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by Maurie Backman | Updated July 17, 2021 - First published on Dec. 15, 2019
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The new year is a great opportunity to ramp up your savings efforts so that you can reap the rewards later on.
The start of a new year is the perfect time to resolve to do better with all things financial. If you're eager to save more money in 2020, here are a few key moves to make.
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Without a budget, it's hard to keep tabs on how much you're spending or how much you can afford to spend. Rather than stay in the dark, carve out some time to set up a budget. Start by reviewing your bank and credit card statements from the past year. Figure out how much you spend every month and what you spend it on, and then compare that total to the amount you earn. If there's no room (or little room) left over for savings, then you need to go back through your expenses and identify a few that you should cut.
Saving money gets easier when you take the temptation to spend out of the equation. That's why it pays to automate your savings. You can do so by arranging to have money transferred automatically from your checking account to your savings account each pay period. Or sign up for your employer's 401(k) plan and allocate a chunk of each paycheck to your retirement fund. Some IRAs offer an automatic transfer option as well, so if you don't have access to a 401(k), you can go that route instead.
Keep in mind that if you're behind on emergency savings, your first goal should be to sock away at least three months of essential living expenses before focusing on your retirement fund. But if you're good on near-term savings, you can shift your attention to your IRA or 401(k).
If you got a raise for 2020, you have a prime opportunity to boost your savings. The reason? That extra money in your paycheck isn't already earmarked for existing bills. As such, you should have no problem putting all of it into savings. And if you do it automatically as per our tip above, it will be even easier.
The sooner you pay off existing credit card debt, the less money you'll throw away on interest. Or, to put it another way, the interest you would have paid to your credit card company is money you can instead put in the bank. If you're carrying multiple credit card balances, it pays to look into transferring them to a single card with a lower interest rate. This option is feasible if you have good credit, and you might even snag a 0% introductory APR in the process.
The more money you earn, the more you'll have available to sock away. And that's where getting a second job comes in.
Now you may be thinking, "Why would I want to take on another job on top of my main one?" But here's the thing -- in today's gig economy, you can turn a number of hobbies into an income stream. So although you may not want to grind away in an office on weekends, or spend your evenings waiting tables or fielding complaints at a call center, you should have no problem taking a pastime you enjoy, like cooking, crafting, writing, or web design, and exploring ways to make money from it.
Chances are that you'll go away from time to time in the upcoming year and won't need your home. If you're willing to put in a little effort, sites like Airbnb and HomeAway make it easy to rent out your home on a short-term basis. The result? More cash in your pocket, which you can then put into savings.
Saving more money is a noble goal, and an important one at that. Follow these tips, and with any luck, your finances will take a turn for the better in 2020.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. The Ascent's picks of the best online savings accounts can earn you more than 8x the national average savings account rate.
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