Every December, I pledge to do a better job at saving money once the new year rolls around. But as we all know, sometimes our best-laid money-saving plans can crumble to pieces in the face of life's mounting expenses. If you really want to save more money in 2017, you'll need to approach that goal from a place of commitment and discipline. Here are five relatively easy ways to get started.
1. Pay yourself first
It's hard to spend money you never actually get your hands on. One of the most effective ways to save more cash is to ensure that it never hits your checking account in the first place. There are several options for accomplishing this goal. First, you can set up a portion of your paycheck to filter automatically into a savings account. If you're behind on emergency savings, this is the best place to stick the money you're committing not to touch. Otherwise, sign up for your employer's 401(k) plan. Part of your paycheck will go directly toward retirement savings, and if your company provides a match, you'll get to sock away even more cash. Best of all, the money you contribute to a 401(k) goes in tax-free, which means you'll save on taxes.
2. Follow a budget
Sticking to a budget is one of the most effective ways to keep your spending in track, yet over 40% of Americans fail to employ this simple tactic. Whether you use online software or a basic spreadsheet to create your budget, start by listing out your various monthly expense categories (such as housing, electricity, transportation, and the like) and estimating what you spend on each. Next, think of annual expenses you typically incur (like professional certification or warehouse club fees) and break out those costs in 12 even increments. If, after running the numbers, you see that there's money left over to save, you're in pretty good shape. If not, you'll need to examine your spending and decide which expenses you're willing to minimize.
3. Live someplace more affordable
Housing is typically the average American's single largest expense, but some of us are spending way more than we should be. In 2015, almost 12 million households spent more than half of their income on housing. Additional data reveals that between 2011 and 2014, 52% of Americans had to make at least one major financial sacrifice, like taking on credit card debt or delaying retirement savings, to cover their rent or mortgage payments. If you're really looking to save more money in 2017, try tackling your greatest monthly cost and seeing what a difference it makes. You may find that downsizing or moving to a less trendy neighborhood frees up hundreds of dollars each month that can go directly into the bank.
4. Use tax-free dollars for the things you're already paying for
Many of us spend money to take care of our health and commute to work. If you sign up for a flexible spending account (FSA), you can allocate up to $2,600 next year in pre-tax dollars to use for medical expenses like in-office copayments and prescriptions. The only catch is that you'll need to use up your entire FSA balance within your plan year; otherwise, you risk forfeiting it, which is essentially throwing money away. Along these lines, if you sign up for commuter benefits through your employer, you can set aside up to $255 per month for transit and $255 for parking for a combined monthly total of $510 in pre-tax dollars. With either option, the amount you save will depend on your effective tax rate. So if you put $100 a month toward commuter benefits and $1,200 a year into your FSA and your effective tax rate is 25%, you'll save $600 for the year.
5. Ask for discounts
One of the easiest ways to save money in 2017 is to simply pay less for things than what you're currently spending. Whether you're looking for a lower interest rate on your credit card or a discount on your internet service, sometimes all it takes is a phone call to snag a discount. Case in point: When my cable bill went up last month after my promotional package ran out, I called and asked for a lower rate. Though my provider couldn't extend the same discount I'd previously had, I was offered a deal that's going to take $15 off my bill every month for the upcoming year. In my situation, a 20-minute phone call was well worth $180 in savings.
If you really want 2017 to be the year you ramp up your savings, be prepared to make a few sacrifices and hold yourself accountable for every purchase you make. It may take work, but you'll be happy when you see your savings balance climb by year's end.