It’s the New Year, and for many of us, it’s time to establish our annual “New Year’s Resolutions”. Coming off the holiday spending, saving money may be on the top of your resolution list. If that is the case, here are 10 New Year’s Resolutions for saving money in 2014.
- Look at all income and expenses to create a monthly budget. Once all spending is out in the open, you’ll be able to see everything more clearly and find where your spending weaknesses are. Make a plan to budget an appropriate amount for necessities like food, mortgage/rent, and utilities, and then see where you can cut your spending on miscellaneous items. Bottom line – make sure you are spending less than you are making.
- Pay off credit cards. While it seems like a no-brainer, many people still stick to paying the monthly minimum, which means they’re wasting money on interest. This year, use money saved from your new monthly budget and work towards paying off credit cards. According to MSN Money, if you paid only the minimum requirement on a credit card balance of $2,800 with a 12% interest rate, without making any further purchases, it would take 14 years to pay off and cost you an additional $2,194 in interest. Ugh!
- Plan your meals according to weekly sales and coupons. Rather than planning your meals based on what you feel like, let the weekly grocery store specials guide your meals.
- Cut down on budget blowers. By cutting down or removing all together items like going out for coffee, eating out, or expensive cable TV, you can find new ways to save.
- Shop service providers each year. When January hits, take some time and price shop services like insurance, phone, internet, and electricity to see if you can find additional savings.
- Call current providers to see if there are any loyalty discounts. While doing your shopping for Resolution #5, you should check with your current provider first to see what’s available. Most of the time there are deals to be found, so all you need to do is ask. If you have been a loyal customer and paid your bills on time, more times than not, you’ll be able to reap some sort of financial reward. If there aren’t any rewards being offered, see if they can help find ways to lower your monthly bill.
- Invest in yourself. Sign up to have a set amount of money automatically transferred into a savings account or money market account each month from your paycheck. The beauty of this method of savings is you don’t see what you’re missing since it goes directly into your savings and never hits your checking account.
- Use the ⅓ rule for any expected/unexpected income. If you are to receive a bonus or any other type of windfall of cash, use ⅓ on the past (meaning put that money towards paying off debts), ⅓ on the present (use it for any remodeling items or whatever you’d like), and ⅓ on the future (put into savings or an investment).
- Ditch the debit/credit card and switch to cold hard cash. Not only does it seem to get you thinking a little more about your purchases, but you can set aside a budgeted amount of cash to use and once it’s out, it’s out until the next month or pay period.
- Follow these financial rules of thumb from Readers Digest.
- The price of your home should not be more than 2.5 times your annual gross household income.
- Your total monthly debt payments (including mortgage, student loans, car, and credit card payments) should not be more than 35 percent of your monthly gross income. Some mortgage brokers will stretch this ratio up to 40 percent, but that leaves you very little budgetary wiggle room.
- To retire comfortably, your nest egg should be about 20 times what you want your annual income to be. If you anticipate needing about $75,000 a year to live on when you retire, you’ll need to save a nest egg of about $1.5 million. Of course, this will vary if you retire early or continue to work longer than usual.
2014 Calendar mage courtesy of Stuart Miles / FreeDigitalPhotos.net.