaire.

  10. Great post! One of my goals in 2018 is to really increase the income from my side hustles!

    I love your point about “working more” at your day job. Here’s one strategy that I’ve used a few times to make some additional money at work.

    Sometimes your boss or someone else might have a project come in that they really want to do, but it needs to be done in a very timely manner. In those situations, I find that if you step up to the plate and say “I can do it, but I need a one time bonus when I finish it”, they’ll say yes most of the time.

  11. On the point of raises – you might not even need to earn it. You might already be earning it, and just need to ask for it! It’s a rare boss indeed who’s going to just go around handing out raises because they feel like it.

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