New Year Resolution 2020: How to Save Money in 12 Steps
It’s 2020 and the start of a fresh new decade. You may be focused on setting healthier habits like drinking less, dusting off your gym or yoga membership and eating better. Well, we want to help you spend better too so you can save or pay off debts.
The average American today has about $38,000 in personal debt, not counting home mortgages. These debts include credit cards, student loans, mortgages, car loans, and personal loans. That’s a lot of money, and the numbers are up compared with previous years.
Saving money can be easy with just a few tweaks to your finances. The following 12 financial tips are sure to save you money in 2020 and beyond.
1. Create an Emergency Fund.
To save money, you have to avoid spending it first. The best way to do this is to create an emergency fund. If you’ve ever faced an emergency and had to borrow from others, or resorted to using credit cards with high fees, you understand how important an emergency fund is. It may feel painful to do so, but pay into your emergency fund a set amount each paycheck. Make a commitment to be consistent with the amount and frequency that you pay into your emergency account. Avoid using a savings account that is linked to your primary checking account because we all know how easy it is to transfer our money back into checking and spend it. Make a promise to yourself that you will not cheat by dipping into this little pot of gold. When the fund grows to a substantial enough amount, put it in a high-rate CD (more on this below).
2. Lock Up Your Money.
A high-rate CD is a great way to get a higher yield on your money than a regular savings account without much risk at all. The way it works is this: You put your money in a CD with a reputable bank or financial institution, agreeing to set aside your money for a specified amount of time, without touching it. You will see a return at the end of that term. The annual percentage yield (APY) is the rate of return earned on your deposit. The APY ranges from one institution to another and there will be different deposit minimums. Ideally, find the highest APY available to you. For more on APYs and interest rates, visit here.
3. Get a Lower Car Insurance Rate.
Most people save hundreds of dollars a year when they compare car insurance quotes. Even if you’re considered a high-risk driver or have had a DUI, you’re probably eligible to pay less than you do now. Switching carriers is easy too. You just have to make sure you don’t cancel your coverage before you are certain you’re covered by your new carrier. Some insurance companies will charge you a fee for canceling while others do not. Sometimes, the savings is so large when you switch that it’s worth biting the bullet with the cancellation fee. Ideally, you’ll visit SmartFinancial for a quote review at renewal time. Just make sure you’re using the best insurance-comparison website and that you’re paying no fee and only getting quotes from top insurance companies.
4. Get Rid of Cable.
There are so many cheaper (much cheaper) alternatives, including Netflix, Hulu, Sling TV, Philo, Amazon Prime Video, HBO Now, YouTube, YouTube TV, and others. Research which of these alternatives to cable offers your favorite shows or movies. If you’re one of those people who spend $200 or more a month on cable, you may be able to customize and streamline your viewing pleasures and save more than $100 a month. You can easily spend between $5.99 to $49.99 with an alternative that offers enough of your favorites to keep you entertained while you save money.
If your situation is dire, just remember that the salad years are sometimes the best. And just think about how free you’ll feel when you have zero debt. For some people, it may mean moving into a smaller apartment. For others, it means selling the house and buying a less expensive one and using the extra to pay off debts. Whatever downsizing means to you, this is the year to consider it very seriously. Start the decade with a clean slate. Downsizing will also force you to do a complete inventory of everything you own. This is a great opportunity to get rid of all the stuff you simply don’t need.
6. Refinance Your Mortgage.
See if you are eligible for a lower interest rate on your mortgage. Lowering your rate, even by half a percent, will save you thousands of dollars over the life of the loan. You’ll own your home more quickly and will be able to spend your money on making sure your home is weatherproofed, which will, in turn, save you even more money.
7. Weatherproof Your Own Home.
You can even do some of the caulking yourself and save thousands by not paying someone else to do it for you. Holes and crack waste the energy you use heating your home during the winter season. Buy heavy curtains, which will trap cold drafts and also block sunlight in summer.
8. Get a Lower Homeowners Insurance Rate.
Some people wrongly assume they are tied to their current homeowners insurance policy because they pay it along with their mortgage payments. That’s not the case. Your lender or the owner may have just selected one for you when you first signed your mortgage. That doesn’t mean you should not shop around for homeowners insurance. You may get a much lower rate and save more than $100 a month with the same coverage from a quality company.
9. Bundle Your Home and Auto Insurance.
In some cases, you can save up to 25% just for bundling your home and auto. It all depends on the insurer. When you shop car insurance rates, get your quote and then ask what you’d be paying if you bundled that rate with homeowners insurance from the same carrier. In some instances, people pay 30% less overall because they were overpaying so much on both and not bundling.
10. Stop Impulsive Shopping.
Unsubscribe from email lists that always draw you in to shop. Closeout your Amazon account if you need to. Those little extra spends each month that you do just because AmazonPrime offers free shipping are not doing your savings account and emergency fund any good. Do you really need all the stuff that you regularly have delivered to you? Think about it (really think about it). If you buy just about anything because it’s on sale, stop buying cheap for cheap’s sake. Make a mental inventory of your impulsive purchases even if it hurts. Reconsider your buying decisions in the new year.
11. Pay Off Credit Cards.
Consider how much you’re cutting from your lifestyle budget and add that to your payments on credit card bills. You’ll save hundreds, if not thousands, of dollars in interest a year if you are lower and hopefully eliminate your balances. Stop using your credit cards, starting first with the highest interest one(s). Then, increase your monthly payments to close out the highest interest ones as soon as possible. Negotiate a much lower rate on those credit cards before ever using them but don’t fall into the trap of drowning yourself in debt again with the enticement of a lower rate. If you’re only paying the minimum or coming close to your maximum limit, you’re burying yourself.
12. Take the 401K.
If you’re not taking matching dollars offered by your employer you’re leaving money behind. That’s free cash, and you’ll be glad you started taking a cut from your paycheck down the road when you’re retired and you start getting your payout.
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To make things even more challenging, this year, we not only have fireworks to worry about but there is also the potential for COVID-19 infections as we all let down our guards while in the presence of family and friends.
Some residents may damage things during do-it-yourself moves. Others may hire professional movers that accidentally break an expensive item.
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