One of the best parts of any new year is using it as a “fresh start,” an opportunity to break bad habits and start anew. When it comes to good financial habits, committing to save in the new year is a popular choice, but it’s not always a choice that is easy to follow through with over time.
To help you keep a particular new year’s savings resolution, these tips can help increase the likelihood of success — and savings account balances, in 2023.
Understand and Set Your Budget
Although it seems obvious, it’s worth mentioning that there is only one way to save money. You need more coming in (i.e., income) than the amount going out (i.e., bills and expenses). Therefore, the foundation of any savings strategy is creating a budget that tracks both.
The first step to saving in the new year is to take time to document monthly income and expenses, remembering to factor in static bills, such as rent/mortgage, insurance, and car payments, as well as revolving and changing expenses like credit card payments, gas, and groceries.
Once you understand incoming and outgoing money, it’s easier to explore places where it’s possible to cut back and save.
Tips to Save Money in the New Year
Once a clear budget is established, it’s time to count pennies — literally.
Calculate how much money is earned each month and subtract how much is paid out in bills. The difference is the maximum monthly savings you can expect without making changes. Then, consider the following new year’s budgeting tips for ways to increase that savings number.
Assess Expenses
Reducing the amount of money paid to various places each month is the simplest way to increase savings. Although many expenses, such as rent and gas, are hard to control, changes in other areas can make an immediate impact.
First, look at subscriptions, including streaming services and memberships. Are these services used regularly enough to justify their expense? Are some items more important than others? Shaving off as little as $20 in monthly bills and applying that money to savings can have a huge effect over time and is easy to tolerate if you won’t even notice the cancelled subscription is gone.
Next, consider larger expenses such as home and auto insurance. Typically, these costs can’t be eliminated completely, but it’s possible to spend less. At HRCCU, our insurance quote service allows consumers to compare costs from more than 40 different insurance providers to help choose the most cost-effective option.
Consider Your Debt
For many people, the largest barrier to a healthy savings account isn’t monthly expenses like rent and electricity; it’s debt repayment.
Often, debt compounds over time as one credit card bill becomes two, three, or even more. Debt can quickly spiral out of control, making the maintenance of minimum payments seem like the only answer, even if it hinders you from reaching financial goals.
Saving money over time must include the elimination of debt, other than large, necessary expenses like mortgages and car loans. However, making ongoing small payments on debts can feel like a losing game. Instead, consider a targeted debt repayment plan that includes tackling the lowest balances first or consolidating debt with a personal loan or low-interest credit card. The sooner these debts are paid off, the sooner you can begin to truly maximize your savings.
Plan for the Future
While paying off debt is the first step to save in the new year, avoiding more debt in the future is equally important. Aside from setting monthly budgetary and savings goals, make sure you are also considering future expenses and savings needs.
For example, if a special occasion is coming up, such as a wedding or a birthday, start putting away money each week to cover the expense of a gift or dinner out. Similarly, regular retirement savings should be calculated into your monthly budget.
Remember that retirement plans are also savings plans that have the potential to pay huge dividends in the long term. Putting even a few extra dollars a month into a retirement account, particularly if your employer matches the contribution, can make a real difference in long-term financial health.
HRCCU Is Your Savings Partner in 2023 — and Beyond
While designing your savings plan for the new year, remember that HRCCU is a valuable partner in supporting financial health all year round.
We offer customers everything from personalized financial advice to high-yield savings accounts designed to help increase savings over time for every individual’s needs. Give us a call or stop by one of our local branches to start the conversation about which financial products can help you start saving for the new year.
