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 are all popular money resolutions, according to a survey from GoBankingRates¹. 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. Look at your credit card and bank statements for a 3-month period and 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. If the service is $15 a month, you’ll save nearly $200 a year by canceling.
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, paying off student debt, or saving for a vacation? 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 to your savings 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. 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 low or 0% interest rate for a limited period of time (e.g. 12 months). Even if you can’t get your credit card 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? If you get a pay bump, increase 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.
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 NerdWallet3 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 prices for you.
It just takes a few steps to set yourself on the path to saving more money in 2020. 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.
2 For more complex financial situations you can request a personalized financial plan for a fee generally up to $1,500.
Financial Advisors are Investment Advisor Representatives of, and offer securities and investment advisory services through Voya Financial Advisors, Inc. (Member SIPC).