A new year often brings financial resolutions. We all know regularly depositing money into a savings or investment account is a smart financial move. However, making deposits without a goal in mind can cause your new savings habit to fizzle faster than sparkling holiday punch. If you don’t know what you’re saving for, it’s difficult to stick to the plan and avoid unnecessary spending.
Let’s take a look at some realistic savings goals you can commit to for a prosperous new year.
1. Cut Monthly Expenses by $100
Trimming expenses is one of the quickest ways to build savings. Coming up with $100 a month sounds like a lot, but it may be easier than you think. A phone call to your insurance carrier, cell phone provider, or cable company could go a long way toward your goal.
For example, lower cellular data usage could mean a less expensive monthly cell phone plan. Look at your usage and your plan to see if you can save money.
If you’ve had an improvement to your credit score, reach out to your insurance carrier to see if that can lead to lower insurance rates.
Your cable bill is also a good place to turn your attention. Cable companies often offer special entertainment packages with reduced rates for a limited time. When the special offer is up, your payment likely goes up too. Removing unnecessary coverage or service packages could save you over $1,000 a year. Give your cable company a call to see what you can do to lower you payment.
And if you’re a streamer rather than a cable user, take a look at your subscriptions for overlap. Many platforms have added more programming and new streaming services have come into the picture. This may mean reduced streaming costs for you as you evaluate your choices.
Last but not least, take a look at your personal spending habits to find ways you can save. This can vary by person, but food and entertainment expenses are usually a good place to check. Maybe you can cook extra and freeze leftovers to save on grocery expenses or look for coupons when enjoying a night out on the town.
2. Save $500 in an Emergency Fund Savings Account
Money set aside in an emergency savings account can be your first line of financial defense against a job loss or unexpected expense that your budget can’t handle. Building emergency savings can also prevent you from turning to high-interest rate credit cards to pay for surprise expenses. Ideally, your emergency account should contain between three to six months of living expenses. While that can take time to work up to, starting with a smaller goal of only $500 can make a real difference. Sell unwanted items, work overtime, or secure an additional job to fund your account quickly. Think of the accomplishment you’ll feel when you hit that $500 mark!
3. Revisit Your Student Loan Repayment Plan
If you graduated from college with federal student loan debt, you might have options that can reduce your monthly payments. Federal Student Loan consolidation allows you to combine multiple federal loans into a single loan with a lower monthly payment by extending repayment terms. You might qualify for other repayment plans that adjust your payments based on your annual earnings or student loan forgiveness. Learn more about alternative federal student loan repayment options by visiting studentaid.ed.gov. You can also speak with your loan servicer to inquire about other repayment options. You can deposit the money saved from a lower monthly payment toward your savings goal.
4. Increase Your Income by 5%
Cutting expenses can only go so far, especially when some expenses are out of your control. Sometimes it’s easier to earn more money to reach a goal than saving your way there. Consider increasing your income by working a side job, negotiating a wage increase, or changing employers. An increase of 5% can make a big difference. The extra funds each month can help you pay off debts or save toward a long-term goal. Stash these additional earnings into your savings account and continue to live as if you never received the bump in pay.
5. Complete a Personal Finance Course
Learning about saving and investing can seem intimidating, but it doesn’t have to be. The Bank of Missouri offers short, interactive videos to help you learn how to take control of your finances. These fun tutorials can answer common questions about money management, regardless of where you are on your financial journey.
Visit our online Financial Wellness Center and choose from a variety of three to eight minute videos to help increase your financial confidence.
What’s your New Year’s financial resolution? Is it one of the five shown here or do you have another goal in mind? Whatever it is, remember to set a realistic goal and specific action steps to achieve it. You’ve got this!