9 Ways to Stick to Your New Year's Savings Goals
Keeping to your new year's resolution is easier than you think. Learn new strategies to save money, reduce debt and plan for the future.
This year, 24% of Americans made a new year’s resolution to live more economically. According to CIT Bank, new year’s resolutions are more popular among younger generations: 56% of Gen Zers, 58% of Millennials and 42% of Gen Xers made resolutions for 2022.
Of those Americans making resolutions, 54% of them make financial resolutions. Here’s how their financial goals breakdown:
Saving more money: 77%
Improving credit score: 48%
Spending less money: 48%
Reducing debt: 47%
Investing more: 43%
Contributing to 401(k) and HSA plans: 24%
Here are nine ways to achieve your financial new year’s resolution this year — whether that’s paying down debt, ramping up your retirement savings goals despite your age or saving on monthly expenses.
1. Update Your Financial Goals and Monetary Outlook
The first thing you want to do is create a new year savings plan. Take a bird’s-eye view of your upcoming year: Are you planning a big life change like buying a car, having a baby or changing jobs? Next, view your 2022 calendar for any big events, vacations or larger expenses that come up year after year, such as children’s birthdays or anniversaries.
Make sure you take into account any job changes or other significant financial events that will affect your savings goals in the new year. You can also consider starting a side hustle or getting an additional part-time job to help with your goals.
2. Build a Better Budget
You’ll want to audit your 2021 budget to make sure it’s still accurate — take a close look at all expenses and your income sources. Make sure to include rent or mortgage, homeowners association fees, insurance premiums (keep an eye on this since it can vary), gas and car payment or public transit passes, utilities, recurring subscriptions, child-care expenses, and groceries and restaurants. Don’t forget to factor in inflation, which jumped 7% YOY in 2022.
A great way to build a sustainable budget is to utilize the 50/30/20 rule — you spend 50% of your income on needs, 30% of your income on wants and the remaining 20% on savings and debt payments.
3. Figure Out How to Save On Your Monthly Expenses
As part of your budget audit, look at two or three months of bank statements to see where you’re spending your money. Be honest with yourself.
If you’re spending $5 per day on coffee, you might want to invest in a Keurig so you can make coffee at home. Too much spending on restaurants and take-out? Perhaps a meal delivery service like Hello Fresh or Sun Basket is a more economical option, and hold dinner parties at home instead of going out.
Evaluate your monthly subscriptions to make sure you’re paying for things you actually use. If you never go to the gym, stop paying for the membership. Or if you’re paying for Netflix, AppleTV and HBO Max, team up with a friend or two and split up the subscriptions. If you have a long commute, carpool with a friend to spend less money on gas.
4. Pay Down Debt
Paying down debt is the most important financial resolution you can undertake as it can save you a ton of money in the long term. If you have a 15% interest credit card and a savings account that yields 1%, the math speaks for itself.
There are two types of strategies when it comes to paying down debt:
Using the debt avalanche method, you would pay down the loan or credit card debt with the highest interest rate, which saves you the most money in the long run.
For the debt snowball strategy, you would pay off the account with the smallest balance, which gives you a quick victory and reward as you continue paying off each balance.
You can also start with the snowball method and then switch to the avalanche method. By doing so, you can celebrate your wins each time you pay off a balance and continue paying off large amounts. The important thing is to choose the method that you think you’ll be able to stick to most effectively.
Another thing to do is to call your credit company and ask if they can give you a lower interest rate on your credit card. If it’s a no, consider opening a new account and transferring that balance to a 0% interest-rate card — it could end up saving you a lot of money.
Keep an eye on interest rates, and if they drop lower than your current mortgage rate, call your broker to see whether you’re a good candidate to refinance your home loan — keep in mind that if you do this, your mortgage starts anew.
5. Set Pragmatic Savings Goals for the New Year
Consider setting a new year’s savings goal that’s a percentage of your overall income, which is easier to budget for every month if your income fluctuates.
Also, consider your needs vs. wants — if you don’t have an emergency fund, that’s your first priority. If your savings account isn’t in an account that yields 1% interest, consider switching to a different account that has a higher APY.
Always pay yourself first, whether it’s your emergency fund or retirement savings. If you can get it deducted automatically from your paycheck, you don’t have to think about it as it builds over time.
6. Make Sure You Have Enough Insurance Coverage
While it can be tempting to purchase the minimum amount of liability insurance coverage for your vehicle, you might want to consider a higher level of coverage. Upping your basic coverage can provide you with additional peace of mind and add-ons like personal injury protection, medical payments and uninsured or underinsured motorist products.
Contact your insurance company to see if you can get a discount for bundling several insurance products, such as personal property, auto and home or renters.
7. Leverage Apps to Budget, Save Money and Track Spending
Apps are great options to help you stick to a budget, save money or pay off debt. They make it easy to keep track of your saving and spending habits.
- Quicken offers a personal finance and money management software to help people with their goals. Plans start at $35.99 per month.
- Mint is a money manager and financial tracker app that lets users budget, track expenses and payments, and monitor their credit.
- Digit makes spending, paying bills, savings and investments work together.
- Tally offers consumers a line of credit and pays off credit card debts immediately, allowing users to pay Tally back once a month using debt consolidation. If you use this service, consider blocking your credit cards, so you don’t continue to use them.
8. Reward Yourself Throughout the Year
When you’re setting your budget, set calendar alerts that remind you of your monthly goals — and add a reward to each goal. If you’re cutting back on eating out, perhaps you can meet a friend for lunch and treat yourself for that month’s efforts. Or maybe you paid off a smaller balance on a credit card using the snowball debt payoff method? Reward yourself with that new lipstick you’ve been eyeing.
9. Prepare for Setbacks
Finally, the most important thing to do when trying to save money and rein in spending is to be realistic and understand that setbacks are a normal part of the process. Your car might need new tires or an unexpected medical bill may pop up, and you’ll have to adjust as appropriate. So, audit yourself along the way — every month if possible. Make sure to reward yourself as you hit milestones and hold space for yourself when you don’t.
Keeping the long view in mind, despite setbacks, will help you achieve the financial goals you set for the new year in 2022.
About Laura Longero
- CIT Bank. "2022 New Year’s Resolutions by the Numbers." Accessed January 17, 2022.
- Statista. "Most popular New Year’s resolutions in the United States for 2022." Accessed January 17, 2022.
- U.S. Bureau of Labor Statistics. "Consumer Price Index — December 2021." Accessed January 17, 2022.