Five New Year’s Resolutions for Saving Money in 2017

Like many people, you’ve resolved to save more money in 2017. Here are five tips to make your savings resolution a reality.

Use the rule of thirds when you have a windfall

When you receive unexpected income — a gift, overtime pay, or a bonus — apply the rule of thirds when deciding what to do with it. The rule of thirds means you use:

• One-third for the past: Pay down the debt you owe.
• One-third for the future: Put a third of the money in your savings account or another investment.
• One-third for the present: Make a purchase you want or invest in a home or personal improvement.

What’s so great about the rule of thirds? Your debt will shrink, your savings will grow, and you won’t deprive yourself to make those two things happen.

Stick to a budget

Make and stick to a budget. There are several online articles and resources to help beginners create a budget. Sticking to your budget will keep you from spending more money than you make. Be sure your budget includes putting money into your savings account. That way you’re saving while staying out of the red.

Keep an emergency fund

So, you’ve made a budget and you’re sticking to it but something unplanned always happens — a house repair, unexpected surgery, or a job loss. Keep an emergency or slush fund for when life’s unexpected events come your way, so you don’t have to use credit cards. Put money into an account you can easily access like a money market or savings account. How much should your emergency fund be? Track your spending for a month and multiply it by three. A three-month emergency fund should help you get by when the unexpected happens. Your fund will take time to build. Add to it every time you get paid — even if it’s only $10 or $20.

Use cash

ATM and debit cards make it too easy to give into impulse buys that drain your checking or even savings account Figure out how much you spend on cash-based purchases during the week (your morning coffee, your lunch, etc.) and get that amount of cash. Leave your ATM or debit card at home or at least in your car’s glove compartment and use it only for emergencies. Once you rely on your finite amount of cash to get you through the week, you’ll think twice about those impulse buys.

Pay yourself

When you sit down and pay your bills, don’t forget yourself. Financial planners recommend this strategy for retirement savings. Every month or every paycheck, put money into a retirement account. Retirement experts recommend six percent of your monthly salary. Some people set up payroll deductions that automatically go into 401(k) or other retirement plans. If this isn’t an option, open a savings account for your retirement, write yourself a check, and deposit it in the account.

Following these five tips will make savings a habit and let you boast of at least one resolution you’ve kept in 2017. If you have other tips to share, please do so in the comments section. In the meantime, I hope your new year is off to a great start!