Resolving to Save

Did you resolve to save more money in the New Year?  It’s a common resolution.  It’s also common for people to break their resolutions.  Chose to succeed by committing to your financial goals and following some simple savings strategies.

1.    Track your spending.  I’ve said it before and I’ll say it again.  Until you see how you’re spending, you won’t be able to assess how you can cut back and save.  Write down every purchase, every penny.  You can use a spreadsheet, your phone, fancy financial software, or the back of a napkin.  As long as it’s all in one place for you to see, you’ll be able to get a picture of your spending; what’s necessary, what’s not, where you’re overspending, etc.

2.    Make a Plan.  Be specific.  How much do you want to save this year?  Divide that number by 12, that’s how much you have to save each month.  Once you’ve tracked your spending you can decide where that money is going to come from.  If it helps, break it down even more.  Divide it into weeks, even days.  Saving an extra $3,000 a year may sound daunting, but when I break it down to $8.22 a day, it’s a number I can manage.  Packing lunch and skipping Starbucks.  Done.

3.    Substitute New Behaviors for Old Ones.  It’s all easier said than done.  I can sit at home writing out the perfect plan, but unless I can put it into action on a daily basis it won’t do me any good.  Beware of habits.  The daily purchases you make just because they’re the purchases you’ve always made, things like coffee and lunch are probably the most common, but also things like water, cigarettes, snacks, drinks, etc.  If you find a recurring expenditure when you track your spending, figure out if there’s a way you can cut it out, replace it, or reduce the cost.  Know exactly what new habits or routines you need to establish to make these new changes.  For example, getting up early to pack lunch instead of buying out or scheduling potlucks instead of meeting friends out for drinks and dinner.

4.     Pick a Cause for your Savings.  There are times when going out for drinks after work or ordering takeout will sound unbelievably tempting.  Breaking the routines and habits of spending on the little luxuries will be difficult.  To help you stay focused on your larger goals, pick a cause for your savings.  My extra $3,000 (or whatever number you decide on) in savings this year is going to help me buy my first home, or set me free from student debt, or allow me launch my new career.  By attaching a relevant and personal dream to your savings, you will give your goals the meaning and urgency you need to trump short term, fleeting desires.

5.    Track your progress and go public.  Acknowledge your successes.  Measure how far you’ve come and let it get you psyched to save more.  Share your progress with family, friends, and social media.  The more you put it out there, the more accountability you’ll develop with yourself and others to stay committed to achieving all you’ve set out to save.

May it be a prosperous and successful New Year!