5 Easy Tips to Achieve Financial Fitness in 2015!
It’s a New Year, which means it’s time to set your obligatory New Year’s Resolution! If you’re like most Americans, your resolution might have something to do with fitness: either physical or financial. Being a banker, I’m most interested in exploring financial fitness to bring you tips to make 2015 your most financially fit year yet!
Here are my Top 5 tips for easy saving this year.
1. Define your goals. Are you saving for a specific event or are you establishing a rainy day fund? When you establish and write down your goals, you’ll understand just how much you’ll need to be saving over time to get there. You’ll also find out real quick if it’s attainable or if you’re setting yourself up for failure. Don’t try to be too aggressive on your quest for savings; sacrificing quality of life too much can make you burn out quickly!
2. Pay yourself 1st and forget about it! If your employer offers payroll deduction, set up a separate allocation to go into your savings account. If payroll deduct isn't an option, you can setup an automatic transfer to occur just after payday. You can even take it a step further by finding a bank that offers a Certificate of Deposit (CD) product that you can add to whenever you like (but not deduct from outside of maturity/grace period); putting a portion of your savings in a CD will help you fight the temptation to spend your savings!
3. Snowball that debt! Fixate on your smallest credit account first by paying as much as you absolutely can each month until it is paid off; all other bills, just pay the minimum amount required. Once the small bill is paid off, take that money and switch your focus to the new smallest debt (be sure to include the minimum balance you were previously paying). Repeat until all of your debts are gone! When you’re finished, take all of the money you were spending on monthly bills and add it to your monthly savings.
4. Revamp the old “envelope system”. Folks really looking to keep to a strict budget have been known to use the envelope system. This is a cash system in which you create an envelope and set a budget for various lifestyle categories (groceries, gas, restaurant, etc.) each pay period or month. You then withdrawal that budget in cash and literally put it in that particular envelope. Once the cash for that category is out – no more spending! But if you’re like me, and many others of the Gen X & Y generations, I know, we simply do not do cash. So is this handy budgeting tool out the door? No way! You can accomplish the same result by using a Reloadable Prepaid Card, only it’s a CASHLESS system! You can load money to the card using payroll deduction (each card comes with a routing number and account number), online or in person and then take money off of the card just like a debit card. Simply label each card for its intended purpose (groceries, gas, restaurant, etc.) and you're set. Talk about simplicity!
5. Eat out less. They say less is more and this time, they mean it (whoever they is). Take a family of four, for instance, eating out 5 times per week for an entire year. At a modest average of $25 per meal, they’re spending $6,500 per year on eating out alone. Even if they eliminated 1 meal out per week – they would save $1,300 in one year. But let’s say they eliminated 3 meals out per week, that’s an annual savings of nearly $4,000*! That will sure help with a rainy day fund or debt snowball!
I can assure you the road to financial fitness and ultimately financial freedom isn't going to be easy, but it's a destination at which you'll be glad to be. *After the cost of purchasing food at the grocery store at an average of $10 per meal, I estimate being able to put $2,440 in savings or towards outstanding debt.