5 Financial Decisions That Paid Off the Most for Me

Improving your financial situation doesn't need to be complicated. These simple decisions have helped me save money and become more financially stable.

Most of us make our fair share of good and bad money decisions. Recently, I looked back on both my biggest money mistakes and successes. It's a useful way to see what's worked and what hasn't.

Fortunately, some successful financial decisions stood out. Whether you're trying to save more, figure out what to do with the money you've saved, or just get to a better overall financial position, here are several ways you can do it.

1. Investing in a mutual fund

Investing in a mutual fund was the decision that helped me the most with building wealth. When I started investing, I mainly focused on individual stocks. But that approach requires a lot of time, and it's hard to be consistent. My cash would often end up sitting around because I didn't know where to put it.

Eventually, I realized I needed to simplify things. I researched the best brokers for mutual funds, picked one, and started making consistent monthly contributions. It doesn't require any time or effort on my part, but the results have been fantastic. Since I began, my rate of return has been 26.8%.

It's highly unlikely I'll continue to earn those types of returns indefinitely. However, the stock market has historically offered the highest returns, and mutual funds are one of the best ways to invest in it.

2. Setting a savings goal every month

I've never been great with traditional budgeting methods. That probably sounds horrible coming from a personal finance writer, but trying to carefully manage my spending just hasn't worked for me.

Eventually, I found a simpler method that did. I looked at my income and my normal expenses. Based on that, I set a monthly savings goal for myself. I transfer that amount to my savings accounts every month before spending my paycheck. I used to spend practically every penny. Since I set a savings goal, I've consistently put away money for years.

If you're not big on budgets or tracking everything, this could be a better option. I like it because you only need to focus on that one savings goal. As long as you're hitting that goal and paying your bills, you're good to go.

3. Finding the right credit cards

With the benefits they offer, credit cards are a great way to save money. You just need to avoid overspending and find cards that suit your spending habits.

Since I enjoy traveling, travel rewards credit cards have been a huge help. I've used travel points to cover airfare, hotel stays, and vacation rentals. My credit cards have also improved my travel experience, allowing me to access airport lounges, get a free Global Entry membership, and book business-class tickets that would've been very expensive if I'd paid in cash.

There are also plenty of other valuable perks available through the best credit cards. Travel cards work for me, but you could also find cards that earn high cash back rates or have zero-interest offers for a year or longer. It all depends on what you need.

4. Moving to an area with a lower cost of living

I loved living in Los Angeles, but it wasn't affordable. At the end of 2018, I relocated to an area with a much lower cost of living. In addition to saving hundreds of dollars on rent every month, I also have a much nicer apartment than I did before.

This obviously isn't an option for everyone. The only reason I could move was because I work remotely and my job doesn't tie me to one place. However, remote work is becoming more and more popular, especially with the COVID-19 pandemic. If you don't need to live in an expensive area, it's worth considering more affordable options.

5. Focusing on increasing my income

There's a popular saying that it's not what you make, it's what you save. Personally, I disagree. What you save is important, but it's also limited by what you make. It isn't possible for everybody to simply earn more, but a higher income does make it easier to boost your savings.

I've done my best to follow smart spending habits, but I've put more energy into raising my income. I've looked for higher-paying jobs and taken on a greater workload when possible. Choosing to save and invest consistently has helped me quite a bit. But I've also had more money available to do so because I've been able to increase my earnings.

These five decisions have gotten me to a relatively stable position today. I'm saving money for the future, and I have a solid emergency fund in case I need it. If you want to get better financially, any of the actions above can help you accomplish that.