Thanksgiving is over. Christmas is quickly approaching, after which we’ll head into the new year.
It’ll be just a few short weeks before everyone starts setting their resolutions. And, just in case you’re resolved to save more money next year, I’ve got some tips for you.
Here are 5 practical ways you can increase your savings next year:
1. Start Small
You were probably thinking I was going to first tell you some magical way you can save more money in the New Year. The truth is that personal finance isn’t magical — it’s simple.
If you want to save more money, you first have to start by saving something, anything. If you’re new to saving, start by stashing away $20 per week in an online savings account. Gradually increase this every month (or, if you can, every two weeks). Though those gradual increases are fairly painless, they’ll really add up.
2. Create a Budget
Budgets are your magical personal finance tool, since they can help you control your spending.
To understand your money habits, look at the past 12 months of your spending. Group similar purchases into categories and lump them together month-by-month. This will give you a good idea of where your money is going.
Now calculate your average income over the past 12 months. The amount you’re spending shouldn’t exceed the amount you’re bringing in. If it is, find a way to cut your spending, or look for a way to increase your income.
In the new year, review your budget each month. When you set budget goals for the upcoming month, make sure they’re realistic. Remember, slow and steady wins the race. If you try to cut back too much, you’ll only be setting yourself up for failure.
3. Shop with a List
When I started shopping with a list earlier this year, I made a shocking revelation: I really did save more money!
In order to keep my impulse purchases down, I started making a list each and every time I headed to the store. I would buy only the things on my list, going through the store as quickly as possible to grab what I needed.
In my pre-list days, I found that all kinds of items I didn’t really need ended up in my shopping cart. Those small impulse purchases can add up fast. It’s clear: shop with a list!
4. Cook Your Own Food
Another one of my big finance failures was relying on takeout to feed my family and me several times a week. This was particularly bad when everyone at work was ordering takeout at lunch.
In an effort to ramp up my savings, I decided to be the odd one out. I started cooking simple meals and taking leftovers to work with me.
I thought it would be hard to be the only person in the office not eating takeout, but it was just the opposite. Everyone would look at my food and complain they were tired of eating from the same old places. Me? I saved some serious money (around fifty bucks per week) and ate much healthier.
5. Earn More Money
One of the best ways to save more money is to earn more money. There are only so many ways to cut expenses before you run out of ideas (and steam). Ramping up your earnings is a great way to find more money to stash away.
To earn more money, you could work more hours at your current job, ask for a raise, or start a side business. It’s amazing how much money you can earn by turning your hobbies into a service.
If you’re ready to make some significant progress on your savings rate next year, make a plan and commit to it. As long as you’re willing to see your plan through, you’ll have no trouble increasing your savings in the next 12 months.