8 small changes that could have a big impact on your finances

Getting your finances in order doesn't always require drastic overhauls or major sacrifices. In fact, some of the most effective improvements come from small, consistent changes in your daily habits and financial mindset. 

Take, for example, your emergency fund. Starting an emergency fund doesn't take much work, but that account can be a crucial tool if you face financial hardships down the road. And so can other small tasks, like eliminating unnecessary subscriptions or eating at home more often. 

While these types of changes may seem insignificant on their own, when combined, they can lead to significant improvements in your financial health.

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8 small changes that could have a big impact on your finances

If you want to improve your finances without a major overhaul, the following changes can help:

Create a budget

Creating a budget is a fundamental step if you want to effectively manage your finances. It doesn't have to be complex; a simple spreadsheet or a budgeting app can do the trick. 

Start by tracking your income and expenses so you know exactly where your money is going. Then, set realistic spending limits for various categories and stick to them. And, be sure to scan your budget to identify areas where you can cut back and save more.

Switch to a high-yield savings account

If you're still using a regular savings account, your money isn't working as hard as it should be. One small move you can make to improve your finances is to move your money to a high-yield savings account instead.

High-yield savings accounts offer much higher interest rates compared to traditional savings accounts. The average rate for regular savings accounts is currently 0.43%, but there are numerous high-yield savings accounts offering 10 or 11 times more interest on your savings.

By transferring your funds to one of these accounts, you can earn more on your savings while keeping your money easily accessible. And, in most cases, you won't have to pay any extra fees or monthly maintenance charges to do it.

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Open a CD

Like high-yield savings accounts, certificates of deposit (CDs) are a low-risk, interest-bearing account — only these accounts come with fixed rates, meaning the rate you lock in when you open the account is the rate you'll get throughout the CD term. That can be a beneficial perk if interest rates decline in the future.

And CDs typically offer higher interest rates than regular savings accounts. In fact, many CD rates currently rival high-yield savings account rates. It's possible to get an APY of 5% or more on your money right now. Just be sure to choose a CD term that aligns with your financial goals, as the penalties for withdrawing your money early can negate any interest you've earned.

Consider a money market account

Money market accounts combine the features of a savings and checking account, offering a competitive interest rate and check-writing privileges. They're a smart choice for those who want to earn more on their savings while maintaining some liquidity. 

These types of accounts offer higher rates than traditional savings accounts, but they may not be as high as the rates you can earn with a CD or high-yield savings account. But if you need easier access to your savings, a money market account could make sense.

Automate your savings

One easy change to make is setting up automatic transfers from your checking account to a savings account or retirement fund. By doing this, you're ensuring that you consistently save a portion of your income without the temptation to spend it. Over time, these small, regular contributions can grow into a substantial nest egg.

Pay yourself first

When you receive your paycheck, allocate a portion of it to savings or investments before paying bills or discretionary spending. This "pay yourself first" approach ensures that your financial goals remain a priority — and ensures that your savings are growing through regular deposits and interest earnings.

Track your credit score

Regularly monitoring your credit score can help you spot potential issues early and maintain good financial health. A higher credit score can lead to better interest rates on loans and credit cards, ultimately saving you money. That's especially true right now, as interest rates have gone up significantly over the last couple of years.

Set clear financial goals

Another easy change is to establish clear, achievable financial goals. Whether it's building an emergency fund, paying off debt or saving for a vacation, having specific objectives motivates you to make responsible financial choices.

The bottom line

Small changes can lead to substantial improvements in your financial situation over time. By incorporating these habits into your daily life and optimizing your savings with a CD or high-yield savings account, you'll be better equipped to achieve your financial goals, build wealth and enjoy peace of mind when it comes to money matters. 

Remember that consistency is key, and even modest adjustments can result in a brighter financial future. Start making these small changes today and watch your finances transform for the better.