How to get richer in a year

Bryan Bedder / Stringer / Getty ImagesYou can make progress on your wealth every year.

If you do a lot of reading about building wealth, you'll find a common thread: It takes time. But you can be richer than you are today in as little as a year.

Depending on how you define wealth, being richer a year from today could mean having more time to spend with your family, finding more joy in your day, or having a job that you find financially rewarding and emotionally fulfilling.

But for our purposes, we'll go ahead and define "richer" as "having more money than you have now."

We're not promising Maseratis or second homes in Vail, Colorado, but give these strategies a shot if you want to see your net worth increase in the next 365 days.

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Drastically reduce a major expense ...

If you track your spending or keep a budget, you know where most of your money goes. Even if you aren't that diligent, you probably have a pretty good idea of the biggest expenses in your life. It's likely the big checks that go to housing and car payments.

Financial planner Colin Drake of Drake Wealth Management in Sausalito, California, advisesnarrowing down the top-three most expensive areas of your spending — 10% or more — and focusing on reducing those, not sweating over every little purchase.

One of the most immediate, effective ways to free up a chunk of money to save or invest instead is to do something to reduce your biggest expenses: Move to a smaller home, or trade in your fancy car.

It sounds drastic, but it works.

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... or get into the habit of eliminating the small ones.

If you aren't prepared to downsize your home — and that's understandable — you can also siphon off money to save or invest by chipping away at the small expenses that add up. After all, saving an extra $50 a month can pay off more than you realize.

We're not saying you have to stop spending money. You just have to decide what you care about, and stop buying the things you don't. As personal finance bloggers like J Money of Budgets Are Sexy and Paula Pant of Afford Anything say, you can afford anything — just noteverything.

Financial adviser and bestselling-author David Bach recommends a simple exercise to stop spending mindlessly: For seven days, write down every purchase you make. For it to work, you have to promise to write down everything, and not to change your habits during the exercise for fear of what you might find. At the end of the week, look back at the list and pinpoint expenses you can eliminate.

Sebastiaan ter Burg/Flickr

Negotiate a raise ...

The other side of spending less money is earning more. If you earn more money and resist the urge to spend more money, you're going to have extra cash to save and invest no matter what.

Just like saving, there are two ways to up your monthly income: You can do one big thing, or a bunch of little things. The big thing, in this case, is a raise or promotion.

Experts recommend timing your request to a time when business is good, around the time of your annual review — if it's a positive one, that is — or when you've completed an important or challenging project or taken on additional responsibilities.

Once you choose your moment, it's up to you to decide your approach. Professional poker players, who have a unique insight into negotiation, recommend doing some prep work by running through scenarios in your head before you even enter the room. What will you do if your boss says no outright? What if they ask why you deserve it? What if they cite budget concerns? Figure out how you'll respond to each situation without getting emotional.

Flickr / Richard Penn

... or take on a side job.

If a side-hustle is more your style, you have many options. If you aren't planning to take on freelance work or a more regular second job, there are still ways to make extra cash while working full-time.

For instance, you can:

• Look into serving as an umpire or referee for local sports teams

• Tutor children or adults in a language or subject

• Sell good-condition furniture or clothing online

• Take online surveys or join focus groups through sites such as iPoll.com and FocusGroup.com

• Pet-sit

• Rent out a room or home on Airbnb

If you're still looking for ideas, check out some high-paying side jobs to consider, and how to make an extra $500 a month.

Flickr / Eselsmann™

Get the money you don't need immediately out of your checking account.

Now that you've started earning more or spending less — or both — to free up some money to save or invest, it's time to think about where that money should go.

Your checking account should be a temporary stopping place for your money on its way in or out. It should hold about one month's worth of your take-home pay, according to certified financial planner Tom Gilmour of LearnVest Planning Services, to cover your month's bills and provide a cash cushion in case of overdrafts or surprise expenses.

Beyond that, it's prudent to store extra, liquid cash that you might need at short notice in a savings account.

Or two savings accounts, or three. Keeping separate savings accounts for separate goals is an expert-recommended strategy to protect yourself from accidentally, or accidentally-on-purpose, spending the money you earmark for one thing on something else.

Savings accounts are preferable to checking accounts because they earn interest on your money. Not much interest, but still interest. You can open savings accounts at your local brick-and-mortar bank, or you can use an online bank. Online banks don't pay to open or maintain properties, and pass the savings along to you in the form of high-yield savings accounts, which have interest rates as high as 1.25% — as compared to the more typical around 0.01% found in traditional savings accounts.

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Keep making strategic choices with your money through automatic transfers.

You can automate money transfers from your checking account into each of your savings to make sure it gets there and isn't waylaid by the urgent need to treat the bar to a round on payday.

In fact, you can automate a good deal of your money, including transfers to your savings and retirement accounts and payments of your bills. Usually, a quick visit to your bank's website or phone call can set it up.

Note, however, that automated transfers don't excuse you from overseeing your money. You'll want to set a calendar reminder on a monthly or bimonthly basis to log in to your accounts and make sure everything is going as it should, and the money is where it's supposed to be. If you choose to automate bill payments for credit cards, it's up to you to keep up with your statement and flag any suspicious activity.

Because bills such as credit cards fluctuate — as opposed to, for instance, your mortgage payment — some experts recommend continuing to pay variable expenses manually to keep a close eye on the activity.

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Increase your retirement contributions ...

If you're contributing to a retirement account, that's fantastic, and your conscientiousness today will likely save you some headaches down the road.

Now, increase those contributions — even if only by 1%.

Because money saved in a retirement account like an IRA or 401(k) is invested, unlike money in a savings account, it has the potential to grow exponentially. This is thanks to compound interest, which is the process of the interest your money earns earning its own interest, and so on. In this case, because it's your money and not your debts earning interest, it's a good thing.

Since your money is growing faster than it would in a typical savings account, a 1% bump in contributions can increase your net worth more than 1%.

If 1% seems a bit meager, consider increasing your contributions when you get a raise by the same percentage of that raise. So if you get a 5% raise, you increase your contributions by 5%.

Flickr / Alex

... and set a calendar reminder to do it again in six months.

The only thing better than increasing your retirement contributions once this year is increasing your retirement contributions twice this year.

In fact, set a recurring calendar reminder to bump up your contributions regularly, or see if your retirement account has an "auto increase" option you can select where it takes care of the money for you. It should be clear on the website, but if not, finding out should only take a few minutes on the phone.

Do, however, be aware that retirement accounts have annual contribution limits, meaning if you're incredibly on top of your savings and putting aside a lot of money, you could potentially contribute more than allowed. The IRS will make you either withdraw that money before April or pay taxes on it.

In the case of a Roth IRA, where you've already paid taxes, you can "recharacterize" the money by moving it to a Traditional IRA, withdraw your contributions, or get hit with a 6% fee on your excess. No matter what you choose, over-contributing will mean some time on the phone with your retirement plan provider, sorting out the issue.

The IRS lists the contribution limits for various accounts on its website.

Flickr / Jon Rawlinson

Pay off debt.

Debts can largely be lumped into two categories: good and bad.

Good debts come from investing in your future, such as buying a house or taking out loans for a college degree. Bad debts, along with typically high interest rates, don't help you build wealth or assets.

The prime example of bad debt is credit card debt, where an unpaid balance can cost you well into double digits of interest. A typical annual percentage rate, the industry term for interest, ranges from about 12% to about 25%. Compared to a recent mortgage rate of about 4%, or a federal student loan interest rate of about 6%, that's expensive.

Because loans charge you interest on your unpaid balance, the more years you wait to pay, the more money you ultimately hand over. Paying your debt — bad debt in particular — ahead of schedule can save you money, and bolster your net worth by eliminating a liability from your budget.

You can accelerate your payoff schedule by paying a little over the minimum each month in a debt-paying marathon — or you can sprint and devote any extra cash to eliminating your debts as soon as possible.

If a sprint sounds appealing, take inspiration from a woman who paid off $50,000 in six months, another who paid off $22,000 in nine months, and one who paid off $8,000 in only 90 days.

Flickr / Kansas City District U.S. Army Corps of Engineers

Shore up an emergency fund.

Emergency savings aren't usually measured in terms of dollars but in months of living expenses. For that reason, everyone will have a different dollar amount, and everyone will have a different need. Generally, it's smart to have three to nine months of living expenses — go ahead and make it six months if you aren't sure — set aside in a separate savings account in case you have a medical or financial emergency.

How will setting aside money in a savings account make you richer? After all, if you have an emergency and spend this money, you'll be poorer, right?

Not exactly. An emergency fund's chief purpose is to keep you from going into the red, where you would be if you didn't have the money to cover a hospital or car repair bill. Losing a few thousand dollars from the savings you have designated just for this purpose is preferable to battling interest rates and debt as you try to build wealth in the future.

And if you think you can wait a year to start putting together that emergency fund, you're tempting fate.

Flickr / Charles Nadeau

Consider investing in a low-cost index fund.

To invest, you don't have to be a professional, you don't have to be rich, and you don't have to cherry-pick the next big stocks in hopes of securing a windfall.

Just the opposite.

Even billionaire Warren Buffett recommends a conservative approach to investing: low-cost index funds, which are mutual funds that hold a collection of securities tied to a specific market index. While investing is always a risk, and you can't predict market activity based on the past, money that's invested — just like the money invested in your retirement account — has the potential to grow faster than money stored anywhere else.

Note, however, that this isn't the place to keep money that you need in the next two or three years. Experts recommend investing only money you won't need for five years, at the very least.

For people who want to invest, but aren't interested in paying an investment adviser or handling their own investments, online investing platforms such as Wealthfront and Betterment have sprung up to handle the ins and outs of investing on a day-to-day basis.

As you get started, take a look at the 25 things to know about investing by age 25.

If you're already investing, take a page from the retirement savings play book and start regularly putting a little more money toward this goal.

This article was written by Business Insider without the involvement of Merrill Lynch.