If New Year's resolutions are your thing, consider prioritizing your financial well-being and creating a resolution based on managing your saving and spending! We’ve listed some of our favorite ways to practice managing your money below.
Start Budgeting
One way to set yourself up for financial success in the New Year is by creating a financial plan and deciding how to budget your money. This means doing a big-picture review of your expected income and expenses. There are many websites and apps that can help you begin budgeting, or you can use the traditional pen and paper option. We also have a couple tried-and-true budgeting methods that we love to share with Members: the envelope system and the zero-based budget.
The envelope system involves placing a certain amount of cash into different envelopes based on how much you have allotted to that expense. You might have envelopes for wants, needs, savings, and debt repayment, or even specific items like groceries and entertainment. The advantage of using envelopes and cash is that this budget makes spending very real. You’ll need to physically take money from your budget envelopes to spend it.
Zero-based budgeting is a way to divide up all of your monthly income to different categories of expenses, savings, and debt payments. You start with your income number, then subtract everything you are budgeting for – including savings or investments – until your budget balances to zero at the end of each month. Zero-based budgeting means you likely won’t need to handle as much cash as the envelope system. It also offers the benefit of showing you when you’re “in the negative” for the month if you take too much from your budget categories, meaning you might be more likely to stick to your budget.
Manage Your Restaurant Spending
Of course, we all love skipping cooking for a night and grabbing a bite to eat from one of our favorite restaurants, but your wallet may not enjoy it as much. A meal that costs you $15 at a restaurant might cost you only $5 to make at home. The average American family eats out three to four times per week. If a family of four were to make just two of these meals at home instead, they could save more than $1,000 during the year. Suddenly becoming your family’s in-home chef may not sound like such a bad thing after all!
To avoid dining out as much, we suggest searching the internet for easy, low-cost recipes. There are many budget-conscious recipes available for feeding just one person or an entire family. Be sure to listen to our Royal Credit Union Money Donuts® Podcast episode Money-Saving Grocery Shopping Tips to learn how you can efficiently save money on your future grocery shopping trips too. Another way to save money and avoid the temptation to order out is to prepare meals ahead of time. Prep your lunch for work the night before, so you are not in a rush and you know you have a meal ready for the day.
Review Your Subscriptions
With all kinds of monthly subscription services available for everything from movie and music streaming to makeup items and workout plans, it can be hard to keep track of what you’re subscribed to. We recommend you keep a list to make it easier to stay on top of your subscription services. You can also make a habit of reviewing your monthly transactions on your accounts or credit cards to watch for recurring charges. This is also a great way to spot charges caused by a free trial that you forgot to cancel!
Once you have your list, think about all the subscription services you pay for and see if there are any you could eliminate. Do you need two or three different video streaming services? Do you listen to music enough to justify the monthly costs? Check your email for receipts and card statements for transactions to see which services you are being charged for if you are unsure. By cancelling subscriptions that you may not use as often or that you don’t need anymore, you can save money for other expenses or start an emergency fund.
Managing your saving and spending in the New Year can seem like a big challenge, especially if you feel like you got off track during the holidays. But, by using the above tips, you can begin practicing healthier financial habits and keeping your resolutions within reach! For another way that you can prepare for the New Year, check out this article on setting a one-word goal as an alternative to a resolution.
