Before you’re ready to make more money, you must master the money you currently have. I will die on this hill. You won’t be able to manage $100,000 if you can’t manage $50,000. And before you say that you need more money to survive, I’m not talking about those instances. Of course, if you don’t make enough to cover your basic living necessities, then yes, you need more money.
However, a lot of people convince themselves they need more money when, in reality, they need to control their spending. It’s either an income problem (you truly don’t make enough) or a behavioral problem (you spend too much leading you to believe you don’t make enough). My focus is on the behavioral problem. If that problem isn’t fixed, the bad spending behavior will continue when more money comes into the picture.
Before you can seek out more money, get strategic with managing the money you currently have. To help, I’m sharing 6 strategic ways to maximize every dollar you earn. Once you’ve given every dollar a purpose, and you’re sticking to the budgeted numbers you’ve established, you’ll be ready to bring more money into the picture, to reach your goals faster.
6 Strategic Ways to Maximize Every Dollar You Earn
#1 Build a Budget That Aligns With Your Goals
Your budget is the first order of business. Your budget is the guide for the money you make. I know budgeting gets a bad rep, but it’s the cornerstone of financial success. The problem comes when people don’t know how to properly create a budget. Usually, people make the mistake of listing out their bills and calling it a budget.
A budget is so much more than a list of your bills. It should include what you have coming in for the month (income), what spending needs to take place (bills, but also non-bills), and it should include a plan for anything left over (profit after bills and spending takes place). That leftover amount is what needs to go towards your goals.
When your budget includes all of those elements, you now have a roadmap for your finances for the month. Sure, it’ll be up to you to stick to the budget, but at least you know everything is accounted for and you know what you can afford to put towards your goals. Need help with creating a budget? I create custom budget plans for my clients, so get yours today!
#2 Prioritize High-Impact Spending
One of the most strategic ways to maximize every dollar you earn is to make sure you’re spending it with intention. We want each spending decision to have a high-impact to our future, our present quality of life, or our goals. To prioritize high-impact spending, you focus on spending on things that directly contribute to your needs, goals, or values.
At this point, you should already have a solid budget formed. Take some time to run through it with a fine-tooth comb. Are there any subscriptions you don’t use or need? Can you spend less on dining out? Are there any bills that can be negotiated down?
These additional cut backs will increase your profit and allow you to put the extras straight to your goals. You can add more to your emergency fund, or send extra money to paying off your debt. Completing this step ensures that your money is working hard for you and isn’t being wasted on things that don’t truly help improve your situation.
#3 Use Automation to Your Advantage
I know I’ve mentioned on the blog many times before that I’m all about getting the best results with the least amount of effort. Usually, that comes as a result of automation – things happening without me having to worry about it, or without having to do those things myself.
Let’s take an example: Saving money. I could review my budget and see that I should be saving $250/paycheck. Every paycheck, I could remember to send that $250 to savings. It is a manual task that I need to remember to do every paycheck. However, if I was using automation to my advantage, I could set up an automatic transfer to take money from my checking account and transfer it to savings every payday. There will be an initial task of setting up the transfer, but then I could set it and forget – giving me the ability to focus on other things (like making more or spending less).
If you want to be strategic with maximizing every dollar you earn, then you’ll need to embrace automation. There are so many ways to use it too! Set up automatic transfers to savings or investment accounts. Schedule bill payments to avoid late fees or missed deadlines. Use apps to round up purchases and invest the spare change.
Automation helps build good habits, eliminates human error, and keeps you on track. This will allow you to use your brain power for other things to help improve your life and financial situation.
#4 Make Debt Repayment a Top Priority
Debt, especially high-interest debt that’s costing you extra money every month, needs to be paid off as quickly as possible. You will not be able to do everything you want, live the life of your dreams, or give yourself true freedom until you’ve paid off the debt that keeps you stuck.
The faster you pay off your debt, the more money you free up for your other financial goals. Imagine earning 10% interest in the stock market with the credit card payment you’re charged 27% interest for? It’s not fun to be stuck in debt (I’ve been there a few times myself), but getting yourself out of it MUST be a top priority.
When working on a debt repayment strategy, focus on high-interest debt first. These are usually credit cards, payday loans, and personal loans. Follow a payment strategy like the snowball method. Once you’ve got that set up and running as smoothly as possible, consider consolidating, balance transferring, or refinancing your balances to get a lower interest rate.
Form there, use any financial windfalls (tax refunds, bonuses, gifts, etc.) to pay your debt off faster. The sooner your debt is paid off, the sooner you can reallocate that money to building wealth or reaching your money goals!
#5 Boost Your Financial Literacy
If you want to maximize your money, you need to increase your knowledge about how money works! Learning more about personal finances will help you make smarter decisions with your money. These decisions are what turns thousandaires into millionaires! The more you know, the more options you can give yourself to reach your goals.
There are plenty of ways to go about increasing your financial literacy and knowledge. Read personal finance books, blogs, or listen to podcasts (like The City Girl Savings Podcast). Take courses or attend webinars to deepen your understanding of budgeting, investing, and saving. Engage with financial communities for support and tips.
Knowledge is power, and a better understanding of money allows you to use it strategically. Don’t feel overwhelmed by all the options. Start with one (like subscribing to the City Girl Savings Podcast), then work to add more knowledge-building options into the mix.
#6 Regularly Review and Adjust Your Finances
The final strategic way to maximize every dollar you earn is by constantly reviewing and adjusting, as your situation changes or as you learn more. Consistent money and budget reviews ensure you’re staying on track and adapting to changes in income or expenses.
I like to do my reviews at the end of each month. I review my budget, spending, and account balances. I compare my actual spending to my targeted spending and I use that information to help me craft a better budget for the next month. I also spend this time assessing if I need to make any changes to my goals.
Do I need to save more? Am I on track? If something comes up, will I be able to course correct? This also helps to keep my goals front and center. Reviewing your goals regularly helps make sure they’re still relevant and motivating. Life changes quickly, so adjusting your financials needs to happen in conjunction with life. This will help keep you in control and on top of your situation.
Related: 6 Tips for Long-Term Success with Your Money
Once you understand the importance of managing your income wisely, controlling your spending and sticking to a budget, you’ll be ready to use additional money to your advantage. I’m not going to sugar-coat it: this process requires discipline and sacrifice, but that’s okay. You don’t have to completely deprive yourself throughout the process, just always keep in mind why it’s important to be strategic with maximizing every dollar you earn.
If you need help with this, request a complimentary call with me and let’s discuss. My 1-on-1 coaching program helps clients build up the habits and routines needed to successfully manage their money and spending.
What are some of your best tips for making the most of your income? Drop a comment below to share or ask questions!
-Raya
The CGS Team
