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One money move at a time, short enough to read in two minutes. Pick one and act on it today.
A solo 401k lets a self-employed person with no employees contribute twice, once as the employee and once as the employer, for a combined cap nearly 10 times the IRA limit. If your business earns more than you can shelter in an IRA, open one and fund the employee side first.
Refurbished laptops, phones, and tablets cost less than new, but how well each is backed depends on who refurbished it. Before you buy, check the warranty and the return window. Favor programs that cover the device for at least a year, like most new electronics, because a short warranty signals less confidence in the work.
Block 15 minutes at the same time every week to read every new transaction in your checking and card accounts and check the bills due in the next seven days. A weekly money check-in catches a fraudulent debit charge or a short balance while it’s still cheap to fix, instead of weeks later on a statement.
If your income is over the Roth IRA limit, you can still fund one through the back door. Put after-tax money into a traditional IRA and convert it to a Roth, since conversions have no income limit. First move any pre-tax IRA money into a 401(k) that accepts it, or part of the conversion becomes taxable.
Before you count on a tax break, find out whether it’s a deduction or a credit. A deduction lowers the income you’re taxed on, so it saves you only the amount times your tax bracket. A credit comes off your tax bill dollar for dollar. Check every credit you qualify for before you file.
A fund takes its expense ratio out of your balance every year, whether it gains or loses. That’s the one piece of your return you can predict. Compare each fund’s ratio with an index fund covering the same market, and replace any that charge several times more inside your IRA or 401(k), where switching triggers no tax.
Dollar-cost averaging means investing the same amount on the same schedule, whatever the market does, so you never have to decide whether today is a good day to buy. Set up automatic investments from every paycheck, and keep them running through market drops, when each dollar buys more shares.
Your car insurance premium and holiday gift list aren’t surprises, but they still wreck a monthly budget because they land all at once. Give each predictable bill its own sinking fund, money saved for that bill alone. Divide the cost by the months left until it’s due, and automatically move that amount into a separate savings account each month.
Set savings to move automatically the day after payday and put your bills on autopay, so each good decision gets made once instead of every month. Automating your finances beats discipline because it takes willpower out of the process. Money that leaves checking before you see it never sits there tempting you.
When you start investing from scratch, your savings rate moves your balance far more than the return you earn, so raise what you contribute before you hunt for a better fund. At a 7% return, a year’s gains don’t overtake a year’s savings until about a decade in, and then returns take over.
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