Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
A new year often means a new focus. You might resolve to lose some weight, get to the gym more often, spend more time with family or save more money. While some of these goals tend to fall off your to-do list as you get busy, saving money shouldn’t. Having a healthy cushion in your savings can help if you face an unexpected financial downturn.
Market uncertainty can lead to layoffs, and accidents can happen to anyone. Without a healthy savings plan, you could be facing severe financial problems. There is a lot of advice out there about savings, but few experts agree on a final percentage. Sen. Elizabeth Warren recommends 20 percent of your income, but there is no one-size-fits-all number. Younger people can save less to reach financial freedom over a longer period of time.
Remember that reaching financial freedom is all about a percentage of savings. When you work on your budget, start with an idea of when you’d like to retire and what your expected income will be. After all, you’re likely to have less financial freedom after retirement, but with careful planning, you can have enough put by to retire early and live comfortably. You have to save money to reach your goals.
Saving money starts with a very simple concept — spend less. The less you spend, the more you save. Your regular expenses can get out of control in a hurry. By setting strict controls over what you are willing to pay for living expenses, practicing good saving habits and implementing a more frugal approach to life, you can start saving money, fast.
Spending less doesn’t mean being cheap, but it does mean taking a frugal approach to purchases. Before buying, you want to be cautious. Consumers already tend to read online reviews and run product searches before spending, but you can take things a few steps further and save money faster. Here are a few tips for frugal spending that will help save you money.
Cutting back on some of your biggest expenditures doesn’t always translate into an increased level of savings. To see the best results from your increased frugality, make arrangements for automatic savings. You are much less likely to spend money if it never enters your checking account. Some companies offer split payroll, where you can have your direct deposit automatically split between your checking and savings account. You can also up your 401(k) match to compensate for the extra funds in your budget.
If your employer doesn’t offer these options, no worries. Your bank does. Your bank will let you set up automatic withdrawals from your checking to your savings. A small CD account can be a good way to get started, as it can impose penalties for early withdrawals. It’s also one way that saving makes money in interest. By making savings automatic, you learn to work with the funds available and avoid thinking about savings as “spendable” cash. When you’ve got things to save up for, this is a great way to start putting money aside.
When you want to get started on a savings plan, sometimes it is easiest to start with small, simple changes. Even pennies add up over time. Here are a few tips to help you get started on your journey to financial freedom. Follow some or all of these tricks to save money this year.
Saving money is a very personalized process. Maybe you don’t eat out a lot, maybe you’ve never signed up for cable TV. Your money-saving ideas should start with a look at your spending. No two people have the same spending habits. When you resolve to save more money this year, take consistent, small steps and see how well you can do. The longer you save, the bigger your balance and the more motivation to keep that New Year’s Resolution.