2019 Financial Resolutions: 12 New Year’s Resolutions to Save You Money
80% of New Years resolutions fail by February, and more often than not financial resolutions are among them. So what gives? Are we all doomed to empty savings accounts and living paycheck to paycheck? Not necessarily.
Often, it’s not about making resolutions but making the right resolutions, and then putting action behind them.
Got your notebook? Got your calculator? Got your calendar? Great, you’re ready to start working towards some powerful financial resolutions that can get you closer than ever to your financial goals. Try one or try them all!
1. Save 15% of Your Income
I want to “save more” this year is a common entry to the resolution list. However, studies have proven that goals are more likely to be achieved if you are specific about the goal. So instead of merely wanting to save more, assign a specific number you want to aside each month.
So, how much should you put aside? It depends on your debts, desired savings amount, income and how fast you want to save it. As a general rule of thumb, it’s suggested to start with 10% to 15% or your income. If you reach the end of the month and find you still have plenty of wiggle rule, make it bigger.
2. Split the Unexpected into Thirds
Now and then you may come across some unexpected money. Whether it came as a gift from a loved one or an extra project landed in your lap, people tend to decide what they use the unexpected money on depending on how much they receive. The truth is, all of your unexpected income should be going to the same three places:
1/3 Toward Debt Payment
1/3 Saved For Investment
1/3 Spent on Yourself
This way, you get to treat yourself while working toward clearing your debt and investing in your future. If you are debt free, think about using the extra third to shore up your emergency fund. Another option would be to invest in yourself through education or other training that may help propel your career.
3. Choose Cash Over Card
Studies have shown that you’re more likely to spend more if you use your card than cash, and for a good reason. Not only are you limited to spending the amount of cash you have in your wallet, but the visual reminder of how much you have left may be enough to slow down your spending.
Unfortunately, the majority of us view our ATM card as a magic card with unlimited funds. We don’t realize the damage until we check our online bank accounts. If you have trouble carrying cash, have your bank text you notifications of what’s in your account a couple of times a day, for a similar visual effect.
4. Watch the Score
By now you should know what a credit score is and how it works. If you managed to damage it beyond recognition (Hello 20’s) somehow, there’s still hope to fix it. Even if you’ve worked hard to clean up your credit score and have gotten it to a good place you still want to follow this piece of advice: watch the score.
There are some little things like applying for a new credit card or even applying to a new job that can knock your number down a bit. So it’s important to keep an eye on things. There are some credit check sites available to help you stay on top of things. Set-up a recurring reminder to check a few times a year.
5. Make a Monthly Investment
When it comes to a healthy financial situation, you want to think about more than clearing your debt and growing your savings account. Having a strong investment (or group of investments) is a perfect way to accumulate wealth with next to no effort, assuming you know where to place it.
If you are new to making investments, it may be best to reach out to a financial planner to ensure that you are creating an investment program that will help you reach your goals and minimize your risk of loss.
6. Create Some Padding
One problem that seems to arise when attempting to build up a savings account commonly is the inevitable emergencies and unexpected expenses. We’ve all been there before; we finally get our savings account to a comfortable place when suddenly we have to empty it to cover a car repair or to float us while we look for a new job.
The only way to get out of the proverbial hamster wheel is by creating some padding for your bills to stay on track with expenses even if you have an emergency. This means paying bills ahead of time, to already have some wiggle room in place in case you need the extra cash without dipping into your savings account. Emergency funds are for emergencies, and no a night out is not an emergency no matter how much you deserve it. If you are using your emergency account for non-emergencies, Stop! Then set-up another level of liquidity for quasi-emergencies like your desperately needed night on the town. Yes, you may need to tighten the belt a little to get your liquidity up, but your future self will thank you.
7. Track Your Daily Expenses
Often we reach the end of the month not sure where all the money went. After all, you barely ate out and didn’t make any major purchases, so why are you still living paycheck to paycheck? Even more dangerous is the belief that we can’t save money since we’re already tight.
When we track our expenses on a daily basis, we realize that the small things tend to add up. Whether it’s your daily coffee order or those several online memberships you don’t remember even signing up for. By tracking each day, you’ll be more aware of all the little places your money is going to. I highly recommend using a tool like You Need a Budget (YNAB). I work with clients on setting up a workable budget and finding ways to keep on track painlessly.
8. Put Yourself on Payroll
Having a hard time putting money into a saving account, but can easily stay on top of your bills? Then it’s time to consider your self one of your bills. It may seem strange, but by lumping your savings into the rest of your payments, it will seem like more of a non-negotiable.
You can even write out a check to yourself while you’re writing checks for the rest of your bills, then go and physically deposit the check into your savings account. While it may seem silly, whatever helps you save money is worth doing!
9. Use an App
If this is your first time trying to incorporate some healthy financial habits into your day to day, you may want some help. While simple pen and paperwork for some, there are a number of Apps dedicated to ensuring your financial health.
Check out apps like:
- You Need a Budget (YNAB) mentioned earlier
Not only do these apps help you divide up your budget, but they’ll also track your purchases through your debit card and even send alerts when you’re approaching your spending limit.
10. Open an IRA
Unfortunately, most people don’t think about their retirement plan until they start approaching retirement. To make matters worse, social security checks don’t go as far as they used to. All of this should be more than enough reasoning to start setting aside a nest egg.
Consider yourself paying your future self for all the hard work you’ve done. You will save on your taxes and at the same time making your future more secure. If you are unable to max your contributions, then make maximizing your retirement accounts a goal and write it down and define how you plan to achieve this important piece of your financial puzzle.
11. Read a Personal Finance Book Monthly
While there is a wealth of financial information on the web, those finance gurus didn’t get to where they are for nothing. Commit yourself to read one new finance book per month.
Sound like an intense commitment? It doesn’t have to be. By reading just ten pages each morning, you’ll easily complete 12 books a year. It will also feel like you’re starting your day having coffee with your favorite finance guru, which puts you in the right headspace to make smart spending choices.
12. Bonus: Give it Away
Probably not what you were expecting to see on this list? While it may seem like the opposite of saving money, giving it away (through charity or donation) can help put perspective on the real value of money. As a result, you’re less likely to spend it on things you don’t need.
Need an extra push? Partner this tip with number 12, and use an app that donates money to an anti-cause. This means if you don’t hit your weekly (or daily) savings goals, the money will instead be donated to a cause that goes directly against a cause you support.
Getting Started on the Right Foot
If you’re tired of your financial resolutions going in the trash and having to face yet another year of not meeting your savings goals, it may be time to get the support you need.
Don’t beat yourself up. Most people have difficulty setting money aside whether it’s for a college fund or in case of an emergency. That’s why we’re here to help. Take the time to enlist the help of a fiduciary financial advisor to help you stay the course.
Contact us to learn more about how to meet your financial goals in 2019.