To Boost Your Finances, Sweat the Small Stuff in 2011

Contrary to popular belief, sometimes it makes sense to glance past the big picture and focus on the small stuff. The little stuff really does matter. The truth is, it's often baby steps -- not just massive and sometimes scary movements that require immense courage -- that create real change. Baby steps lead to walking, and eventually to running.

This idea applies to your money too. In 2011, go for small changes to reap big rewards. Here are 10 ideas to get you started:

1. Conquer credit

The theory is simple: "If you don't have the money, don't charge it. Try to leave your credit card at home and only use it to pay bills," advises April Lewis, director of education for Consolidated Credit Counseling Services. Then immediately pay off your credit-card balance. As for old credit-card debt, sit down and commit to paper a plan for paying them off. Go for a quick hit, like paying off the smallest balance first, or decide to take on the highest rate card first. Get the job done.

Here's a second tip: Be proactive about managing your credit. Call up your lender and ask it to lower your interest rate. Usually, lenders will lower callers' rates by 2% to 3%, says Scott Gamm, founder of HelpSaveMyDollars.com. Also check your credit report. You can check your credit for free at annualcreditreport.com, for example. If you see mistakes, contact the credit agencies and get those mistakes corrected. If errors are dragging down your score, eliminating them can boost it to where it belongs and make you eligible for better rates.

2. Think automation

Free online banking tools can make it easier to manage your finances with less work. To help grow your savings, for example, you can schedule regular transfers from your checking account. Manisha Thakor, author of Get Financially Naked: How to Talk Money With Your Honey, suggests setting up the transfer of a set amount of money into your savings account every pay day.

Also automate recurring bill payments so you never miss a due date or pay a late fee, which sends money down the drain. Even without late fees, timely payments are key: 35% of your credit score is based on your ability to make payments on time. If you sign up for automatic payments, however, make sure to check your monthly bills for errors. One other caveat: "Make sure you have enough cushion in your checking account to avoid any overdrafts" before setting up auto-payments, money coach Lora Sasiela says.

3. Minimize medical costs

To get the most out of your health savings account, if you have one, put in the maximum amount early in the year. That will allow you to use pre-tax dollars for copayments and deductibles while allowing unused money to collect interest for more of the year, advises Keith Mendonsa, consumer health insurance expert with eHealthInsurance.com. Secondly, if you've gotten married or divorced, had children or gained or lost income this past year, you may be able to save money on medical costs by starting the year with a new plan better suited to your needs.

4. Go green

Turn off all lights and appliances, including the television, whenever you leave a room. Doing so will reduce your utility bill, and you'll be helping the environment too. There are many other ways to conserve energy, such as by installing a programmable automatic thermostat so you can avoid heating or cooling your home when nobody's home. "It's a painless way to reduce your monthly electricity bill," says Shomari Harn, a certified financial planner with Palisades Hudson Financial Group.

5. Know the numbers

Write up a budget and stick with it. "A simple zero-based budget is all you need, but most people don't do one," says Dave Ramsey, author The Total Money Makeover. Setting a budget helps make you aware of where your money is going. "Most people will feel like they got a raise just by doing a budget and sticking with it," Ramsey says. He offers free budget forms at daveramsey.com. If you have no clue where your money goes, track every penny of your spending for several weeks before putting together your budget.

6. Commit to spending less

Make frugality fashionable. "If you don't absolutely need it, don't buy it," Lewis says. Carpooling to work, bringing your lunch, brewing your own coffee instead of buying it from Starbucks and painting your own toenails are just a few of the dozens of ways you can save money, she says. Avoiding these regular $10 and $20 purchases can add up to big savings quickly. And you can use that money to pay off a bill or to save for the future, Lewis adds. You've probably heard this a million times, but Steve Seibold, author of How Rich People Think, says it's worth repeating again: "Don't live beyond your means; live below it. Most people try to do more with less and suffer sleepless nights worrying about the future."

7. Go coupon crazy

Coupons aren't just for little old ladies. Amazing online resources now exist that didn't two years ago. Coupon and discount sites are all over the Internet. With a smartphone application or a few minutes at a time on a computer, you can save hundreds of dollars throughout the year, Lewis says. Almost all grocery stores and drug stores have "club cards" that provide savings for frequent shoppers. Use the coupons and stash the difference, adds Neal Ringquist, president of Advisor Software, which created goalgami.com, a financial planning tool. Why pay full price when you don't have to? Make BOGO (buy one, get one) your favorite word.

8. Be a savvy investor

Avoid investing in high-commission and high-expense financial products like variable annuities and universal life policies, says Richard Kahler, a certified financial planner with Kahler Financial Group. Consider fishing in foreign waters for higher returns. "Emerging markets like China and Brazil have seen significant growth in recent months [and] years," says Andrew Ireland, head of premier and wealth, for HSBC Bank USA. "Use all the tools in the investment toolbox. Think beyond U.S. stocks and bonds and consider real estate, commodities, private equity, cash, overseas investing."

9. Get creative about saving

Recent survey research from TIAA-CREF found that more than 6 in 10 Americans wish they'd managed their finances differently in 2010, and four in 10 said their top financial goal in the new year is to save more money for the future. Most people should set aside enough money to cover their expenses for six to nine months in case of financial trouble, and also should aim to save at least 10% of their income toward retirement.

There are many little ways you can jump on the savings bandwagon. Kahler, for example, suggests joining a co-op, buying household items and nonperishable foods in bulk, buying large items -- such as homes, cars and furniture -- used, or buying airline tickets on Tuesdays and Wednesdays. Joel Ohman, a certified financial planner and founder of CarInsuranceComparison.com, offers another suggestion to consider: Switching from using a debit card to a credit card that gives you cash back on each purchase could save you 5%, just by swiping a different card. Another way to add to your savings account? Sell household items you don't need and stash the proceeds into savings.

10. Set goals

All of the above will be a lot easier to do if you're motivated by a realistic goal. Put short and long term goals on paper. As Lewis says, "If you speak it into existence, it will happen." When you're sacrificing those frappuccinos and fabulous new shoes, it won't hurt so much when you know those sacrifices will be gratifying and worthwhile later. Set a goal for how much you want to save each month in the new year and post that amount somewhere you can see it all the time. Toss out your old and undermining money habits with 2010. In 2011, it's time to reinforce your positive money habits and take small steps to leap closer to your dreams.