Streamline your expenses

In addition to finding leaks in spending, you can save money (or help pay off debt) by consciously streamlining your spending. So much of our spending is unconscious—a few lattes at Starbucks, an impulse purchase at the mall, a few extra grocery items because we shop while hungry. By cutting out these unnecessary purchases, you'll not only save money, but also you'll feel more disciplined and mindful about your spending decisions.

Action Steps:The best way to streamline expenses is by creating a budget. You have some fixed expenses like a mortgage payment, but other expenses can be cut back or eliminated entirely. Review your bank statements and credit card bills to see any expenses you can eliminate from your budget. Determine your budget for variable items like entertainment, travel, food, clothing, etc. Consider a cash-only system for spending on these variable items. Whatever budget you create, be sure it is less than the amount you earn. 

Investing is putting your money to work for you so you can make money from your existing money. People are often intimidated by investing, so they avoid learning or hand off the responsibility to someone else. However, if you don't know anything about investing, you won't feel assured your advisor is doing a good job or if they understand your financial goals. You might not know if you're being charged fairly for financial services or racking up too many investment fees that benefit the broker rather than you. Learning the basics of investing doesn't need to be intimidating—it will give you the confidence to make sound decisions about your investments.

Action Steps:Start by learning some basic terminology of investing by doing some online research. Learn the differences between stocks, bonds, mutual funds and certificates of deposit (CDs). Understand more about compound interest. Research basic financial theories such as portfolio optimization, diversification and market efficiency. Here's a great list of basic investing books from the Wall Street Journal.