A new year is here, and with it comes the opportunity to make resolutions that can change your life for the better.
This year, why not resolve to save more money? You can make it happen by following these simple steps.
1. Set a Budget
Saving money is a habit, and the easiest way to build a new habit is by tracking your spending behavior.
That’s where a monthly budget comes in. Whether you want to use an online tool or create a spreadsheet, follow your expenses closely.
Write every expense down, from your weekly trip to the supermarket to the monthly premium for the best auto insurance.
Doing so will help you determine where you’re spending most of your money and how you can cut back to save more.
When you create your budget, decide on how much you want to save each month and add that to the budget.
This might mean cutting back on non-essential items at first, but it will be worth it in the long run.
2. Review Your Auto Insurance Policy
Do you know how much your car insurance really costs per year? If not, it’s time to find out. Next, consider if you are really getting the best auto insurance deal.
You might be able to switch to a cheaper option for a lower premium. While it might seem like a hassle to shop around for better insurance rates, you will end up saving more money in the long run.
3. Pay Off Your Debt
Once you ace your monthly budget, it’s time to start paying off your debt.
If you are like most people who carry credit card debt, you might be surprised at how much it’s costing you.
Paying off this debt will save you money on interest payments and help improve your credit score.
Find Out How Much You Owe
Start by listing all the credit card and loan payments you owe. This will help you see how much you are spending to carry debt each month. Be sure to include the minimum payment.
Have a Snowball Payment Plan
Next, pay the minimum payment on each one and put all your extra money on the smallest one.
For example, if you have three cards and a car loan, start with the card that has the lowest balance.
Pay as much as you can on the card until it is paid off, then make the minimum payment on each of your other cards and put all the extra money into the next smallest debt.
As soon as the smallest debt is paid off, take the money you were using to pay on that card and put it towards your next lowest balance. Continue until all your debts are paid off.
While it might take you a while to pay down your debt, the result is worth it.
4. Use Tools That Reward You for Saving
Saving money might seem hard at first, but there are a few tools that can help. Apps like Acorns have been designed to round up your debit or credit card transactions and save the change.
The amount you save can depend on you, so adjust it to work for your savings goals.
5. Save for Retirement
It might feel like you don’t have enough time to put money away, but even small contributions today can make a big difference in the future.
Earn Rewards for Saving
Another tool that can help you save money is your employer’s 401k plan. By enrolling in an employer-sponsored 401k plan, you can save money for retirement with pre-tax dollars.
You can also increase your savings by taking advantage of employer matching funds. Employers will usually match the contributions you make to your 401k, up to a certain percentage of your salary.
Never Miss a Deduction with an IRA
If you have excluded yourself from your employer’s 401k plan, consider opening an IRA (Individual Retirement Account) to save for retirement.
Similar to a 401k, IRAs allow you to save with pre-tax dollars. Once your contributions to the IRA are in, you can invest them how you want until retirement age.
Be Sure to Max It Out
As of 2021 and 2022, you can contribute a maximum of $6,000 per year to a Roth IRA. If you are over 50, you can contribute up to $7,000 per year.
Contributing as much as you can today allows you to see greater savings in the future.
Alternative Sources of Income
Making money online has never been easier and there’s plenty of options for side hustles on the internet.
It would a shame not to use this opportunity, so do your research and find how can you add to your income.
To get you going, you can start researching money-making apps.
For example, the app Honeygain allows you to generate passive income without putting a lot of effort and time into it. It also doesn’t require any initial investment.
All you have to do is download the app and register an account. There’re plenty of options to choose from, you just have to find what works for you.
6. Diversify Your Investments
Once you have saved some money, it’s time to start investing.
By diversifying your investments and choosing the right funds for you, you can make your money work for you.
Here are some investment strategies you might want to consider:
- Cryptocurrency
- Index funds
- Commodities
- Foreign exchange
- Unit trusts
Before you start investing, make sure you educate yourself on what types of funds exist and how these work.
It might be a good idea to talk to a financial planner or someone else who can help you make an informed decision.
7. Automate Your Savings
Finally, automate the savings process every month by setting up an automatic transfer to your savings account.
By automating the process, you won’t have to worry about forgetting to put money into your savings account. As a result, you won’t miss out on the opportunity.
Takeaway: Invest in Yourself
It is a good idea to put your money into investments that you can learn about and manage.
You can start small by putting money into low-risk stocks.
Then, find a good financial advisor to help you with your investments. Your future self will thank you.