Millions of Americans made a New Year's resolution to save more money in 2016, and we want you to be successful. Saving more money doesn't need to be painful, either -- in fact, here are five suggestions from our contributors that can make it easy.
Sean Williams: Saving money can sometimes seem like a lot of work, but making one simple change that requires perhaps 30 minutes of your time each month could wind up making a big difference in your wallet. This change in question involves you taking the time to formulate a workable monthly budget.
I know what you're thinking, and yes, even I cringed at the idea of a budget in my younger days. But here's the problem. If you don't work with a monthly budget, you'll simply not have a good understanding of your cash flow. When I was 21 years old, I had a single job and three bills to pay, which made going without a budget somewhat feasible (but still not advisable). A decade and change later I have more than a dozen bills to pay, some of which are monthly, bimonthly, twice-yearly, and annually, and I have varied income sources. I buy some items with credit, others debit, and I use cash in my wallet for other goods and services. Without a budget I'd be lost as to how my income moves in and out of my checking account, and I'd have next to no chance to optimally save for retirement.
Thus, your task in 2016 is to take 15 to 30 minutes each month and formulate a budget. Set aside money for bills, entertainment, and retirement savings, and understand that as your income or spending habits change, your budget can be revisited and revised. Sticking to your budget will allow you to optimize your saving for retirement and a rainy day, and it'll also remove some of the uncertainty and stress associated with paying your bills and saving for retirement.
Best of all, most budgeting tools can be done online these days, removing the potential for human error, and actually shortening the time it takes each month to ensure you're staying on track.
Jason Hall: If you're truly going to take a budget from an idea to something you do, you have to develop healthy spending habits and break old habits that will deep-six your budget before it gets out of the harbor.
Using lists -- and holding yourself to them -- when shopping is a great start. This should be the case for everything from groceries to office supplies to clothing. Think about how often you pick up something you weren't intending to buy when you're in the grocery store. A couple of items every week, a few bucks each, and it's hundreds of dollars per year.
Now think about how that works when you're buying clothing. You needed new pants, but you left the store with a couple of shirts that you bought because they were on sale. A great deal, but there goes another $50 you didn't budget to spend. Marketers are very good at putting low-cost and "great deal" stuff in stores where we will pick it up and buy it without really thinking about it.
Make lists. Don't buy stuff that's not on the list. Not only will this help you hold yourself to that budget and save you hundreds of dollars every year, it will also help you build great spending habits that you can sustain for a lifetime.
Matt Frankel: One smart way to save more money in 2016 is to automate the process for both savings and investment accounts.
Virtually all brokerages have the ability to set up recurring deposits on a weekly, biweekly, or monthly basis. Additionally, many mutual fund companies will allow you to invest a fixed amount into one or more funds at set intervals -- and most will waive their minimum initial investment requirement if you do.
Not only does automatic investing force you to invest as much as you planned to, but you also get the added benefit of dollar-cost averaging. In other words, by investing a set dollar amount at regular intervals, you end up buying more shares when your investments are cheaper and fewer shares when they're expensive.
It also pays to automate contributions to savings accounts in order to build up an emergency fund. Many banks make it easy to automatically transfer money from your checking account, and some even offer incentives to do it, such as waived monthly fees with automatic deposits. There are also specialized savings accounts that can make it even easier. For example, the Wells Fargo Way2Save account automatically transfers $1 from your linked checking account every time you use your debit card, pay a bill, or have an automatic payment drafted from your account. You may be surprised at how quickly those dollars can add up.
Selena Maranjian: We often think of saving money as just spending less -- but you might also save money by spending it on something that is likely to significantly appreciate in value -- such as stocks.
Think of it this way: If you save $1,000 and sock it away in a bank account that grows by an annual average of 2% over 20 years, it will become about $1,500. If you shove it in a coffee can or under your mattress or bury it in the backyard, in 20 years it will still be $1,000 -- but thanks to inflation, which has averaged about 3% annually over the long run, it will have roughly half the purchasing power than $1,000 had in 2015 or 2016.
Stock in healthy and growing companies is likely to grow much more powerfully for you, and even a simple, inexpensive broad-market index fund can serve you well. If you plunk $1,000 in one and it grows by about 10% annually for 20 years, you'll end up with close to $6,700.
So as you think about ways to spend less, think also about what you'll do with what you save. Make the most of your money. Don't just save and then park your savings in a bank account earning 1% or less -- unless that's emergency fund money. Any money that can be applied toward your retirement years from now should serve you well in the stock market, either through carefully selected individual stocks or mutual funds or in inexpensive index funds.
Dan Caplinger: The most painless way to save more money is to do it gradually, and you can't spend money that you never even see. That's the reasoning behind boosting your savings by increasing the amount of money you have taken out of your paycheck to go toward a 401(k) or other retirement plan account by one percentage point.
The beginning of the year is often an ideal time to increase your 401(k) contributions. If you were fortunate enough to get a raise of at least 1% for the coming year, then boosting your contribution percentage won't result in a drop in take-home pay, but it will dramatically increase the rate at which your retirement savings grows. Saving just $10 more per month will boost your eventual retirement nest egg by $13,000 after 25 years and $38,000 after 35 years if you can earn a 10% return on your money on average each year, and the greater your annual pay, the more your contributions will add up. Moreover, if you aren't saving enough to get the maximum matching contribution that your employer offers, then adding one percentage point to your retirement savings will free up more of that additional money as well. Making a minor increase to your 401(k) contribution percentage is just about the easiest way possible to boost your savings.