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Small Moves with Big Results

You have often heard that taking small steps to decrease debt and increase savings is the recommended approach to improving financial footing. These small moves, consistently taken, help to build new and positive habits for ongoing success. 

When thinking about the big financial picture, challenge yourself to think beyond the typical ways to save. The following are several ways to help you think bigger while keeping it small:  

1. Take advantage of tax deferred accounts. Tax rates are not the same across the board. Taxable income determines your tax rate, and the difference in tax brackets can be significant. Taking advantage of tax deferred accounts like a 401(k) and Traditional IRA can reduce your taxable income and place you in a lower tax bracket. Knowing your tax bracket and planning ahead can save you thousands of dollars each year. 

2. Purchase second-hand. Thrift shopping is not just a trend; it’s an incredibly smart way to save hundreds and even thousands of dollars on big purchases. From cars to furniture to clothing, you’ll never lose value buying used and you’ll pay far less than buying new. 

3. Cut the cord of recurring payments. Many of us pick up small, recurring charges for monthly subscriptions along the way that we don’t use and often forget about. Go through your monthly charges and find at least one recurring charge you can eliminate. Take the money you are saving and transfer that into savings each month, or use it to make an extra payment on a credit card.   

4. Learn to fish. The old Chinese proverb says, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” Make it your mission to become financially literate now and for the future. Don’t settle for a quick fix. Start by reading at least one financial book. If you’re not big on reading, set a goal to read a few pages each day. 

5. Make an extra payments. Paying more now could be mean saving a lot of money in the long run. Just one extra mortgage payment each year can save you thousands of dollars in interest and several years of payments. The same is true for any large debt, such as vehicles or credit cards.

Source: The Balance