Spending can get a little crazy during the end of the year. Between holiday happy hours, generous gift giving, travel and end-of-year donations, chances are December was a bank account buster.
You might be looking back at 2016 and thinking, “Where did all of my money go?”
You are not alone. In fact, of those people who make beginning-of-the-year promises, about 42 percent make money-related New Year’s resolutions. So if you’ve resolved to spend less or save more, now is the time to take control of your financial life and save more in 2017.
Here are four easy ways to save more money this year.
Make a Budget and Stick to It
If you don’t know where your money is going, it’s hard to know where to start saving. Therefore, making a budget is a great way to assign each dollar a purpose and identify areas where you could cut back.
There are many free budgeting tools online, including sites that allow you to track all your credit card and debit card purchases in one place, automatically categorizing them based on the vendor name. The sites can also provide recommended percentages, so you’ll know if your monthly rent is eating up too much of your take-home pay.
If you are more of a tactile learner, some pros recommending taking out your spending cash at the beginning of every week or month, so you are physically handing over money instead of swiping a card.
Once you see where your spending is going – like 30 percent of your income goes toward eating out or 25 percent goes toward cable, streaming services and video game purchases – you’ll be able to address your budgeting pain points.
Bring in More Moolah
Even if you are able to find savings in your budget, a sure-fire way to gain more wiggle room in your budget is to bring in more money.
The most obvious way to do this is to begin with your current employer. Start by doing research on sites like Glassdoor.com to back up a request for a raise. Talk to your boss about the projects and new responsibilities you’ve taken on, the new business you’ve brought in and the going rate for your position out on the general marketplace. Then ask for a raise. Don’t assume she will know what you are getting at.
Whether your boss goes for the raise or not, another way to bring in more money is through a side hustle. Try freelancing, pet-sitting, babysitting or drive for services like Lyft or Uber. These side gigs will add up quickly.
Most importantly, don’t change your budget at all after your raise or freelance money kicks in. Just sock away any extra income you receive and watch your savings increase quickly.
Pick the Right Savings or Debt-Reduction Vehicle
To accumulate real wealth and rich life experiences, you’ll have to pay down debt and save. It’s how you’ll get a down payment on a house, get those student loans off your back or take advantage of compounding interest for retirement.
Many experts recommend having an emergency fund before you start tackling other debt and savings, so you don’t get totally derailed when your car needs urgent repairs or you’ve got to fly home for a family emergency.
From there, think about your goals and your stresses. Are your student loans the first thing you think about when you wake up in the morning? Then pay as much as you can – well beyond the minimum payments if possible – toward those loans so they are stricken from your budget as soon as possible.
Be sure to use your age to your advantage by benefiting from compounding interest for retirement or other long-term savings. Basically, the idea is that you could be earning interest on the previous balance plus any interest accrued. For example, someone who invests $5,000 every year from age 25 to 35 and then stops investing will end up with more money at retirement than someone who invests $5,000 from age 35 to 65. Why? The earlier saver’s money has more time to benefit from compounding interest.
Automate Your Savings
Once the money appears in your account, you’ll be tempted to spend it. Also, life gets busy and you might forget to log on and transfer funds. So automate your savings as soon as possible.
Transfer money from your checking account directly to your savings account of choice on a particular date every month. Have your retirement money automatically deducted from your paycheck so you never even have it to spend. The more you can automate, the less likely you will be to convince yourself the money should be spent elsewhere.
If you just can’t get motivated to save, rename your accounts based on your goals. For example, instead of have a 10-digit savings account number with your bank, change the name to Dream Home Down Payment or change the line item on your budget from 401(k) to Traveling to Europe in Retirement. Reframing your saving based on your goals will help keep you inspired.
Let 2017 be the year your money works for you. Stop being ruled by worry and unintentional spending, and use these planning tools to save more money and enjoy the peace of mind that comes with financial wisdom.