Keeping New Year’s resolutions can be a challenge — particularly when they have to do with money. But making small adjustments to your finances consistently throughout the year can dramatically improve your financial picture.
Mechel Glass, vice president of community outreach for Atlanta-based nonprofit CredAbility, offers a few simple things you can do to help keep the momentum going:
Track every dollar you spend for 30 days. If you don't have money left at the end of each pay period, or you can't save money, it's time to start tracking it. For just 30 days, write down every penny you spend. Review this list for expenses that can be reduced or eliminated. Small changes can add up to big savings and can help you reach your goals more quickly. Use the budget calculator from CredAbility to help you track your expenses, or use the free Pocket Tracker app available for iPhone.
Put $10 a week in the bank. Even if you think you are living paycheck to paycheck, it is possible for you to save money. You can save as little as $10 each week just by making simple changes. Here are five ways to save $10 or more:
1. Eliminate your home phone. If you only use your cellphone, consider turning off your land line or at least reducing your services to the bare minimum.
2. Have coffee at home. Skipping your morning coffee out can add up to quick savings.
3. Bring your lunch and snacks to work. Limit lunch out to once or twice a week.
4. Skip the lottery tickets. You will be better served by putting that money in a savings account.
5. Avoid unnecessary trips and carpool when possible. Gas prices are on the rise, and sharing commuting costs can add up to big savings.
Ask for lower rates on your bills. You can reduce your auto insurance costs and bills for your cable, cellphone and credit cards with a simple phone call. Do some comparison shopping on auto insurance rates and call your carrier to see how you might reduce your premiums. Your cable company might be able to lower your monthly bill or offer you a special promotion for a period of time that can result in savings.
Tuck away those savings in a CD or IRA. Don't scrape by each month only to fritter it away the next month. Take your savings from the 30 days of scrimping and open a CD or an IRA. Putting the money in a regular online savings account won't work; it's too easy to reach in an emergency.
Raise your 401(k) contribution by 1 percent. As the economy improves, investment returns may improve. Instead of spending more money, consider investing an additional 1 percent of your income in your 401(k). For a person earning $50,000 annually, 1 percent is $500 — about $10 per week. Think about the amount of money you will earn over several years, as well as the tax benefits next year.
Every once in a while, use a credit card. Avoid a reduction in your credit line or having your credit cards canceled for lack of use. So pay a small expense with a credit card every 30 to 60 days. Then, pay off the credit card bill when it arrives.
