Money Smarts Blog
Five Best Ways to Save Money for a Financially Successful Year
Feb 18, 2020 || Sarah-Beth Floyd
“I’m going to save money this year and know EXACTLY how to do it!” --no one ever
There’s a variety of money saving techniques available, but how do you choose the right one that fits your lifestyle? Breathe! We’ve done the heavy lifting for you and put together a list of five different options from packing a lunch versus eating out to planning a bathroom remodel. Start your year off right with some hefty savings; review the techniques below and choose the option that fits your needs!
#1: Get rid of credit card debt
Set a goal to pay off your credit card(s) in the first half of the New Year. Even those cards with low balances or low interest rates require a monthly payment. Wouldn’t it be nice to not have a monthly payment toward your credit card debt? If you want to get serious about saving, pay off your credit cards and use the extra money to start a savings account or build the one you currently have.
If you need help getting started, the easiest methods are the debt snowball and debt avalanche. With the debt snowball you pick the debt with the lowest balance and pay it off, then move onto the next. Your debt-free satisfaction is the motivation to keep going.
The debt avalanche has a slightly different approach; choose the credit card with the highest interest rate and work toward paying it off. This saves you money in interest charges down the road.
To have the ultimate savings account, try to only use credit cards for routine purchases, that you know you’ll pay off each month (gas, groceries, etc.).
#2: Set savings goals
It’s easy to say you’re going to put $50 in your savings every month, but without a specific plan it can be difficult to follow through.
This month try coming up with a realistic plan to put $XX away by next year. For example, my current savings goal is to save $500 by April 1. I’m allocating $50 from every paycheck to go into savings through an automatic transfer; $50 moves from my checking to my savings every Friday. I made the plan by choosing a dollar amount and picking a date. Now I’m ready to start saving!
#3: Cut back on your spending
Probably the most basic way to save is to cut back on your spending. And let’s be real, do you really need a $5 latte every day? If you need ideas on what to cut back on, the list below is a good place to start.
- Pack your lunch: While Chick-Fil-A might be right down the street, your wallet is begging you to stay at work. Instead of taking a stroll to your local fast food restaurants, pack your lunch and save some money. Tip: to save time in the morning, pack it the night before. No one likes a half thrown together PB&J.
- Think “big picture”: Remember that latte I just mentioned? Do yourself a favor and calculate how much money you spend on coffee runs per week. A typical coffee drinker will get a $5 latte, Monday-Friday, which is $20+ a week, $80+ per month, and $960+ per year! That’s a number scary enough to snap you into making coffee at home.
- Make a grocery list before going to the store (and stick to it!). Those Oreos are so close to your cart, and sometimes they might just fall in. To stop these impulse purchases, make a list before you go and stick to it! And whatever you do, don’t go to the store hungry. Trust me.
If impulse buying at the store is too risky, try shopping online. You don’t have to leave the house to get groceries and sometimes you can save a little by using digital coupons.
Stores like Walmart and Target offer online shopping with store to car delivery. If you shop at Hy-Vee or Aldi, you can do the same thing, but they deliver. You’re welcome.
- Instead of going out every weekend, invite friends in. Going out is fun, but inviting your friends in can be just as enjoyable. Ordering pizza and playing games can be just as fun as that expensive bar (but so much cheaper). Think of it this way, if everyone brings a dish, you’re spending roughly $25 on ingredients (with beverages), when a typical night out for a couple can be as expensive as $50+.
- Review your utility bills. There’s always that one person in the house who keeps every single light on. Try making it a household rule to turn off the lights when you’re done in a room. Same goes for the heat/AC. Keep it at a realistic level and watch the utility bills drop. Forgetting to adjust the thermostat at night, and then again in the morning, can happen. A programmable thermostat takes away all of the thinking (and forgetting), and they’re fairly easy to install. This option allows you to save money without any extra effort.
- Pay yourself first ... within reason. Yes, you read that right. If you’re not using the automatic transfer from your paycheck, make sure you deposit your savings amount as soon as you get paid. Once all the monthly bills are paid and you find you have some “extra” money, it’s okay to take yourself out for a coffee, get your nails done, go out for lunch, etc. As they say, “All work and no play…” Just remember to stay within your budget so you continue to move towards your savings goal.
#4: Plan your big expenses
We all want that perfect Pinterest bathroom, but usually that means dropping at least $1,000+ to achieve it. Instead of buying all the materials in one big purchase, make a plan to do it in phases. The best thing to do is buy materials when there are discounts or sales. Once you have all the supplies, save up for the labor charges or find qualified friends to help reduce that cost (friends love being paid in food).
Investing doesn’t have to mean investing in the stock market. There are options such as CDs, money market accounts or high interest savings. There really is an investment option that fits everyone’s personal needs.
If you want to be really strict with yourself, invest in a CD. These are typically longer-term investments that strongly advise against taking the money out until the term is over. If you do withdrawal before the term is over, there’s a penalty associated with it. However, these types of investments require a larger dollar investment, but you receive a higher return in the long run.
Money market accounts are similar to CDs but not as strict. With this type of investment you have a lower minimum investment, AND you can withdrawal the money any time without incurring a penalty. You’ll accumulate interest, without tying up your money.
The last way to save money and earn interest at the same time is a high interest savings account. These accounts are like your typical savings account, but come with a minimum investment and you earn a larger interest rate. And as a bonus, you have access to your funds whenever you need them.
Which option best fits your savings goal? Now, pack your lunch, turn on your coffee maker and watch your savings account grow! If you’re interested in choosing one of our savings options, visit our savings page for more information.