Simple Budget Hacks That Make a Big Difference

Many budget hacks save you cents, but some can save you hundreds or even thousands of dollars over time. Try these to make a significant impact on your finances this year.

Tax Optimize Everything

I’m not here to give you tax advice. I strongly advise you get a professional to do that. And I also suggest that the first thing you ask him or her is how to optimize absolutely everything to do with your taxes. Things to ask about include:

• Any tax credits you may be eligible for, such as Saver’s Credit, Child Tax Credit, or Premium Tax Credit
• Adjusting your tax withholding to avoid overpaying and waiting for a refund
• Saving into things like Health Savings Accounts and Dependent Care Flexible Savings Accounts if they apply to you (both are tax deductible, allow savings to grow tax free and allow for tax-free withdrawals for eligible expenses)
• Maximizing all other tax deductions
• Absolutely everything your advisor can think of that might allow you to pay less tax

Minimizing your tax bill as an ordinary person on an ordinary income can still save you more than you might imagine. And you’re not doing anything wrong by ensuring you optimize legal tax strategies.

Many working Americans overpay on taxes (often on purpose), with underpayment (including deliberate tax evasion) tending to be higher in those with higher incomes.

In other words, while the very rich complain about working class leaches living off the system, they tend to be the ones paying less tax than they should, while the working classes frequently overpay.

Live “One Raise Behind”

One way to really boost the actual money you have in the bank (or in your investment accounts) is to simply ignore any raises you get. If you’re already getting by okay, then you get a raise or promotion, it pays to simply pretend you didn’t.

Instead of spending the extra money on a flurry of lifestyle upgrades you could live without, funnel that money into savings and investments — or debt repayment if needed.

Some people decide to simply live “one raise behind” so they will invest the first ever raise they get, and only upgrade their lifestyle a little when the next one comes in. This helps you always live within your means, control lifestyle creep and build a healthy buffer.

You can do the same with bonuses, unexpected commissions or any other ‘extra’ money you don’t absolutely have to use for immediate needs. You may well find the peace of mind is worth more than any luxury you might have splurged on.

Automatic Round Ups

We all tend to round up everything in our heads when we spend. The $38 meal is around $40 to us, and the vacation that cost $1,900 sure feels like a $2,000 trip. Now the technology can actually do that round-up for you and squirrel away the money you already kind of thought you’d spent anyway.

Apps like Acorns and Monzo can be set to round up automatically every time you spend, funneling that rounded up money into interest paying savings accounts. For most people, this probably won’t make as big an impact as the two tips above, but it’s an easy, automated action that can really add up over time.

Have any big budget hacks that have made a significant difference for you? Feel free to share.

About the Author

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen