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Money Growing Tips for People With Poor Money Habits

The first step to taking control of your money is to set up a budget. You can't build wealth if you don't know what's coming in and what's going out every month. Our favorite budgeting tool is Mint because it's free and easy to use. Mint is safe; it's owned by Intuit, the same company behind Turbo Tax. If you want to get the most benefit out of the program, check out our book, Mastering Mint.

There are lots of complicated formulas for budgeting, but a simple and effective one is the 50/30/20 method. The 50% is for fixed expenses, expenses that don't vary much or at all month to month, like housing and utilities. The 30% is for variable expenses like groceries and gas which can vary a lot and can be cut when things are tight.

The remaining 20% is for your financial goals like retirement, saving for a home or paying off debt. If you have debt, you should flip the 30/20, put 30% toward paying it off and leave 20% for variable expenses. They aren't the most fun to cut, but they are the easiest.

Once you have a month's worth of data, look for "spending leaks". Spending leaks are places where you don't realize you're spending so much money. Check all of your food related expenses first. Leaks are almost always food related! Now that you can see where you're wasting money stop wasting money!

Learning to distinguish between wants and needs will go a long way towards staying on budget. You need food; you don't need seventeen expensive purses. We all like buying things, so this isn't always easy. If you think you have a bit of a shopping problem, you can try the "30-day list."

If there is something you want to buy that isn't a need, write it on a list. If you shop on-line, you can add the item to your virtual cart. (Actually, sometimes leaving an item in the cart will prompt the company to send you a discount offer for it). But you can't buy it for 30 days. At the end of that period, if you still want it, it might be a good buy and not just a passing fancy. But more often than not, you won't even remember what it was you wanted so badly.

If you've tried and failed to stick to a budget in the past, there is a method that can help train you to stay on track. The problem with even the best budgeting software is that there really is nothing to stop you from overspending. Sure you might get an alert that you're close to your limit on a certain cate gory and then another when you do go over, but that's it. It's not like Mint dispatches a representative to cut up your credit card.

If this sounds familiar, you can try the envelope system. You take cash, real paper money, out of the bank and get a stack of envelopes on which you've written your various categories, "food gas, entertainment, beer" etc. Inside each envelope, you put the amount of cash you've budgeted to that category for the month. Once an envelope is empty, you are finished spending in that category for the rest of the month.

If you went out for an expensive dinner and blew a week's worth of your food budget, you're going to have to make the rest of your food money last for the remainder of the month. And no, you can't take money from one envelope to cover a shortfall in another. The point is to train yourself not to over spend on any category, not just to avoid overspending for the month. No robbing Peter to pay Paul.

Obviously, this method doesn't work for everything. You're not going to use cash to pay your rent or mortgage, but it's not stuff like rent and utilities we over spend on. It's things like food, gas, and entertainment, and those things you can use cash for.

This admittedly isn't the most convenient method of budgeting, so you don't have to use it forever, just long enough to get you used to staying on budget, then you can switch to an easier method.

Once you have your budget in place and your leaks plugged, you can start following what is probably the most important tenet of personal finance; pay yourself first. This simply means that a portion of every dollar you make is saved, whether it's put into your emergency fund or your Betterment account, that money is for you.

You can easily do this by setting up auto-deposit. If you want to divert money from your paycheck directly into savings, and you have direct deposit, your human resources or payroll department can set it up for you, just provide them with the routing and account numbers.

If you want money to go into your investment account, most platforms allow you to set an auto-deposit between your checking or savings account into the investment account. You decide how much you what to transfer and the date you want the transfer to take place. In fact, if you do this with Betterment, they will lower your fee! This way, you never see that money and can't spend it.

Take Action

• Sign up for a Mint account. It’s easy, it’s free and it’s a great place to start. If you don’t want to use on online budgeting tool, try the envelope system.

• Divide your money according to the 50/30/20 method.

• Plug your spending leaks. Remember what our friend Benjamin Franklin said, “Beware of little expenses; a small leak will sink a great ship.”

• Start using a 30-day list. For the next month every time you want to buy something that's not absolutely necessary put it on the list and date it.

• Set up a system to pay yourself first.

Educating yourself about money is critical if you want to live well and retire early. You don't have to understand complex economic concepts to understand personal finance, and you don't have to read boring stuff to learn it. Finding LMM is a good start!

One of the biggest factors in determining if you will reach your financial goals is whether or not you have a like-minded partner. Fights over money are one of the leading causes of divorce. If you're in a relationship, you must get your partner on board. Two people can't work together to reach their goals if they're at cross purposes.

Money isn't always an easy subject to talk about, but once you get the conversation going, it gets easier and easier. Eventually, sitting down with your partner to quickly check in on financial matters will become a regular part of your week, "weekly practice." If you think talking about money is uncomfortable, just wait until you have to hire a divorce attorney to do it for you.

Those are the words of author and motivational speaker Jim Rohn. Look around. Who are those five people for you? This is why at least one or two of those people should be financial friends.

Having financial friends helps to smooth your path to financial security. It can be hard to stay on budget when all your friends like to make it rain. It's also hard to get advice when everyone around you is financially illiterate or feel like money is a taboo subject. Spending time with people who have goals and philosophies similar to your own makes it easier to stay on track.

Speaking of goals, it's not enough to merely have them. You have to have a plan with small, actionable steps to help you reach them. If you don't have a plan, you're just flailing around in the wilderness which will end up costing you time and money.

Let's say you have a goal of saving $500 a month. What steps can you take to achieve that? You can start by bringing lunch to work rather than buying it out every day, you can call up your cell phone and cable companies and ask for a cheaper plan, you can have friends over for pizza and beer rather than having dinner and drinks out. Small, actionable steps are how you achieve any goal, financial or otherwise.

• Start educating yourself on personal finance. If you are looking for good money books check out the LMM Library.

• Join a meet up and find people you can talk money with. Having financial friends is important to keeping you on track. We have some awesome smart people in Our Community too!

• Create a list of realistic goals and small action steps to get you started towards them. How do you eat an elephant? One bite at a time.

• Schedule a money meeting this month. Being on the same page with your partner is key. We created this print out with some questions to get you started.


Well, duh you might be thinking. But much like the key to losing weight is to burn more calories than you consume, having money is just a matter of spending less than you make. It's simple even if it's not always easy.

Where you live will go a long way to determining how much money you can save. If you aren't tied down to a location because of your job or family, do some research into areas with a low cost of living, or, at least, lower than where you currently are. You're always going to pay a premium to live in a city and contrary to popular belief, urban employers don't always pay enough to make up for a place with a high cost of living. If you really love living in a city, we have more than New York and San Francisco you know!

If you can't leave a high-cost area, consider your domicile (love that word!). Do you need those extra bed and bathrooms? A bigger place is not only more expensive, but it also means more room to accumulate stuff, and it takes longer to clean. If you're determined to stay in your big place, you might need to consider getting a roommate.

Remember the 50% we talked about in the budgeting section? Of that 50%, no more than 30% should be spent on housing. If your rent or mortgage is "Never spend your money before you have earned it." Thomas Jefferson more than that and especially if you have debt to pay off, you are going to have a tough time building wealth. If you're getting ready to move into your first apartment, we can help you save money there too.

Most of us don’t have an unlimited supply of money. So we have to carefully consider what we spend our money on. No one needs the best of everything. Do you not care much about fashion but love technology? Then you don't need to spend a lot on clothes, but you can spend a little more on the latest phone or laptop. The point is, to only spend money on things you value.

When you decide to spend money on the things you love, buy the best quality you can afford. That doesn't necessarily mean the most expensive option either. By spending a little more upfront on quality, you will spend less overall replacing cheaply made items over and over. Head over to Buy It For Life to get good recommendations on quality, long lasting items.

Before you head out to the store or click the "Buy" button, take a few minutes and google whatever it is you need to buy followed by the word "coupon." There are all kinds of discount codes and coupons available on-line. There's no need to pay full price for everything. Also, consider hitting up a thrift store before you just head off to a big box place. You can find amazing stuff at thrift stores, some of it brand new!

You love fun, right? Of course, you do! At LMM, we want you to have as much fun as possible. No one likes a miser, and no one wants to be a miser. But you don't have to spend a lot of money to have fun. Too often going out for dinner or drinks is our default when making plans with friends but there are much cheaper ways to socialize. Host a potluck, have a picnic, attend a free concert near you. We even wrote a fun guide for cheap dates but you could do most of these things with friends too.

You don't have to spend a ton of money to have fun holidays either. What's more fun than going on vacation? You can have a great vacation for less than you think. We have you covered for the holidays we all share too, Valentine's Day, Thanksgiving, and Christmas.

If you spend money hoping to buy happiness, it can be done but only if you buy the right things. And by things we mean experiences, not physical things. When we spend money on an experience like a concert or a vacation, we get the added pleasures of anticipation, the unexpected, sharing the experience with other people, and the memories of the event long after it's ended. We rarely get all those benefits from just buying a thing. Do you fondly remember the day you bought your last computer? Probably not!

A big part of making more than you spend is avoiding lifestyle creep. Lifestyle creep happens when you upgrade your lifestyle every time you get a bump in income. New job? Time to get a new apartment. Big raise? Time to trade in your paid off car for a brand new one.

Keep it up and any extra money you are making is gone before you even realize it. If you are suddenly (or not so suddenly) making more money, there's no reason not to celebrate that and treat yourself. You worked hard for it after all. But keep it in perspective. Celebrating a raise means treating yourself to a nice dinner or maybe upgrading your wonky old phone, not having a first class European blow out vacation and replacing every electronic device you own.

Take Action

• Break down your cost of living, and be honest. If you are spending more then you make, decide on what you value most and make appropriate changes to your lifestyle to save.

• If you have any big purchases coming up, do your research so you get the best quality. You only want to buy it once.

• Consciously avoid lifestyle creep. Just because you make more doesn’t mean you have to spend more.

• Find inexpensive ways to have fun! Plan a cheap fun day for your next free weekend.

Kill Debt

Your debt is an emergency! If you have high-interest debt, paying it off should be your priority. If you have several debts, you may want to consolidate. You can get a personal loan from a bank or a peer-to-peer lender like Lending Club. For student loan debt, you can refinance with a company that specializes in it like SoFi.

When you have debt, it's not enough to pay it off; you have to have a plan to pay it off. Otherwise, it will take longer and cost more. The most moneysaving method of paying off debt is known as the stacking method. List all of your debts by interest rate, highest interest to lowest. The dollar amount doesn't matter. We generally exclude mortgage debt from this. It's debt yes, but it's not the kind of high-interest debt, like credit card debt, that is killing any progress you could otherwise be making.

You put every extra penny towards paying off the first debt on the list while paying only the minimums on the rest. Stop eating out all the time, stop going to happy hour three nights a week, cancel the gym membership you never use (running outside is free!). Once you pay the first debt off, you take the money you were paying toward that and put it towards the next debt and so on until all the debts are paid. You will save more money on interest with this method.

If most of your debt is credit card debt, learn how to use credit responsibly. A credit card is just a tool, and you can use it wisely or poorly. By choosing the right card and using it well, you can even save money on things you commonly purchase like gas and groceries or get travel rewards like free flights and hotel stays. Nerd Wallet has lots of good credit card recommendations based on the kinds of rewards you want and your credit score.

Each credit card should be paid in full a few days before the due date. There is some crazy myth out there that by leaving a small balance on credit cards, it helps improve your credit score. This is not true, in full every month! It also doesn't help your score to make a payment every time you charge something. Just pay it off once a month as scheduled.

While you're making that list of your debts, call up each creditor and ask if they'll lower your interest rate. You might be surprised by how many will agree. If they don't agree, call back in a few minutes and try again. Your odds of getting the same person on the phone are lower than your odds of winning the lottery. This time, may have some offers from that company's competitors in hand. If they won't play ball, threaten to close your account and move to the other company. This works for stuff like insurance and cell phone providers too, life pro tip there for you!

The more debts you pay off, the higher your credit score will go. And that's a good thing because having a good score will save you money when you take out loans for things like cars and houses. The better your score, the lower the interest rate you will be offered. You don't need the highest possible score to get the best interest rates. As long as your score is 740 or above, you'll get the lowest interest rates. If you don't know your credit score, you can make a Credit Karma account to get a pretty good idea of what it is. Some credit cards also give you your credit score on your monthly statement.

If your score is not ideal, there are ways to improve it even if you can't get a traditional credit card. And understanding what that number is based on can help you do that too.

Your credit score isn't the same thing as your credit report. If you apply for a loan or a credit card, the lender looks at both. You'll see lots of sites offering a free copy or your credit report, but there is only one place to get a truly free copy, Any other site is likely a credit monitoring site that will charge you a monthly fee for the service.

You don't need to pay a monitoring site. You are legally entitled to one copy of your credit report from each of the three big reporting agencies, Equifax, TransUnion and Experian, once every twelve months. If you're concerned that someone has gotten hold of your personal information and is using your name to take out lines of credit, you can order one copy every four months from one of the agencies and monitor it yourself.

Even if you're not concerned about fraud, it's a good idea to get all three reports. Mistakes on your report can hurt your credit, and all three agencies will have slightly different information so you can check for mistakes.

Take Action

  • Learn to use credit responsibly. Set up auto pays on all your cards to pay the full balance every month. Sending minimum payments is setting you back even further.

• Call your credit cards companies and try to negotiate lower interest rates. It doesn’t hurt to ask and you may be pleasantly surprised.

• Set up a Credit Karma account, get your credit report and score. Understand what is effecting your credit score so you can improve it.

• If you have a boat load of debt look into consolidating it. Your credit card interest rates are sucking you dry.

• Get familiar with the stack method, organize your debts and create a debt

reduction plan.


At LMM, we believe that money should fade into the background. You shouldn't spend a lot of time and energy managing it or worrying about it. Money doesn't have to be complicated, and because we can do so much online, it doesn't have to be time-consuming either.

If you have multiple financial accounts, start consolidating them. You need one checking and one savings account. If you have 401k's from old jobs, roll them over into an IRA.

A lot of creditors will allow you to choose the due date of your payment. If that's an option, group as many together as you can pay comfortably. That way you just have to sit down and pay your bills once or twice a month rather than multiple times scattered around the calendar.

Do you have a wallet full of credit cards? Just use two credit cards, a good travel reward card, and a good cash back card. Don't cancel the rest because that will hurt your credit score but take them out of your wallet and just carry your two main cards. You can put a small recurring payment on the old cards, like your gym membership payment to keep the cards open.

Get rid of all that paper cluttering up your life. Go paperless for any bill that allows it. You don't need to deal with paper statements, especially if you pay your bills on-line anyway. Go through all of your old records and only keep what you can't get on-line. There is no reason to keep years of bank statements when you can get them all with a few mouse clicks. For papers, you do need to keep, digitize them.

Combine as many providers as you can too. Bundle your phone, internet, and cable and consolidate your auto and renter's or home owner's insurance. Fewer companies to deal with and passwords and account numbers to remember.

The internet has made budgeting and investing easier than ever. Mint is one of our favorite budgeting tools. If you have a good handle on your budget, consolidate your categories. Instead of breaking it down to "groceries, work lunches, dinner's out" just make one category and call it "food." Mastering Mint can help you get the most out of the tool and reach your goals faster.

Have you ever been late paying a bill, not because you didn't have the money, but just because you forgot? If so, you might have been charged a late fee and even been reported to a credit reporting agency. There is never any reason to pay a bill late (unless you don't have the money). You can set up auto-pay through your bank's on-line service for nearly any bill. If you're not comfortable trusting technology to do the job for you, at least, set up alerts on your phone a few days before the bill is due.

Take Action

• Use fewer cards. Use one credit card for most of your purchases so its easy to see what you are spending. Set up payments for smaller subscriptions like Netflix or Hulu on the other cards to keep them active.

• Go paperless. Having stacks of bills and papers around the house will drive you crazy and you will most likely avoid them. Email notifications work better, plus we always need an excuse to look at our phones.

• If you haven’t done it yet, set up auto-pay for all of your bills. There is no reason for you to EVER have a late payment. While you are at it, change your due dates to work with your paycheck so bills get paid before the money is spent. It’s not an excuse to pay late because your waiting for you next paycheck. Priorities people. Bills come before dinner with friends.

Beware of Fees

We don't like fees at LMM, and we want you to avoid them whenever you can. There is just too much competition out there between financial products and banks to pay unnecessary fees. If you use ATM's a lot, consider opening an account with Fidelity. They will reimburse your ATM fees.

We don't like fees at LMM, and we want you to avoid them whenever you can. There is just too much competition out there between financial products and banks to pay unnecessary fees. If you use ATM's a lot, consider opening an account with Fidelity. They will reimburse your ATM fees.

Americans lose $600 billon a year on investing fees! Paying a 1% fee might not sound like much, but charged on tens or hundreds of thousands of dollars over decades, that 1% in fees can consume a huge percentage of your retirement savings. The SEC gave a real numbers example; if you invested $100,000 with a modest return of 4%, over a twenty year period, you would have paid $28,000 in fees. If you had that $28,000 to invest, you would have another $12,000 in your retirement account.

It's not always easy to find out what fees you're paying. Sure you can read through the tome-like prospectus you get when you sign up for an investment account and scour your monthly statements but who has time for that? There is an easier way. FeeX can tell you. They will analyze your accounts, show you how much you're paying in fees and recommend lower-cost alternatives with similar profiles. Two of the best low-fee investing platforms are Betterment and Vanguard.

You might think that by paying for an actively managed fund, you're beating the market. Surely these fund managers know something the rest of us don't. Picking stocks is their full-time job, and they have all the research and data to make the best picks right at their fingertips. No. Actively managed funds are regularly beaten and by a wide margin, by index funds which are passively managed. So you're paying all that money for some manager to sit in a fancy office and collect fat bonuses even when they lose you money!

We suggested rolling over 401k's from previous jobs into an IRA in Chapter 6 because it gives you less to keep track of. But there's another good reason for doing so. 401k's can come with very high fees, and you don't always have much choice, you're stuck with the choices your employer offers. You don't want to cash them out when you leave a job though because then you'll be hit with taxes and early withdrawal penalties. But by choosing the right IRA, you'll pay lower fees and have the option of penalty-free withdrawals for things like a qualifying first home purchase and educational expenses.

If you like to select and trade individual stocks, don't pay $7-10 or more per trade. At Robinhood, trades are free! Keep in mind though that stock picking is not for the uninitiated. Get some personal finance knowledge under your belt before attempting it.

Take Action

• Switching banks can be a pain but if you are someone who is always stopping at the ATM for cash, you can rack up a ton of fees. Get an account to eliminate ATM fees like Fidelity.

• If your bank is charging you for a checking account, find a bank that offers free checking.

• Set up a FeeX account to see what other kinds of fees you are paying for. Most people lose about one third of their retirement savings to fees. Don’t be part of the statistic.

• If you are looking for no fee investing, open a Robinhood account for free individual trades.

Diversify Your Income

If you lost your job today, would you have any income from another source? A lot of people don't, and that is a dangerous position to be in. Everyone is expendable. You need to find multiple streams of income.

If you have a lot of free time, there are probably better ways to spend it than gaming and Netflix binges. Spend a few Friday and Saturday nights driving for Uber. You get to set your own schedule and in the right city, you can make some nice side income.

Do you live in an area that's popular with tourists? Find a friend to crash with a few nights a month and rent your place on AirBnB. Or at least, rent it out while you're on your own vacation. There are lots of ways to make money in the sharing economy.

When people hear the word "freelance," a lot of them think only of writing. But that's not true! If you look at freelance job boards, there are all kinds of work available so just because you're not a writer, don't think that you can't find a few jobs. If you can program, have graphic design skills, or can transcribe audio, you can make some extra money. Take the time to set up a good profile and if you aren't getting work right away, consider bidding for some low paying projects to help get some feedback on your profile.

You can also set up a side hustle. The ideal hustle is a hobby that you can monetize like cooking or photography but good old fashioned things like babysitting and mowing lawns count too. Setting up your own blog can make you some extra money via affiliate links. It can take some time to build an audience but the more "niche" your site, the less competition you will have.

If you need to make some money fast, we came up with 103 ways to make $100 fast. It's not enough to retire early, but if you're a little short at the end of the month these tips can help!

Do you want to buy a home? Great! We can help you do it fast. Just don't live in it. There are certainly good reasons that have nothing to do with money to buy a home. But if your main goal is to make money, a home to live in is not a great investment. Buying a home and making it a rental property is a good investment. And becoming a landlord doesn't have to mean being on-call for things like leaky roofs and misbehaving toilets.

You can buy turnkey rental property. A management company does all the heavy lifting for you, they find and vet the tenets; they collect the rent, and they handle the maintenance and repairs. All you have to do is pay the management fee and cash the rent checks!

There is even a magic formula that will tell you how many properties you need to own to entirely replace the income from your job with rental income. If you dream of early retirement, becoming a landlord is a good way to do it.

Take Action

• Check out freelance opportunities on Up Work. There are so many ways for you to make some extra cash from writing to design to social media marketing.

• Already doing some freelance work? Take it to the next level and start treating it like business rather then a hobby to reap all the tax benefits.

• Consider being a landlord. If you have retirement savings under control, and looking for some other kinds of investments to grow you cash flow look into acquiring rental properties.

Take Free Money

There may be no such thing as a free lunch but sometimes, there is such a thing as free money, and you should always take advantage of it. For many of us, our first exposure to investing is through an employer sponsored 401k. If your 401k offers matching, that is free money. This is the one thing that we argue should be prioritized ahead of paying off debt. If you can get matching, make sure you contribute enough to the 401k to receive it, even if that means taking some money away from debt repayment.

Taxes are not only one of life's certainties; they are one of life's biggest expenses too. Natali Morris explained to us how we can turn a small business into a way to save on taxes by setting up an LLC. You don't have to have some sophisticated business to do this; you can set up an LLC for your side hustle. You can write off things like printer ink and paper, your home office, and your car if you use it for your business. You can even write off work related travel and dinners! Don't get too greedy though and be sure to document every expense you plan to write off.

There are some tax credits that you might be eligible for. The Saver's Tax Credit is for low-income individuals who contribute to qualifying retirement accounts like 401k's, and both Roth and Traditional IRA's. The Earned Income Tax Credit is available for some low-income tax payers. It reduces the amount of tax owed and can result in a refund.

If you truly want to be wealthy, and you don't have a nice inheritance waiting for you, you must invest. There is just no way around it. Investing can seem scary, but it really isn't. If you're nervous, read about our experience with Betterment, The Betterment Experiment. It will answer any questions and fears you might have.

Start investing as early as possible so your investment will have more time to grow. You will see the stock market go up and down in the short term, but long term it is one of the best wealth generating tools. Time is on your side and you will be amazed what compound interest it can do over 30 years.

Take Action

• If you haven’t started contributed to a 401K yet, do your research on your employers program. If they offer matching, it’s a no brainer. Take the free money.

• Working on a side business? Set up an LLC to take advantage of all the tax benefits that come with it. • Find out what tax credits you're eligible for.

• Invest! Even of you just start with a small amount. Investing is a great way to build long term wealth. The money you keep in a savings account loses value year after year due to inflation.

We wanted to write on personal finance, because there is just not enough education in the area of money. You don't learn it in school, and a lot of people don't learn it at home either. Aside from learning how to take care of your health, there is nothing more important than learning how to take care of your money. Not because you're greedy and want to swan dive, Scrooge McDuck style into a pool of hundred dollar bills, but because money buys choices and having choices means you have freedom.

We have articles on almost every subject relating to handling your money and for every level, whether you're a beginner or a veteran. We strive to bring you the best guests on the podcast and to write articles that are the definitive source on a subject. We try to make everything we do fun and entertaining. We get it; money isn't the most interesting subject for a lot of people, we included!

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