Setting yourself up for saving success in 2019
As the New Year starts, a lot of people think about how they can improve themselves—and finances come up again and again. Paying down debt, saving more and spending less, and boosting income are all popular money resolutions, according to a survey from GoBankingRates¹.
January is a good time to kick start some habits that will up your money game and help you reach your goals, whether you want to build an emergency fund or save for the next big vacation. Try these strategies to set yourself up for success.
Go through the last three months of statements. One of the best ways to get a handle on spending is to understand where your money is going, and a good gauge of that is to look back through the previous three months of credit card and bank statements. (Potentially you can skip December, when spending tends to deviate from the norm.) Take note of categories where you’re shelling out more cash than you expected.
Focus on monthly charges. Often people sign up for things that automatically renew—subscriptions, website memberships, etc.—that they never really use. When you review your statements, look for services you’re paying for but not utilizing. Even if it’s only $15 a month, you’ll save nearly $200 a year by canceling just one of those.
Set goals. It’s hard to crack down on savings when you don’t know what you’re saving toward. Write down your short-term and long-term savings goals. Are you saving for retirement, for an emergency fund, and for a really nice road bike? Once you know what’s on your list, it can motivate you to make the changes necessary to make it happen.
Make savings automatic. One of the best savings strategies takes a page from the retirement account playbook—if you have money automatically transferred from your checking account on paydays, you’ll never miss it. Set up a bi-weekly or monthly transfer to an interest-earning savings account for short-term and long-term goals.
Use technology. You no longer have to use a piggy bank. (Although you could.) There are numerous apps available that will help you spend less and put more away. Some apps will round your purchases to the nearest dollar and put the difference in an account for you, while others analyze your spending and help you identify areas where you can cut back. Explore the financial section of your app store for ideas.
Consolidate some debt. If you’re carrying debt at high interest rates—credit cards, for instance—consider transferring the balance to a credit card with a 0% interest rate for 12 months or more. Even if you can’t get your balance to zero in that time (and you should try), you’ll make more headway without the interest slowing you down.
Save a raise. Is there a pay bump or bonus in your future? Consider putting at least half of it toward savings. If you get a pay bump, nudge your retirement account contribution by a couple of percentage points. If you get a bonus, take half of it and stow it in an interest earning savings account. Do it immediately so you’re not tempted to spend your windfall.
Shop around for insurance. When’s the last time you got a new quote for your auto or home insurance? You may be able to get a better deal. One NerdWallet² analysis found that good drivers could be missing out on more than $400 in savings every year by not shopping around for car insurance. (38% of Americans with car insurance haven’t checked the price or shopped around in at least three years.) Visit the big insurers online to see what you can get for your money or give a broker a call who can compare company prices for you.
Use your tax-deferred accounts. Do you have a flexible spending account (FSA) or health savings account (HSA)? Does your employer offer a dependent care flexible spending account, or commuter reimbursement? Wherever you’re able to pay for expenses with pre-tax money, use the opportunity to tighten up your bottom line.
It just takes a few steps to set yourself on the path to saving more money in 2019—a little more conscious spending, some targeted saving and some smart money moves will go a long way. If you need a little guidance, considering consulting with a financial advisor who can look at your financial picture and help you set the ball in motion.