2019 is just around the corner and if you want to make this your “year to save,” you need a plan. Savings doesn’t happen without a plan and actions to keep that money set aside. Now is the time to not only set your savings goal, but to create your plan to make it happen.
First things first, you need to take a look at where you are on your savings journey and decide where to start. Do you already have an emergency fund set up? If not, that should be your first savings goal. You never know what financial surprises will come up during the year and you need to be prepared.
The second thing you need to look at is credit card debt. Think of all the money you could be putting into your retirement account if you weren’t paying high interest rates. Once you have an emergency fund set up, it’s time to take a look at your credit card debt and start working to pay it off, or at least pay it down, to reduce your total debt and put more money in your pocket.
After that, you’re ready to set your savings goals. Are you saving for something specific, like a down payment for a home? Or are you building your long-term wealth by saving for retirement?
Once you have your goal, it’s time to make a plan to reach it. Review your budget and see where you can make cuts to increase what you’re able to set aside in savings. (Note: If you aren’t already working with a budget, this should be your first goal for creating your savings plan.)
You may be surprised at what you’re able to cut from your budget. For instance, cutting a premium cable package that costs $22 a month and opting for Netflix at $10 a month will give you $12 a month for savings. It may not seem like much, but it’s $12 you weren’t saving before and it adds up as you make more cuts.
Can you work out at home instead of paying for a gym membership? Are you using the full capacity of your cellphone plan? If not, you can cut back on your plan and save. Can you choose to eat dinner at home more often instead of going out? Pack your lunch instead of hitting the drive-thru every day? Make your favorite coffee drink at home? All of these switches can end up giving you as much as $100 or more a month for savings.
Now you need to decide what to do with this money. Should you park it in an interest-bearing savings account, a high-interest CD, or invest it in the stock market? The answer depends on your goals. Short-term goals should be saved in accounts that you can easily withdraw from when you need it. Long-term goals should sit in an account where you can’t touch the funds for a while, but they’ll earn more interest.
If all else fails and you can’t make enough cuts to meet your savings goals, it’s time to look for ways to earn extra income. The possibilities are endless, you just need to find the one that works best for you.