4 Steps to Succeed in Saving More This Year
Americans love to make ambitious goals for the new year, but few succeed in accomplishing them. According to a study from the University of Scranton, only 8% of those who made resolutions in 2012 accomplished them.
In the same study, “spend less, save more” was the third-ranked resolution for 2012. Despite the the number of goal-setters that give up, it’s encouraging that many want save money in the new year. The research suggests they just may need help doing it.
If you’re looking to save more money this year, here’s how to turn your resolution into action and succeed.
1. Set your purpose for saving
Setting a goal to save is noble, but there’s a trick stay motivated: save for a specific purpose.
Saving simply to have a pile of cash in the bank isn’t a great goal because the consequences of failing aren’t so clear.
Instead, save for something that really matters to you. Maybe you want to start an emergency fund to set aside $1,000 for car repairs because coming up with the cash was stressful last time your car broke down. Or you may be excited to take a vacation to Hawaii later this year but can’t until you save to pay for it.
If you don’t save the money in these situations, the consequences are clear as are the rewards for sticking to your goals.
2. Make big goals smaller
Big numbers can be intimidating. Once you’ve set your big goals, break them down into smaller and more manageable steps.
Which seems like an easier goal to you? Save $5,000 this year or $100 every week? Both are technically the same, but I prefer the second option since I can achieve this on a weekly basis. Saving $5,000 sounds like a harder task and it’s less clear on where to start, which may leave procrastinating savers wondering how to come up with all that cash once December rolls around.
3. Make saving automatic
When attempting to form new habits with yearly resolutions, it’s easy to forget these changes we’re hoping to make. Plus, there may be times when we’re tempted to bend the rules we’ve made for ourselves. The solution for saving more: make it automatic.
Automating your savings goals fixes both of these problems if you do it right. Set up automatic transfers so that when your paycheck is deposited, a portion immediately moves to another account before you can spend it. There’s no need to rely on your memory, and once the savings go in, you’ll be less likely to take money out to spend.
4. Focus on the expensive stuff
There are really only two ways to find more money to save: Spend less or earn more. You can choose either option to achieve your goal, but if you want to save more, find ways to save big within your budget and bank the difference.
The largest expenses in your budget often provide the biggest opportunities to save. Saving 50 cents by choosing store brand pasta sauce is helpful, but a discount of $150 on your car insurance is much more valuable.
Use technology to find big expenses and save. The Pageonce app can show you where your money is going, and you can then look closely at the categories with the highest spending. Work on ways to spend less in these areas so you can put more money into your savings account.
Common big expenses where you can find ways to pocket hundreds of dollars over the course of the year include:
- Cell phone bill
- Home energy improvements
- Car insurance premiums
- Cable and internet bill(s)
- Interest rates on home and auto loans
For any monthly bills you reduce, go back to step 3 and deposit the difference into your savings account each month.
Jeffrey Trull is a freelance writer and blogger with a passion for helping others pay down debt, save money, and spend on what they love. His work has been featured on Money Talks News, MSN Money, and MainStreet. You can find him on Twitter.