Ready to save more money this year? Laura covers seven resolutions you can make to save thousands. Even adopting a few can put money in your pocket and improve your financial life.
No matter if you love or hate New Year's Resolutions, they're hard to avoid during January. While you can commit to new financial goals anytime, having a new year ahead of you is the perfect opportunity to refresh your priorities and get motivated.
If one of your goals is to save more money this year, this post will review seven resolutions you can make to save thousands. Even if you only adopt a few, they can move your finances in a positive direction.
7 financial resolutions for the new year
Here's the detail on each resolution that can put money in your pocket and improve your financial life.
1. Go on a spending freeze
Controlling spending is a struggle for most people. It's a critical financial skill because if you spend every penny you make, you won't have anything left to save and invest each month. Living below your means is the key to getting ahead financially and building wealth.
A spending freeze can help because it's a period when you decide to spend money only on necessities, such as groceries, housing, utilities, transportation, and insurance. The idea is to resist the urge to buy wants, such as excess clothes, trinkets, or housewares, and be grateful for what you already have.
A spending freeze allows you to see how much and how often you buy stuff that you really don't need, even if you can afford it.
A spending freeze allows you to see how much and how often you buy stuff that you really don't need, even if you can afford it. The money you don't spend on extras could get earmarked for a savings goal, such as boosting your emergency savings or maxing out a retirement account.
You might start by freezing all unnecessary spending for several weeks or a month. Or you might freeze certain types of purchases that are problematic for your budget, such as spending on hobbies, beauty products, or luxury items. Consider extending the duration of a spending freeze or doing one several times throughout the year to maximize your savings.
2. Check your impulse spending
And speaking of living within your means, if you're an impulsive spender, it's time to resolve to quit. Here are some strategies that can help:
- Never shop as entertainment. Don't tempt yourself by going shopping in person or online if you're bored or just trying to fill time. When you're trying to save money, be a deliberate shopper so you don't end up buying items that you shouldn't.
- Unsubscribe from retailers. Getting notifications from your favorite stores about flash sales and promotions can be challenging to resist. If ads cause you to overspend or buy unnecessary items, choose not to have them delivered to your inbox.
- Use a waiting period. Never buy items over a certain amount, such as $50 or $100, without waiting at least 24 hours. That allows time for a spending impulse to settle down so you can decide if you need to purchase something with a clear mind. In many cases, waiting makes you realize that you don't need or want to make a purchase.
- Calculate what an item costs in time. If you're about to hit the buy button for an expensive item, figure out the amount of work required. For example, if you earn $25 per hour after taxes, buying a $250 pair of shoes costs you ten hours of work. Only you can decide if they're really worth a long workday.
- Notice your emotions. Don't shop when you're feeling anxious, angry, hungry, or sad because it's easier to let your guard down and make poor decisions. Wait to shop until you have a better mindset, so you'll be less likely to overspend.
3. Get rid of unused stuff
We all have unused stuff—such as clothes, sporting goods, electronics, and items in storage—that we should ditch. Join me by resolving to unload items that you haven't used in the past year or two. If you haven't looked at or needed something within that period, you probably don't like it or need it. When you come across something that you forgot that you own, it's definitely time to purge it!
The solution isn't to get organized but to get rid of more so you don't have to manage it.
In many cases, when we have too much clutter or feel unorganized, the solution isn't to get organized but to get rid of more so you don't have to manage it. Try out these apps:
OfferUp is a mobile marketplace for local buyers and sellers where you can negotiate prices and pickup times through the app's messaging service. Users have profiles and ratings from previous transactions. Unlike eBay, OfferUp doesn't charge fees to sell or buy items. Just take a photo of what you want to sell, post it to the app, and chat with potential buyers.
Decluttr will buy your stuff, such as smartphones, iPods, CDs, DVDs, video games, books, Legos, and more. You scan the barcode on each item, and Decluttr makes you an offer. If you accept, you get a prepaid shipping label, send your item, and receive payment once it's received and inspected.
ThredUp is an online secondhand clothing store that pays you or offers a credit when your clothing, handbags, and accessories get sold. They give you a prepaid shipping label to send your items. ThredUp lists and prices your accepted items, but you can alter prices if you wish. You can choose that unaccepted items get donated to charity on your behalf. ThredUp is one of the easiest ways to clean out your closet!
The Real Real is a local and online consignment store for luxury items. Got some Gucci shoes, a Versace jacket, or a Prada handbag that haven't seen the light of day in a while? The Real Real gives you a prepaid shipping label and pays you when your item sells. You don't have to take pictures or create a listing because they do all the work and make sure things are authentic.
Poshmark is an online marketplace for or selling clothing, handbags, and accessories. You upload photos, create listings, and set prices. Buyers can message you to ask questions or negotiate. Then you mail items to buyers, and Poshmark takes a commission depending on the purchase price. This option takes more effort than consignment services but may yield higher prices.
When you sell unused items, use the money to buy something you want, or build financial security by adding it to your savings or retirement account. And if you can't sell items, making donations to charities, such as Good Will or the Salvation Army, helps others and can be tax-deductible.
4. Take a personal money day
Sometimes taking time to focus on your money is the only thing stopping you from saving more. Make a resolution to take a personal money day within the next 30 days. It's a full day that you block out to focus exclusively on your finances.
Make a resolution to take a personal money day within the next 30 days. It's a full day that you block out to focus exclusively on your finances.
If you don't already have a budget or spending plan, use this time to start one. You might track your spending on paper, using an Excel spreadsheet, a Google Doc, or using a financial program, such as Quicken.
Use your personal money day to evaluate if your bank accounts are the best fit for you. And if you're not already making regular, automated contributions to a retirement account, get started. It's easy to open a traditional or Roth IRA at an online investment site, such as Betterment.
Another smart way to save money is reviewing your insurance coverages. Use a free site, such as Bankrate, to compare quotes for auto, home, renters, and life insurance.
Review your bills and see if you can get a better deal on your internet, cable, or cell phone plans? Could you find a less expensive apartment? Call companies or do online research to see how you can cut your monthly expenses.
You might also think about making more money by selling unused items online, looking for a better-paying job, or starting a freelance side-hustle. You know what essential tasks you've been putting off that could make a big difference in your financial life. So open your calendar right now and schedule a personal money day!
5. Check your credit reports
The vast majority of Americans have never checked their credit, even though you should review it at least once a year. Not only is it the best way to know if you've become the victim of identity theft, but monitoring your credit and correcting any errors can boost your scores.
Having higher credit scores allows you to pay less for many products and services, including loans, credit cards, insurance, and deposits on utility accounts. So, resolve to check your credit this year.
You can review or download your credit reports from each of the nationwide credit bureaus every 12 months for free at annualcreditreport.com. Or you can sign up with free credit sites, such as Credit Karma or Credit Sesame, where you get access to your data as often as you like.
6. Automate a savings goal
Since it's easy to go off the financial rails, a smart way to stick to a money resolution is to automate it. Here are some ways to put savings on autopilot:
- Participate in a retirement plan at work, such as a 401(k) or 403(b), that deducts your elected contributions from your paycheck before you receive it.
- Set up recurring transfers from your bank account to a traditional or Roth IRA.
- Open a 529 savings plan to pay future college expenses for yourself or a family member.
- Have a portion of your paycheck sent to a bank savings account to build your emergency fund or save for other goals, such as a down payment for a home or taking a vacation.
7. Learn more about personal finances
Mastering your personal or business finances and becoming a savvy money manager doesn't happen overnight. Make a resolution to continue your education by reading or listening to at least one money book or completing an online course in a finance topic that interests you this year. The more you know, the more strategies you can implement to earn and save more.
Of course, I recommend my book, Debt-Free Blueprint, if you're ready to create a debt-reduction plan. And my latest title, Money-Smart Solopreneur, is just the ticket for aspiring or experienced small business owners to master their money. And subscribing to the Money Girl podcast for weekly education and inspiration is always free.
Making financial resolutions can get you fired up to create good habits and reach big goals. But the trick is making them stick for the long term. To stay focused, choose a few critical resolutions that mean the most to you, instead of trying out dozens at once.