8 Savings Tips for the New Year

The New Year is the time of resolutions. Whether it involves living a more healthy lifestyle, losing weight, or saving money, come January 1, you’ll want to start with a clean slate. Many people include saving more money on their list of New Year’s resolutions, but in order to increase your savings, you will have to change your money habits.

Saving is a big problem for Americans. Even when the economy is strong, Bankrate reports that 20 percent of Americans don’t save any money and 65 percent aren’t saving enough for retirement. The median savings account balance is $5,200, which isn’t enough to cover emergencies in the case of illness or loss of employment. All of this shouldn’t be surprising when 80 percent of Americans are living from paycheck to paycheck.

To improve your savings habits in 2019, it’s best to find some easy-to-follow strategies so you can get ahead in your savings. Here are eight simple suggestions:

1. Create a household budget: In order to set up a savings plan, you need to know where your money goes and how much you can save. Create a household budget. Only 41 percent of Americans actually have a budget—you can beat the odds just by tracking your expenses. Be sure to include the most common (and costly) expenses, such as housing, transportation, taxes, food, and healthcare. Once you have a handle on your finances, you can set aside an amount each month for savings.

2. Open a savings account: Before you can start saving, you need a place to stash your cash, and a savings account is the best place to start. Money won’t earn interest if you put it in your mattress, and if you try saving money using your checking account, you will probably spend it. A savings account will let you put money away and earn interest at the same time. Once you start accumulating savings, you can graduate to other savings strategies that yield higher interest earnings, such as CDs.

3. Automate your savings: Once you have the savings account set up, you can instruct your bank or credit union to automatically transfer money into your savings each month. This is a great way to ensure you are putting money aside.

4. Lose that debit card: Spending has become so easy with debit cards. If you want to make an impulse purchase, ATM card spending is simple because the money is automatically withdrawn from your checking account. As a result, many people don’t track their spending and they overspend. If you use cash for daily expenses, you are less likely to exceed your budget. Establish a weekly or daily cash spending limit and try not to use your ATM card.

5. Hold that latte: A little sacrifice can go a long way. For example, Americans love their coffee and spend an average of $3 per day, or $1,100 per year, on coffee. That’s a lot of coffee money that you could put into savings. Think of other indulgences you can do without. Can you forego your morning bagel or muffin? How much would you save if you brown-bagged lunch a few times each week. Calculate your spending and put that same amount into savings instead.

6. Match your vice spending: If you are looking to cut back on other vices, such as drinking too much or eating out too often, consider setting up a vice fund. It works like a swear jar where you deposit cash every time you overindulge. This gives you a double incentive to keep your New Year’s resolutions.

7. Your smartphone can help: There are a number of money-saving apps for your phone that can help you save. Most banks and credit unions have their own banking apps that make it easier to manage your money and move cash between accounts, such as into your savings account. There are plenty of other apps that help you manage your money, such as Digit which helps you budget for savings, Qapital which helps you set savings goals, and Trim which helps you lower your bills, to name a few.

8. Change jar: An old-fashioned strategy is to put all your loose change in a jar, and when the jar is full, deposit it into your savings account. It’s not a very strategic way to save for the future, but every penny helps.

These are just a few simple strategies to help you start saving more money in 2019. If you can maintain the discipline to set aside a specific amount on a regular basis, your financial advisor can help you make it grow even faster. Talk to your bank or credit union about interest-bearing accounts and financial services that can help you save. The sooner you start, the happier you will be when you really need that extra money.