Saving money isn’t easy. And let’s face it: Those old standby suggestions to skip your morning Starbucks or cancel your gym membership won’t really move mountains when it comes to your long-term financial goals. But there are some creative ways to grow your wealth that you might be missing out on. That’s why we asked Rachel Rodgers, founder and CEO of financial education company Hello Seven, to give us a few tips on how to add a digit or two to the end of your bank balance. She offered up five surprising ideas on how you can start saving money today — so you can spend it on what matters tomorrow.
Invest the excess
It’s generally said that you should keep between three and six months’ savings in a high-yield savings account for emergencies, but Rodgers disagrees. “I cannot stress this enough,” says Rodgers, “Aside from a month or two of savings, put everything you have into a brokerage account. It will grow your wealth quickly, but it’s still possible to pull your money out if you need it quickly.”
If you need cash in a flash, Rodgers explains, certain types of accounts allow you to borrow up to 50 percent of the balance you have in your investment portfolio. “That’s what rich people do,” she says. “You’re borrowing from yourself, so you don’t owe anything to a third party, and the interest rate is lower than it would be on a credit card.” Rodgers warns this isn’t something you should do unless it’s an emergency situation, and the absolute maximum you should borrow against is 30 percent of your balance. In a worst-case scenario, you could also liquidate part of your account without penalty, although in most cases, you’ll have to pay capital gains tax. If this all sounds a bit over your head, ask a financial advisor about the specifics of your situation.
Spend strategically
By using credit cards that offer rewards points, you can earn points on purchases you would have made anyway. As your points accumulate, they may have an estimated value that can add up to hundreds of dollars. To figure out which card or cards are best for you, Intuit Credit Karma can make recommendations based on your spending habits and financial profile. So if you go out to dinner three times a week, Credit Karma can help you find a card that offers extra points on dining. We suggest downloading the app: With 4.8 stars and over seven million ratings, it has dozens of other features like a loan calculator, a driving score that could help you qualify for a discount on a new policy, and a virtual assistant who can offer you a personalized financial summary and personalized tips on anything from improving your credit score to paying down debt. And the best part? These features are completely free.
Audit, audit, audit
Rodgers says it’s crucial to watch what your money is doing. “I live by the Peter Drucker quote, ‘What gets measured gets managed,’” she says. “When we don’t feel empowered financially, we hide. But if you watch what your money is doing, you’ll notice patterns.” While entrepreneurs should do this more frequently, if you have a full-time job Rodgers suggests looking at all of your finances once a month. “Look at how your investments are doing so you can make informed decisions in the future, but also take note of all your financial decisions and where your money went that month,” she suggests. “Simply being aware of your net worth and where all your money goes is a way to build confidence around financial decision making.”
Another piece of advice Rodgers has is simple yet effective: Stop spending your money on things you don’t care about. “When you’re reviewing each expense during your monthly audit,” she says, “Ask yourself, was that absolutely necessary, and if it wasn’t, did it make me happy?” That means taking a good hard look at that gym membership you’ve never used, or the expensive flight you bought for a family reunion you didn’t really have to attend and to ask yourself if there’s something you could’ve put that money toward that’ll actually bring you joy.
Do a deep clean
“If you’re over 50, you probably have stuff in your house that you don’t need and that you probably wish wasn’t there at all,” says Rodgers. Is there a treadmill collecting dust in the corner? Have you been hauling an antique armoire from house to house, even though you know it’ll never match any of your decor? Do yourself a favor and sell them on Facebook marketplace — you’ll earn some cash and free up some much-needed space in your home. Plus, if you end up downsizing your living space in the future, you’ll be glad you got rid of the non-essentials early.
Speak up!
Are you doing something for free that you should be getting paid for? Have you covered the bill the last three times you and your sister got dinner? Do you have an expense report you keep forgetting to submit? It’s time to collect.
“This is a big problem for women,” says Rodgers. “I used to practice law, and on multiple occasions, I had female business owners ask me to send a formal letter to collect money that was owed to them. I’d ask, ‘When was the last time you reached out to them to be paid?’ And in most cases, they never had — the bill-by date came and went, and they never said a word. These women didn’t need to hire me, they just needed to speak up for themselves.” There’s no reason to be embarrassed to ask for what you’re owed, she says, so go ahead and submit an expense report for that cup of coffee you bought on a work trip. Tell your coworker you’re more than happy to handle the calligraphy for her wedding invitations — and what you’ll be charging based on the going rate. Once you know your worth, the sky’s the limit.
