With the new year being right around the corner, many people will no doubt start making their lists of financial resolutions. And chances are, “save more money” will be one of yours. If you’re eager to come out ahead savings-wise in 2020, here are a few easy ways to get there.
1. Follow a budget
You might think budgeting is complicated, but actually, it’s one of the simplest money management tactics you can employ. All you need to do to create a budget is list your recurring monthly expenses, factor in sporadic expenses that pop up during the year, like quarterly property tax payments or annual membership renewals, and compare your total spending to your total earnings. If you’re not left with room left over for savings, you simply go back through your expense categories and decide which to trim. Easy!
2. Bank your raise
It’s hard to part with money you’re used to spending. But the beauty of getting a raise is that it’s more money than you’ve had coming in before. Therefore, if you score a raise at work, you should have no problem earmarking it for savings rather than spending it.
3. Put your efforts on autopilot
Saving money gets a lot easier when you take human error — or a lack of willpower — out of the equation. Automating your savings effectively forces you to add money to your bank or retirement account on a regular basis, and once you start doing it, you’ll stop missing that cash. You can arrange, through your bank, to have a portion of each paycheck go directly from checking to savings, or sign up for your employer’s 401(k) and have a chunk of your earnings allocated to retirement off the bat. Some IRAs have an automatic transfer feature, too, so consider that if you don’t have access to a 401(k).
4. Pay off costly credit card debt
The longer you carry a credit card balance, the more money you throw away on interest. If you want to boost your savings next year, stop giving your money away to credit card companies, and instead start keeping it for yourself. If you pay down a chunk of your existing debt, you’ll do just that.
5. Eke out extra savings from the IRS
There are immediate tax benefits to funding a traditional IRA, 401(k), or health savings account (HSA). The money you put into any of these accounts is made with pre-tax dollars, and your associated savings are a function of the tax bracket you fall into. If you save, say, $3,000, in any of these accounts next year, and you’re in the 24% tax bracket, that’s $720 in instant savings for you to enjoy. IRAs and 401(k)s come in traditional and Roth varieties, and while Roth accounts offer their own tax-related perks, you won’t get that immediate tax break, so keep that in mind when deciding which type of retirement plan to save in. HSAs, meanwhile, are always funded with pre-tax dollars, so you get that instant savings any time you contribute to one.
If you’re intent on saving more money in 2020, know that it doesn’t have to be a painful endeavor. Keep at it, and with any luck, you’ll close out the year much richer than you started out.