Want To Save More Money In 2019? Achieve Your Resolution With These Financial Tips
Like everyone else in the world right now, you have probably made tons of new year resolutions. The U.S News and World Report says that 80% of all new year aspirations will have miserably failed by mid-February.
Resolutions are usually geared towards happiness and general satisfaction with life. Ken Hevert, a senior V.P at Fidelity Investments, says that “there’s a connection between overall financial wellness and happiness.” So if there is one resolve worth holding on to is the one on saving more of your money.
For the past decade, more and more people have planned to save money, pay debts and spend less as their main new year resolutions. According to a survey done by Fidelity Investments, 48% of these respondents in the survey plan to squirrel more savings away this year.
If you are part of this percentage and plan to save more and better than you did last year, here are some tried and tested ways to achieve your resolution.
Seven tips that will help you achieve your financial resolutions
1. Obey the 50, 30, 20 rule
You cannot save much without a budget. NerdWallet’s Kimberly Palmer proposes a unique budget breakdown that should help you make better budgeting decisions. A 50% of your income should cater to your basic essential needs. This includes food, clothing, and housing.
Your wants should utilize a 30% of your income. So that expensive Burgundy for that dinner date should fit within this budget. The remaining 20 % should cater to your savings and debt payments.
A set budget can help you live within your means, and you can even have one as an app on your phone.
A reasonable budget will assist you to cut back on costs that keep utilizing funds meant for your needs, wants and future planning. An app can help keep tabs on avoidable costs like taxis or subscriptions like Amazon Prime or Netflix.
It might break your heart to do so, but stop these subscriptions if you hardly use them. By cutting out unnecessary costs, you can start building up on your emergency savings kitty that should be at least six months of your day to day living expenses.
2. Pay off your credit card debt
Credit cards; you can’t live without them, but you have to learn to live with them. You cannot avoid credit cards if you are looking to build a healthy credit score. Without a credit score, you will find it very hard to get a realistic loans for your car or your apartment.
On the other hand, the average American household has at least $6,577 worth of credit card debt. Of the over $1 trillion Americans owe as revolving debt balances, a whopping $830 billion of it is classified as credit card balances.
The 50% of all consumers carrying this debt are in a tight spot. Their debt is getting more expensive by the day. This is why credit card debt needs to be fast-tracked. That may mean for example contributing an extra $60 automatically from your online repayment interface.
Experian’s Rod Griffin advises that you should manage credit cards by making your payments on time. “Ride the wave, don’t fall off the surfboard, that’s the trick,” he says. Do not use your credit card to purchase things outside of your budget too. Clear that consumer debt and start off your year on a high note.
3. Put a boost on your retirement contributions
This year you can contribute $500 more to your IRAs than you could last year. Put a challenge on yourself to pay in the maximum amount possible. Remember, you cannot make up for the years you have missed payments, so its time to put your best foot forward.
You will need to budget for those 529 and 401(k) plans on a monthly basis too. If your employer has a workplace plan, match it. And if there is anything left over, for example after paying off your credit card debt, toss it into your IRAs.
4. Fund your health account
Build up your HSA or health savings account for those unforeseen medical expenses or for retirement. If possible get health insurance that is a high deductible plan to cater for day to day medical bills and doctor’s consultations. This will keep your HSA safe, for use when you badly need it down the road.
Take good care of your health too. You can save money on unnecessary medical bills by taking preventative health measures. This includes visiting your dentist or your doctor for that checkup. A stitch in time saves nine!
5. Plan for your vacations
Once summer rolls around, and #wanderlust selfies start to show up on your IG feed, you want to be readily armed with an enjoyable vacation plan. A LearnVest survey shows that 3/4 of all U.S vacationers boot their travel expenses with debt.
A whopping 55% of them go for vacations that they have not budgeted for. In the end, these travelers accrue at least $1,108 mostly in credit card debt, which is very expensive to pay back.
Well, you do not have to raid your retirement kit or kids school fund to fund your holiday if you want to avoid debt. A well planned holiday at the beginning of the year can save you a lot of money. Starting your holiday planning with a budget is essential. This will ensure that you can successfully squirrel away travel money within a reasonable time.
More steps you can take to save money for travel includes setting up airfare price alerts to help you book affordable air tickets. Reserving tours in advance and being flexible with travel seasons can also chop huge expenses off of your travel budget.
A travel fund is the easiest and most pain-free way to fund your vacations, and you can start one today.
6. Set up your kids college education savings plans
A 529 college savings plans is often touted as the best way to save for your children’s future education costs. Some states also provide tax deductions to encourage these savings and make it easier to hit target goals.
Some parents also save for this future by investing in stocks. Stock markets are very volatile though, so you have to weigh your risk appetite and save as much as possible.
7. Budget for those always forgotten one-time expenses
Recurring monthly expenses like your mortgage payment or rent are seldom ignored. It Is effortless to overlook annual fees like license renewals or different insurance costs. When the time comes to cough up these funds, you might find yourself in an unpleasant situation that forces you to use up your savings.
Go to your records and note down those annual expenses. Fix them in your monthly budget too. It could also be time to study them in-depth and find out if you are paying more than you need to be paying. Look around, you might find that rates are cheaper elsewhere.
The final word
Your financial life will change for the better this year if you follow these tips. The key is to save first, then spend later. Saving first forces you to smarten up about spending. Overall be patient and watch your savings, as well as your financial health and happiness, grow.
