We all know how important it is to put money aside, whether it’s for the purchase of a new home, in anticipation of retirement or to deal with emergencies. But how to move forward with such a project? Experts share with us their simple tips for saving $20,000 in just one year!
Stop being a spendthrift and make a plan
The very first thing to do before putting money aside is to know the nature of your expenses, says Marcy Keckler, vice president of the financial strategy firm Ameriprise Financial. By having a clear picture of your finances, savings, and expenses over a set period of time, you can begin to make adjustments. “A financial plan can guide you through good times and bad times, and through expected and unforeseen situations,” she adds.
Schedule automatic transfers
Are you the type of person who spends faster than you earn? Difficult to resist then the presence of a pay deposited every two weeks or month in the bank account. That’s why Marcy suggests avoiding the temptations by setting up automated transfers to your savings account. “Setting aside a set amount at regular intervals ensures that part of your income will not be spent”. Plus, you won’t have to worry about your savings and you won’t notice the difference, because the money won’t be in your transaction account anyway.
ALSO READ: Get Rich: 18 Easy Money-Saving Tips (2023)
Make life hard for online subscriptions
Take a look at your most recent transactions on your credit card. How much are all your monthly subscriptions costing you? You might be surprised how much you spend on all those tiny $5 or $10 recurring fees, warns Gretchen Caldwell, consultant at EP Wealth Advisors. From Netflix to Spotify to online fitness classes to foodservice, it’s easy to spend way more than you realize. To overcome this problem, Gretchen suggests using the Clarity Money application, which searches and cancels your registrations for you.
Expenses: avoid the pitfalls
You can easily trap yourself into spending habits depending on your interests and lifestyle. For Gretchen, the Target chain is her sore spot. She goes there to buy simple toothpaste and comes out with purchases totaling $150. Others might spend way too much time on the Amazon site, or patiently browse the aisles of a craft store, for example. Wherever you spend too much money, avoid it until you have developed a resistance to pulling out your cards or cash.
Confront your bad habits
We all have our little rituals that are almost automatic: having morning coffee at Starbucks, buying the newspaper, having a drink or two with friends, etc. According to Gretchen, we need to cut our most expensive spending habits for a year to reach our goal. This saved money should be placed in the savings account. Be careful, you could drop your jaw seeing how much you will have saved in coffees after 365 days.
Don’t buy new clothes for a year
Take a look at the side of the wardrobe. Be frank: you already have everything you need to dress for every day of the year. Shopping for yourself is fun, sure, but you don’t have to. Do like all those who have decided not to visit clothing stores to find clothes, accessories or even shoes. Do it for a year, and watch your savings account grow.
Stop delegating tasks
It’s obviously much easier to pay someone to do all those things you don’t want. Here’s a great way to save, doing everything yourself for a year. “If someone comes to your house to clean your house, wash your car or take care of your land, why not give them a year off and do it yourself? It will take time, which will help you fight the temptation to go out and spend more,” says Gretchen.
Change your meal strategy
It’s nearly impossible to eat every meal at home for a full year. David Rosen, finance expert and certified real estate agent, suggests creating a restaurant budget in order to save substantially. Start by swearing to always have breakfast at home and to bring lunch to work as often as possible. That’ll leave up to $15 in your pocket each time. Think about it: three restaurant meals a week can drain up to $6,000 from your bank account in a year.
ALSO READ: Planning for Retirement: 10 Common Budgeting Mistakes to Avoid
Modify your insurance plan
Many variables come into play in an insurance policy. David Rosen suggests taking the time to analyze the different rates in order to reduce costs. For example, by increasing the value of your car or health insurance deductible, you could save $100 to $200 per month, or between $2,000 and $4,000 per year. “A strategy of lower premiums for a higher deductible can be risky, but by avoiding activities hazardous to your health and driving carefully, you should avoid making big claims. These are generally not common for most insurance. The apprehension of a catastrophe can be disproportionate when choosing a cover. Please note: if you are older or have a pre-existing condition,
Celebrate differently
There comes an age when it is (relatively) easy to announce to our children that Santa Claus does not exist. However, birthdays, festivities and other celebrations will not disappear so easily. Awaken the elf in you to make them more affordable. As David says, “instead of overdoing it, be practical and give smaller gifts.” Keep this in mind when shopping for a wedding, baby shower or birthday. It’s a good savings strategy to consider, knowing that we spend on average around $3,000 a year on gifts of all kinds.
