It is that time of year again—making resolutions for the New Year. Each year, millions of Americans resolve to make changes in their lives. Among the top of the list each year are resolutions that affect people’s personal finances, in particular to save money. Often, the good intentions of the resolution are forgotten or abandoned after a few weeks or months. This year can be different. You can actually achieve your financial goal to start saving more money this year. The most important part is setting a plan in place that is actually feasible within your family’s budget.
Plan to save money:
- Look at your entire budget. Before you can decide how much to save, you must look at your income and expenses. Build savings in as a part of your budget.
- Decide how much you can afford to save each month. After you have taken a look at how much money is left over each month after all of your monthly obligations have been met is your disposable income.
- Commit to a fixed amount that you can put into savings each pay period. It is easier to save each month when you are setting aside a set amount each time you get paid. Some savings plans tell you to start out saving $1 the first week and working your way up to saving $52 the last week of the year; this sounds good, but the reality of this means that the first month, you are saving $10, and the last month, you are saving over $200. That is a huge swing in your budget, one that can be hard to stick to, especially when unexpected expenses come up.
- Set up automatic funds transfer. Whether your savings are through an employer-sponsored retirement plan or just depositing in a savings account each, set it up to go directly from your paycheck to that account.
There is no one, right way to save. The biggest part of success with keeping this type of resolution is to view this as a commitment. For more information on investing and saving you can request a free booklet from USA.gov.