Saving in 2018: How to Set Yourself Up for Success
With the New Year comes a painful spending hangover from the holidays. Along with the aftershock comes the opportunity to improve your money management habits, focusing on saving money and spending less.
A 2017 BankRate survey found that 3 out of 5 Americans had a major unexpected expense in the last year and 41 percent will turn to their savings to pay for these costs. Without those savings, you put yourself in a challenging position if something goes wrong or hold yourself back when you’re ready to make a big purchase.
In 2018, resolve to get your money in order and set yourself up for success. These ideas will help you get organized and step into the New Year on the right financial foot.
Set Goals and Priorities
The first step in getting finances on track is knowing how much you want to save and what for. Start by getting a baseline of how much you already spend or save each month with this simple budgeting calculator. It requires only two numbers: money earned and money spent. Once calculated, you’ll get a number that represents your monthly debt or savings, which can be used as a guide to create realistic goals for yourself.
Next, create a list of what you want to accomplish financially and be specific. For example, your list might include:
• Put $300 into savings each month. • Open my 401(k) • Start a house fund • Only buy coffee on Fridays
Use a Spending Tracker App
Now that you know what your goals are, you can start assessing where your money goes each month. Using an app to track your finances is the easiest way to do this, especially if you’re new to saving and budgeting. Once set-up, you may realize that your weekly lunch with friends is costing nearly $80 a month—and when you discover information like this, you can make changes to start spending less. For example, you may go out to lunch just once a month and instead have mid-week picnics with your friends the rest of the time.
When looking for the right app, check out Rize, which aims to make saving easier. You can track progress toward your goals and set the app to move money from checking to savings automatically so you don’t even notice it’s gone.
Prioritize Your Spending
If your weekly girls night or yoga membership is important to your life, don’t give it up. Instead, prioritize these expenses and cut back in other areas. If you find that you’re still not able to save what you want, consider other ways to cut back. For example, you may be able to choose a less expensive membership at your yoga studio, use free online classes at home, or do girls nights in instead of going out.
Another simple idea is to focus on the “big things that really move the needle,” says Jeff Proctor in our recent post, Why Rounding Up Your Small Change Isn’t Enough. Some big things Proctor suggests focusing on include:
• Driving a car I can afford • Living in an apartment within my budget • Getting a pay raise at work • Not racking up credit card debt • Downgrading my cable package • Boosting income with a side hustle
If those are not options for you now, check out an app like Clarity, which will monitor subscription services and cancel them for you. Maybe you have a Hulu subscription that you never use or you’re a member of a website that you don’t even visit anymore. Clarity will catch these expenses, ask you if you want to cancel them, and take care of the cancellation process for you.
Don’t forget to also review things like your insurance policies. With car insurance, for example, you may be able to increase your deductible to lower your monthly premium. If you’re a good driver with a good driving record, it may make more sense to put the higher cost on the deductible side. In general, experts with U.S. News suggest that all insurance policies be reviewed annually to be sure you are getting the best coverage at the very best cost.
Finally, consider cutting the cord with things like cable. The average cable bill is $103 monthly, which is quickly becoming an unnecessary expense in the age of streaming TV. Check out services like Sling, YouTube TV, Netflix and Amazon Prime, or invest in accessories like Roku or Amazon Fire TV to watch the shows you love without spending a fortune on cable.
Establish a No-Spend Day Each Week
Having a no-spend day is a trick that many financial experts recommend as a way to curb spending. Choose 2 to 3 days each week that you don’t spend money, except on bills or absolute necessities. If that feels like a stretch, start with just one day and work your way up to another one or two; some people even take this a step farther and establish no spend weeks or months.
Find a system that works for you and your financial situation and then stick to it. You may find it easier than expected and end up saving more than you ever planned.
Start Saving in 2018
Sometimes the smallest changes can make the biggest difference, especially when used in tandem to create a savings plan you can actually stick with. Write down your goals, find an app to track your expenses and goals, and make a few lifestyle changes to start saving more every single day.
BIO: Jessica Thiefels has been writing for more than 10 years and is currently a full-time writer, content marketing consultant and business owner. She’s been featured in Forbes and Business Insider and has written for SoFi, Lifehack, Savings.com and more. Follow her on Twitter @Jlsander07 and connect LinkedIn.