If you are like most when it comes to resolutions, you stick with them for a few months and then it’s back to normal behaviors. That’s why you see the gyms packed in January, and by May they have cleared out (yet a vast majority will continue to pay the monthly dues).
As you get the holiday bills coming due and seeing your bank account low, you probably are saying now is the time to make changes. But maybe you’re reluctant to make a plan because you don’t want your “save money” goal to just be another failed New Year’s Resolution.
How to Save Money This Year
Don’t let the fear of failure keep you from taking the steps that are necessary to succeed! If you put to practice just a few of the tips that we share in the article, this could be the year that you finally start making the financial headway that you’ve always dreamed of.
And once you see the extra money start to add up each month, hopefully, there will be no going back to your typical spending (and lack of saving) behavior.
1. Set realistic expectations
When it comes to working out, if you say that you’re going to lose 30 pounds in the first month, you are probably just setting yourself up for failure. That’s simply not a realistic goal. And when you fail to meet it, you end up feeling discouraged and tempted to quit.
A better strategy is to set a smaller, achievable goal…like say, losing a pound a week. The idea is to experience the satisfaction of reaching goals that you set and allowing that satisfaction to motivate you towards future success.
The same principle applies to your finances. If your goal is to cut spending and save $10,000 in 3 months, that is probably not realistic…especially if that means having to save every dollar and probably going insane by not being able to have any fun.
- But a $1,000 savings goal may be achievable for you in a 3-month span.
- For others, saving $200 a month would be a huge victory.
No matter what your situation is or how tight your budget may be, the key is to set savings and spending goals that are realistic and achievable for you.
2. Start with your emergency fund
Your first savings goal needs to fund your emergency fund.
- If you don’t have any money set aside right now, start by aiming for a $1,000 emergency fund.
- This will give you an important cushion to handle unexpected expenses like medical emergencies or auto repairs without having to pop out the credit card.
Once you’ve reached your $1,000 goal, then strive to fully fund your emergency fund with 6-12 months worth of expenses. Yes, I know that may sound crazy right now, but trust me, it’s a critical step.
An emergency fund shields and protects you financially from the absolute worst case scenario — like a multi-month stretch of unemployment or a long-term medical problem.
Once you know that you’re prepared for the very worst that life can throw at you, it’s amazing how much easier it is to sleep at night. When it comes to enjoying financial peace, getting your emergency fund in place really is the turning point.
But how are you going to save that much money? It really all begins with the next step: creating a budget.
3. Create a budget and track your spending
For the remainder of this article, we’re going to discuss practical ways to free up extra money each month that can be, in turn, thrown at savings. As we move throughout this guide, we’ll discuss monthly payments, food, insurance, and travel expenses.
But before any of that can happen you need to know where your money is going. Pull last month’s credit or debit card statement and go line by line to get a true sense of where your money is being spent.
Since you have now figured out where your money is going, now would be a good time to figure out how much you should allocate out to each area so you can stay under budget and continue to free up extra money each month that will go towards paying off debt and saving for your future.
Your budget will take some tweaking along the way, but if you stick with it, it will pay off huge in a short time.
4. Cancel unnecessary subscriptions
Once you’ve started tracking your expenses, there’s a good chance that you will come across a variety of subscriptions that you are paying for each and every month. You need to objectively evaluate each of these services to decide if they are worth the money that they are costing you.
- Could you “cut the cord” by getting rid of cable?
- Do you really need a subscription to Netflix AND Hulu?
- Do you use Spotify enough to make it worth the monthly expense or do you end up listening to the radio and purchased albums most of the time anyway?
- Are there magazines that you don’t even read that you are paying money each month for?
- Do you really read enough(or listen to enough) books each month to justify your Kindle Unlimited or Audible subscription (If you do that read that much, perhaps you should consider getting paid to read)?
And the list goes on and on. You could easily uncover $50-100 of potential savings in this step alone.
5. Get car insurance quotes
Whenever people ask me where they can find wiggle room in their budget, I always tell them to start with their car insurance. Just about everyone could easily save $50 or more per month just by picking up the phone and getting a car insurance quotes from other companies in town.
Insurance companies are notorious for slowly, and nearly imperceptibly, raising your rates at each policy renewal. Add that to the fact that as your cars get older they should become less expensive to insure and it’s easy to see why a new insurance company can usually significantly undercut your current provider.
So get on the phone and get some quotes. A few minutes of your time could result in a huge boon to your savings rate in 2019!
6. Plan your meals on a weekly basis
Over and over again when I talk to families that are struggling with their budget, I hear that their food cost is one of the hardest areas to get under control. Whether it’s spending too much on groceries or eating out too often. “Groceries and Dining” is one of the most common budget busting categories for all of us.
One of the best things you can do to tackle your food budget problem is to plan your meals out on a weekly basis.
- Look at all the coupons that are being offered at your local supermarkets and come up with a meal plan based off of using as many on-sale ingredients as possible.
- Then, hit the road and buy all of your groceries for the week at one time.
I can’t say enough what an amazing effect this will have on your food budget. When you just wander into the grocery store each evening and buy the ingredients that you need for one night’s meal, you will inevitably spend money on unnecessary items during each store visit.
When you make your weekly meal plan, even put down which days that you will eat out. It’s important to plan that out ahead of time and stick to it so that you don’t eat out more often than you can afford in a given week.
7. Use credit card rewards to save on travel
If you did any traveling in 2018, there’s a good chance that any savings progress that you made throughout the entire year could have been blown in one week’s time during your summer vacation or winter getaway.
Traveling can be super expensive. And because we all travel so infrequently, it’s easy to feel entitled to spending more than we can afford during trips and just slapping a ton of our travel expenses on the credit card.
But instead of using your credit card to bail you out during your too-expensive trip, why not do the opposite and use your credit card on everyday purchases and use the rewards to earn free flights, hotels, or rental cars?
We’ve been credit card hacking for years, and it’s helped save thousands of dollars on travel…thousands of dollars that we were able to instead put towards building up our emergency fund.
8. Use your tax refund wisely
If you are someone who gets a sizable tax refund each year, it’s easy to get a little punch-drunk when that big check arrives and immediately find frivolous ways to blow it.
But I have another idea. Why not make a commitment right now, that you are going to split up the use of your tax refund in this way:
- 50% – Spent on a big expense (like a new piece of furniture, a new appliance, or a home renovation.)
- 25% – Put in savings toward your emergency fund.
- 25%- Spent on something strictly fun!
For more ideas on using your tax refund wisely, check out our guide, 10 Smart Ways to Spend Your Tax Refund.
9. Create sinking funds for non-monthly expenses
Irregular expenses like car repairs, home repairs, and medical expenses can kill a budget because you don’t technically HAVE to budget for them each month.
But these expenses will pop up. It’s just a matter of when not if. So instead of allowing these expenses to create major stress in your life whenever they happen, why not create sinking funds for each of them, so that you’ll be prepared.
If you’re not sure how to do that, check out our guide, How to Budget for Unexpected Expenses.
10. Set up an automatic transfer on your savings account
Finally, once you’ve completed all the steps below and you’ve created breathing room in your monthly budget, you have to actually put the leftover money in your savings account.
One of the best ways to make sure that happens is to set up an automatic transfer from your checking to your savings account on a weekly or monthly basis.
Just set it and forget it. We’ve done this years and it’s worked great for us. If I had to physically move our money into savings each month, I fear that I would either (1) forget certain months, or (2) allow emotions to get in the way and find other ways to use the money.
If you’re really serious about saving in 2019, then maybe it’s time to start viewing it like just another non-negotiable monthly bill.
There you have it! By following the 10 steps that we’ve outlined in this article, you could truly make 2019 the year that your savings goals become a reality.
Do you have any of your own money-saving tips? If so, connect with us on social media to let us know.
Still looking for more ways to save money? Check out 10 Ways You Are Throwing Money for more money-saving tips.