BY SARAH BERGER
Doing some housecleaning for the holidays? Don’t forget to spruce up your savings, too.
Follow these savings tips to get your finances in order.
––Set a realistic savings goal. It should be measurable, realistic and timely. You might feel ambitious and set a super-high goal, but you’d likely be setting yourself up for failure.
When deciding on a savings goal, think of a specific purchase or benchmark you could realistically reach in 12 months. The goal should require self-discipline and a little sacrifice when it comes to spending), but you shouldn’t overreach.
Then, find a friend or family member who can hold you accountable, or write down the goal in a place where you’ll see it every day.
–– Be picky about where you keep your savings. Savings accounts vary widely in interest paid, fees and minimum balances, so do your research and find the one that’s right for you. Consider extra costs such as monthly service charges and ATM fees.
The interest rate might sound minimal at first, but it adds up. Every little bit counts when you’re saving toward a specific goal. Check out online banks, too, as online savings accounts sometimes have higher interest rates.
–– You might not have the discipline to set aside part of your paycheck for savings. So make your contributions automatic. Banks often offer free services that will transfer a fixed amount of money from your checking account to your savings account every month.
Or, ask your human resources department if you can direct-deposit a percentage of your paycheck every month into a savings account.
–– Set up a fund just for emergencies. Although your savings account might double as a rainy-day fund, if you’re savvy about saving you’ll have a fund dedicated solely to emergencies. Your savings account might be for big expenditures — like a down payment on a house or a car — but you should not touch the money in your emergency fund unless there’s an actual emergency. If you lose your job or have to go to the hospital, you’ll have something to fall back on without having to sacrifice the big purchase you’ve been saving for.
Typically, an emergency fund should have enough to cover four to seven months’ worth of expenses. Experts recommend starting your fund with small goals, such as saving $1,000, and then working your way up.
–– For one month, track every penny you spend. You’ll learn exactly where your paycheck is going and where you’re overspending.
You might realize, for example, that you’re spending an obscene amount on coffee every week. Once you’re aware of that, you can limit your coffee-shop stops and put the rest of that money into savings.
–– Once you know your spending habits, you can create a realistic budget. Budgeting will help you save by helping you cut frivolous spending. It might be a trial-and-error process until you figure out what works best for your lifestyle.
You don’t have to cut out all of the fun stuff, but you do need to pay your bills on time and eventually meet your savings goal.
–– Be a savvy shopper. A few ideas:
Rack up rewards by signing up for loyalty programs at your favorite stores.
Sign up for a warehouse club and buy in bulk.
Clip coupons when you can.
Plan your shopping trips around sales and daily deals.
When shopping online, check out price-comparison websites or use browser plug-ins to make sure you’re getting the best deal. Just because something is advertised as being discounted doesn’t always mean it’s a good deal.
–– There’s an app for everything, whether you want to order a car to pick you up or just want to socialize with your friends. So why not use that technology to become a better saver?
There are many apps that help you budget, find the best local deals and sell your old junk. This year, find one or two apps that will help you save and use them regularly.
–– Explore signing up for a flexible spending account where you work. FSAs are often offered by employers as part of a benefits package, and they can save you money on health care costs not covered by insurance, including co-pays and deductibles.
After enrolling, you decide how much you want to contribute for the year. That amount is then deducted from your salary over time, before income tax. You withdraw money from the account to pay for certain eligible medical expenses, which are effectively discounted because of your tax savings. But you must use up all the money within your benefits year.
–– Regularly assess your progress. To save effectively, you need to know exactly where you stand with your finances each week. Make a “money date” with yourself every Sunday and go through your transactions to ensure you’re on track with your budget. If you fall off track (maybe you spent too much one week or didn’t sock away a penny from your paycheck), don’t give up. Get back on track.
When you hit savings goals, celebrate and reward yourself a bit. Saving is all about moderation, not cutting out shopping and spending completely.