How to Make a Money-Saving Resolution That Will Actually Stick
As the new year begins, people around the globe set out with resolutions in hopes of making this year better than the last.
Resolutions come in all shapes and sizes, and nearly two-thirds of Americans focus their goals on getting in better financial shape. According to one major financial resolutions study, “saving more money” tops the financial resolution list.
It’s easy to start strong, but once the excitement of the new year starts to fade, resolutions often fall by the wayside.
If you’re hoping to save more hard-earned money this year, then here’s how to come up with a plan, so you’re more likely to follow through on your goal.
Set more specific goals
One reason many people may struggle to stick to resolutions is that the goals are too general. Setting a specific goal can help bring that real-life motivation. Almost everybody wants to save more money, but the real question to ask is why this is important to you.
Perhaps you want to save for a child’s college education, start your own business, buy a new house, or take your parents on a week-long cruise. The more specific the reason, the stronger your motivation will be to commit to your goal.
Define the specifics and deadline of your goal
Once you have your “why,” it will be easier to figure out the granular details of your savings resolution, like how much you need to save and by when. Setting a specific amount and assigning a real deadline will take your goal from vague to actionable.
For example, if your original goal was to “save for a house,” transform it into “save $10,000 for a down payment on a $200,000 house within two years.”
Of course, you want to make sure your goal is attainable according to your current financial situation. While it’s OK to choose a resolution that might be challenging to achieve, it shouldn’t be completely unrealistic.
Come up with a savings strategy
Once you nail down your savings amount and timeline, look at your budget and decide how much you’ll need to allocate toward the goal each month. Then, review your income and current expenses to see if you need to make any changes.
You may find that you’ll have to cut expenses. But, if a goal is meaningful enough, it will be easier to make sacrifices to get there.
Go through your budget and see what you can live without while working toward your resolution. Do you need to cut back on eating out? Can you cancel a few subscriptions? Can you avoid buying new clothes and accessories?
Also, don’t hesitate to contact your bill providers, such as your internet, cell phone, cable, and car insurance providers, to negotiate for lower rates. If not, contact competitors for comparison shopping; some may offer new customers specials that can help you save. But don’t stop there; you can use these lower offers as leverage to see if your existing providers are willing to match or beat what you’ve been offered. If they’re not willing to compete, then you may wish to take your business elsewhere.
Depending on your goal, drastic changes may be in order, for example, downsizing to a one-car household or moving to a smaller apartment. You could also try to pick up a side job, work overtime, or negotiate a raise.
Measure and share your progress
One of the keys to reaching a goal is to track each step you take on your journey. Not only can this help you see if you need to make adjustments along the way, but doing so can also make it more exciting as you get closer to the finish line.
There are plenty of budgeting and savings apps to help you easily set savings goals, automate transactions, and track your progress. If you prefer an analog method, print out a visual aid or buy a magnetic goal thermometer to fill in as you get closer.
Don’t be afraid to share your milestones with others or publicly on social media. While you don’t have to dish on all the specifics, letting friends and family know your goal can keep you more accountable — and it doesn’t hurt to have them cheer you on as you go. You may also find others in your circle who are trying to reach a similar goal.
Celebrate small wins
Because reaching a financial goal takes time and patience, rewarding yourself for hitting mini-milestones can make saving feel like less of a burden. For example, if you’re trying to save $20,000, treat yourself every time you hit another $5,000.
It shouldn’t be something that will ruin your progress, but a one-night splurge on entertainment or something that makes you happy can give you the boost you need to keep going strong.
Take your savings goal even further
When it comes to reaching your savings goal, every penny counts, and a high-yield savings account can help you expedite the process.
High-yield savings accounts, like those offered by SaveBetter’s partner banks, may offer a higher percentage than traditional savings accounts you might find at your current institution.
For instance, as of early 2021, the national average interest rate on traditional savings accounts is around 0.05% APY, whereas SaveBetter’s partner banks currently offer rates as high as 0.51%.
While it may not sound like a significant difference, here’s how that can play out over two years:
If you have $10,000 in an account with 0.05% APY, you’ll earn just $5 in interest after one year and $10 after two years. But if you keep $10,000 in a high-yield account at 0.5%, you’ll earn $50 in interest after one year and $100 after two years — that’s 10 times the amount you’d receive with a traditional savings account.
While savings rates are crucial when selecting an account to hold your money, there’s also another point to consider.
As Ben McLaughlin, head of SaveBetter, explained in a recent interview: “It is important to keep an eye out for FDIC insurance as well. FDIC insurance protects your deposits up to $250,000 per institution, even in the unlikely event that the banks they’re held in were to collapse.”
How SaveBetter can help
SaveBetter provides a new way to help you reach greater earning potential.
With a fast, one-time online account registration, you can get access to a range of savings products, such as high-yield savings accounts — all of which are available through our FDIC-insured partner banks.
To learn more about high-yield savings products that can help make your savings resolution a reality in 2021 and beyond, explore SaveBetter’s partner banks.
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APY means Annual Percentage Yield.
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