New Year, New Bank Account: How to Save Money in the New Year
As the end of January rolls around, the reality of your New Year’s resolutions are likely kicking in. While many people resolve to lose weight or eat clean, at Morris Financial Concepts we commend the individuals who opt to make healthy financial resolutions for the new year – like trying to save money in 2019 and beyond.
After the dust settles from the abundant holiday spending frenzy that is December, the month of January tends to be an easy financial relief for your bank account. Realistic financial expectations tend to settle back in around February or March. There are vacations, expensive dinners, important sporting events – not to mention Valentine’s Day – that so often make a negative impact on our bank accounts. 365 days is a long time to keep those financial habits in check, after all.
Thankfully, the financial advisors at Morris Financial Concepts have a few tips to help facilitate a healthy saving strategy year-round:
50, 30, 20 Rule
The 50, 30, 20 rule all comes down to good old-fashioned budgeting; a concept that we believe is fundamental in helping pocket some extra cash throughout the year. This money saving method works by allocating 50% of your monthly income on essential need expenditures, such as clothing and food, 30% for fun activities and your last 20% on savings or debt pay off.
At the end of the day, this saving methodology holds you accountable for what you are actually spending your income on – such as your (not so occasional) Target binges. It can be easy to ignore expenditures when you don’t pay attention, thus to be successful, one must track expenditures and adjust spending accordingly. This is a great way to focus your income on the necessities – with a healthy dose of fun – and, in turn, can save a lot of time and unnecessary spending.
Follow the Thirty-Day Rule to Control Impulse Spending
If you aren’t quite organized enough to closely track your expenditures through budgeting methods like the 50, 30, 20 rule, we recommend using another rule of thumb known as the thirty-day rule to appease impulse spending. The thirty-day rule is fairly simple; when you spot something that catches your eye, rather than snatching it up and throwing down your card, wait 30 days before making a formal purchasing decision.
The thirty-day rule takes the ‘sleep on it’ mentality one step farther by encouraging you to ‘sleep on’ impulse expenditures for 30 days prior to making purchasing decisions. This “wisdom to wait” mentality ensures you are confident in your purchasing decisions and have thought through the financial impacts in advance.
Deposit Money Into Your Savings Every Paycheck
Creating a secondary account that takes a small amount of money from your bi-monthly paycheck is one of the easiest ways to save money. If you set aside $100 each paycheck, you’ll have $2,400 in your savings by the end of the year without even blinking an eye.
Setting up your paycheck to automatically deposit into two accounts makes saving that much easier, as you aren’t ever tempted with your savings in your main account. Your savings account will be out of sight and out of mind, but still growing.
Utilize Technology to Save Money
Take advantage of the various technological tools around you that were built to enable your financial success. Apps like Mint or programs such as Quickbooks, Quicken, or Envelope make money management an absolute breeze.
Just be prepared as reality hits – financial apps and programs track every single time you swipe your credit or debit card. As it turns out, those morning lattes really do add up – just like the interest on your credit card!
The upside to viewing your financial diet on a pie chart is that it enables you to see where you can cut back your spending and move that extra cash into savings. This might mean a solemn farewell to morning chai latte’s at your favorite local coffee shop, but nothing tastes sweeter than building a solid savings account and successfully accomplishing those New Year’s resolutions.
These simple budgeting methods will set you up for financial success and enable you to finally complete your savings related new year’s resolutions. Professional advisors at Morris Financial Concepts wish you financial success in the New Year! For more information on how to save money and the services offered at Morris Financial Concepts, be sure to check out our services page, or contact us directly.
The opinions expressed herein are those of Morris Financial Concepts, Inc. and are subject to change without notice. This material is for informational purposes only and should not be considered investment advice. Morris Financial Concepts, Inc. is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Morris including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request. MFC-19-03.