Are you always tapped out by the end of the month? The truth is it takes more than just a steady job to get ahead. If saving has always been challenging, here’s how to make 2017 your year to turn things around.
1. Look out for No. 1
If you don’t put yourself first, no one else will. It’s critical to make a commitment to pay yourself first by depositing something to savings each month before any other obligations.
An automated savings plan makes this process easy. Caty Boylan is a 22-year-old retail loss management professional. She’s also a full-time student preparing for a law enforcement career, and is actively paying down student loans and credit card debt. Juggling these responsibilities and expenses has taught her that once you’re out of high school, “the world starts hitting you, and you’d better be ready for it.”
Boylan’s automatic savings plan moves $100 from her checking account to savings each month, ensuring that she’s building a nest egg. Additionally she decided on a savings account with a minimum balance as a disincentive to drain her cash below that level.
2. Make your money earn its keep
Annual percentage yields on accounts offered by financial institutions vary more than you might expect. You’ll maximize compound interest by shopping around for the best rates before settling on a savings account. If you can maintain the associated minimum balances, explore high-yield and money market accounts. Also be sure to check out credit unions, which on average offer better interest rates than banks.
3. Think long term
Retirement may seem a long way off, but you can expect it to last 15 to 30 years or more once it comes — and that requires a huge chunk of change. Since it takes decades to save that kind of money, preparing for retirement as early as possible should be part of any saving strategy.
Like all types of savings, it’s easiest to do this when you make it automatic. If your job offers a 401(k) or other retirement plan, it makes sense to opt in, especially if your employer matches your contributions. You won’t miss what was never in your hands, and all that tax-deferred money will be compounding and waiting for you when you’re ready to retire.
4. Get on budget
A budget might not sound very hip, but it’s still one of the best ways to keep finances under control so you’ve got something left to save each month. Creating a budget and sticking to it doesn’t have to cramp your style, and for help you can choose from any number of free mobile budget apps that ease this process.
5. Plug up cash drains
Spending less to create more cash for savings doesn’t have to involve painful sacrifices. Start by scrutinizing statements and bills for sneaky little expenses that drain your wallet without providing sufficient gratification. If you discover you’ve been paying fees for ATM use or bank account maintenance, or you’re not getting the lowest possible prices for insurance, cable, internet and cell service, it’s definitely time to seek better deals.
Learn to live at or preferably below your means. And remember there are lots of ways to have fun without spending a fortune:
Check out free hiking trails, parks and beaches.
Enjoy free and low-cost concerts, theater and sporting events at local cafes, colleges, libraries and houses of worship.
Curl up with a friend for a DVD or Netflix movie night with homemade snacks.
Find affordable almost-new and vintage treasures at consignment shops and neighborhood yard sales.
When you crave an occasional restaurant meal, go for lunch, when prices are lower, instead of dinner. Look for coupons and deals online, too.
6. Bring in extra bucks
Increasing income also generates cash to save, and this doesn’t have to make you feel like a miserable martyr either. You’re probably already sitting on cash in the form of reward points earned on debit and credit cards. If you haven’t cashed in your rewards lately and you’ve been dealing with sizable expenses, hundreds of dollars or more may be just waiting for you to claim them. You may also want to free up the potential cash in unwanted possessions by selling them online or at a yard sale.
Another approach is to turn interests and hobbies that already bring you pleasure into dollars through a side business. Musical performance and teaching, academic tutoring, dog-sitting, baby-sitting, landscaping, crafts and home repairs can all generate extra income.
With a few minor money tweaks, you don’t have to be that person who’s always broke anymore. The combination of smart habits and a little creativity just might make this year the one when the resolution to save finally sticks.
By Roberta Pescow, NerdWallet