Resolutions 2014: 4 simple tips to fatten your bank account
The best time to start saving money? Ten years ago. The second-best time? Today. Use these tips to turn your finances around in 2014.
This post comes from Donna Freedman at partner site Money Talks News.
You want to save. You swear you're going to save. But you said that last year, too, and your bank account doesn't look much healthier.
Saying "I need to save" means you've recognized a basic financial fact: You need to take responsibility for your financial life. You really intend to do it -- one of these days. (Read: Sometime between next week and never.)
Or maybe you're just financially overwhelmed, especially if you haven't gotten a raise lately or if you've undergone a spell of unemployment. It's easy to convince yourself that you'll save "later."
The best time to start saving money? Ten years ago. The second-best time? Today.
Want 2014 to be the year you turn things around? Four simple tactics can make all the difference.
Step 1: You need a goal
The first thing to do is set a specific goal. "In 2014 I'm going to start an emergency fund" or "I resolve to have a healthy bank account this time next year" are both fatally vague. How much of an EF? What's a "healthy" account? Try this instead: Pick a specific sum. It could represent, for example, your emergency fund, the cost of a long-deferred vacation or a down payment on a house. Your choice.
You could divide that amount by 12 and put that result into savings each month. Or you could divide that goal by 52. Why 52? Because a small, weekly savings plan is less traumatic than a once-a-month withdrawal. You learn to live on what's left week by week, vs. losing a (relatively) big chunk all at once.
Let's start with an easy example: the $500 that personal finance writer Liz Weston recommends as a starter emergency fund. Divide $500 by 52 and you get $9.61, which rounded up makes $10.
Step 2: Pay yourself first
The old saw holds true: Pay yourself first. Otherwise that "extra" $10 will get spent on something nonessential, like a pizza.
Or even for something essential, like rent. Paying yourself first forces you to get smarter about the way you let money slip away each month.
Step 3: Automate
Automate a weekly withdrawal of $10 (or whatever your selected amount is) from checking to savings. Why automate it? Because that way it's sure to happen every week or month. Treat your savings like any other bill -- utility, credit card -- that you pay online.
Step 4: Track your expenses
Track your expenses with a free service like our partner PowerWallet, which shows you where your money is going. Now you can look for ways to save on everyday expenses.
Earn more or spend less? (Why not both?)
A recent survey from CareerBuilder indicates that 36 percent of U.S. residents either always or usually live paycheck to paycheck. If you're in this situation you might wonder how to find that $10 per week.
Let's turn that idea on its head: If you had an emergency, how would you find the however-many-dollars it would take to fix things? Better to sacrifice $10 a week than to have to come up with $300 all at once.
Even if you're not in that situation, you'll need to find ways to set extra money aside to meet your goal. Here are a few ideas to get you started:
- Pick up extra work. If extra hours on the job aren't available, you can find other ways to earn more money. Dog walking, house cleaning, lawn mowing, delivering newspapers and the like are all tried-and-true methods. Try thinking outside the box, though. I once interviewed a woman who walked several neighborhood kids to school; since she had to walk her own daughter, she was earning money for doing something she did every day. Smart.
- Cut back on eating out. Way back. Cooking at home is much, much cheaper. Can't cook? Go online or to the library for easy recipes. Do this gradually if you're a total restaurant junkie. For instance, cook two times a week at first (and make the meals big ones so you'll have leftovers to carry to work).
- Cut other everyday expenses. Trim TV costs by ditching cable (or at least negotiating for a better deal). Use discounted gift cards to pay for goods and services. Look for cheap or free ways to entertain yourself.
- Look for savings elsewhere. For instance, find ways to save on car and homeowners insurance.
- Use coupons. Sites like CouponMom.com and Favado do the work for you by matching coupons (often downloadable) to sales at supermarkets and drugstores. (I never pay full price for toiletries.) Incidentally, there really are coupons for healthy foods, including organic products.
- Sell stuff. On eBay, on Craigslist, on the supermarket bulletin board. Sell books through online used-book sites.
- Tell yourself "no" more often. Well, scratch that: Tell yourself "not now" or "not today" when you're itching to buy any unnecessary item. Don't stop treating yourself entirely -- just pick your spots.
Try one new tactic at a time until you're confident you can pry that $10 -- or whatever amount you've picked – from your budget. Watch that savings account creep up. If through luck or diligence you find a little extra money in the budget some weeks, shoot it over to savings.
Pat yourself on the back (just a little), but don’t consider the matter closed. Instead, keep looking for ways to increase your savings. Even if it's only $11 a week instead of $10, that's an extra $52 per year. (Hint: Slow growth is better than no growth.)
Yes, it can be tough. But it gets easier, or at least becomes second nature to pay yourself first. If times are tight, don't let that undermine a better future -- and that future starts now.
More on Money Talks News:
Put 5% of your gross income into your 401K, more if your company matches. Put 10% of your gross income into an emergency fund until it's 6X your minimum monthly expenses, then start putting the excess into safe investments. Treat this as bill number one, no excuses.
In five years your life will be dramatically different. You won't worry about your car breaking down, a big unexpected bill will be no big deal, and you'll shake your head in disbelief at how much your friends suffer with self-imposed money problems. It's really that easy.
First of all, don't spend more than you make. Second, no credit cards. It's always a good idea to have money set aside in case of an emergency. Third, don't buy things you don't need. Most importantly, keep most of your money invested, but watch it on a daily basis. The key is to try to keep your money working for you.
Cancel your cell phone contract, drive a clunker, build a shed and live in it, raise chickens and rabbits and eat them.
What is all this with work and save? Under today's administration it is better to maximize the amount of free time you have. Your retirement is already taken care of with 99 weeks of unemployment and SSI, your food bill is taken care of with SNAP, your medical insurance is taken care of with ACA, your education is taken care of, your housing is taken care of with section 8, your cell phone is taken care of with your Obama phone.
If you decide to work and save just look to your left and right one of the people standing next to you is not and it takes an ever growing centralized federal government to ensure that you pay for their benefits.
never mind, I'm not telling what I have. it will but enough, it will take care of me and my family for quite a while
I am not rich but I have put $ away for awhile and I know how to protect my family and I will give my life to preserve my and my family's right to live the way they want to. come hell or high water I will protect what this country that was founded on, and that is the freedom of the people to choose how they will live and not how some politician tells ' them tells how to live. this country was founded for the people by the people and I am 46 year veteran of this country, and I am sick and tired of the way the people of this USA are being treated. we have freedoms that were provided by the
second ammdenent to protect ourselves from harm. what choice do Have
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