How to Save Money in the New Year
How to Save Money in the New Year
One of the top New Year’s resolutions each year is to get in shape, financially. Welcome to the year 2020 where the shape you want to get into has dollar signs attached to it. There’s really no difference in getting shape physically versus financially. You need to be honest with yourself, define your goals and find the willpower or tricks to staying fit. Here are the most important secrets to saving big and starting fresh this year
- Define your objectives
There’s literally no reason to get in shape financially or even continue reading this article if you don’t start by defining your objectives. You should develop a clear plan with tangible goals so you know you are on track. It is likely the number one reason why people fail at goals, because they do not define them.
So, how can you define your financial goals you might be wondering? It is easy when you use the SMART system. Here is how this model stacks up:
Specific: When you make a financial goal (or any goal for that matter), it is hard to aim when you don’t know what to go for. Choose a goal and make is very specific.
Measurable: You have to get out the measuring stick to see if you are on track and assess your progress. Make sure your goal has a measurable aspect to it.
Achievable: The sky might be the limit on some things in life, but make your financial goal achievable. You need to start off the new year with confidence.
Relevant: Make your goal make sense, or it just won’t work.
Time-bound: You have to choose a deadline. You have to get down and dirty with a time limit.
Example: Choosing goals like “I want to get out of debt,” or “I want to own a house one day,” are good goals on the outside, but they can become reality only when you add on the SMART method. So, instead of saying you want to own a home, find out what you need to do in order to apply for a home loan. Perhaps your first steps are to establish or increase your credit limits, or start saving for a down payment. Your SMART goal could be this:
I want to save $12,000 for a down payment in the next year. I will do this by putting $1000/month into my savings account. That’s a good start on how to save money in the new year.
- It’s time to be honest with yourself
One of the hardest parts about the beginning of any journey to an end goal is being honest about where you are starting. Many people have made poor financial decisions, but that doesn’t mean you need to beat yourself up. You also shouldn’t hide from them either.You should take a look at your whole financial picture. In order to do that, take a look at these areas:
Income – Take a look at how much you made last year (check out your taxes) and if you expect that to grow. Is there a way you can increase your income?
Expenses – Do you know how much you spent last year? This is the time when budgeting becomes essential. You can find where you might have had some hidden expenses or emergency situations happen. Are you saving for the future as well? For example, are you contributing to an emergency fund or retirement account? Lastly, can you survive on what is in your bank account should you lose your job, and for how long?
Assets – Do you know what you are worth? Many people have some investments (cars, a house, jewelry, etc). What are your assets and what is their value? This sometimes comes down to having a financial planner dive deep into your estate, investments, etc to see the current value and making sure you are getting the most out of tax-advantaged investments.
Debts and Credit – Have you planned for future debts, such as college, braces, etc. Do you have outstanding loans? What does your credit card balance look like and do you know what your interest rate is? Now is also a good time to check your credit score.
- All the tips
Let’s get down to the nitty-gritty. You have a goal, you have taken a good hard look at your finances, but you just want to know – how can I save in the new year?
- Stop using credit cards: if you can’t afford it outright, do not put it on credit this year.
- Start couponing: save some money on groceries.
- Eat at home: spending money on food is a sure-fire way to hurt your savings plan.
- Buy in bulk.
- Take advantage of customer discounts, clearance items, and loyalty cards.
- Buy store brands or generic labels.
- Readjust your cell phone plan. See if another carrier has a better deal.
- Install a programmable thermostat to save on heating and cooling costs.
- Shop the market for new insurance (auto, life, health, etc.)
- Choose free events to attend.
- Wait 24 hours to purchase anything over $100.
- Don’t shop when you are stressed out.
- Sell things on Facebook Marketplace or Craigslist.
- Take on a part-time or flex job.
- Negotiate credit card rates or transfer your balance to a zero percent interest card.
- Give up soda. Just drink water.
- Do DIY gifts and projects.
- Buy used when you can.
- Cancel unused memberships.
- Walk, don’t drive.