Five Tips for Saving Money in 2017
Spending less, saving more, reducing debt, and repairing credit are common New Year’s Resolutions, but many people don’t know where to begin. Mercury Insurance interviewed financial expert Abby Ulm, Manager of Nonprofit Services for SCE Federal Credit Union and its Center for Financial Empowerment, to get tips on how to set and meet your financial goals for 2017.
1. Set up a monthly budget. To do this, Ulm recommends that you:
- Write your budget on paper or in a computer spreadsheet. Money management software can even help auto-generate a budget for you based on your historical spending and income.
- Prioritize savings and be sure to set aside a portion of your paycheck, no matter how small, for a rainy day or an emergency. Do this before paying the rest of your bills and you’ll see your savings add up.
- Include categories for “Fun” and/or “Miscellaneous” in your budget.
- Set small goals. Re-assess your progress after one month, then again after three months.
- Know why you’re setting a budget. If your goal is to pay down debt, buy a new car or save up for a family vacation, it helps you stay focused on the task at hand.
- Make a commitment to stick to the budget…that means no cheating!
2. Involve the whole family in your money saving goals. You should always make sure your spouse or partner is in agreement with the budget and that you work together to make it succeed. “If you have kids, organize a family meeting and show them visual images of what you’re saving for that will benefit them,” says Ulm. “For instance, if you’re saving to pay down debt, think about what being out of debt will do for your family. Will you be able to take a nice vacation? Will you be able to afford a trip to Disneyland? Will you be able to work less and spend more time with the family? Then explain what things each family member can do to contribute to the effort of getting out of debt. To start, kids can start a coin jar, not beg parents to buy extras at the store, or turn off lights to help conserve energy.”
3. Carry cash. If you’ve never successfully used a budget before, Ulm recommends using cash with an envelope system. “Cash hurts a lot more when you spend it, so it works better when learning a new discipline like budgeting. Debit cards are easier to track purchases, but it’s also a lot easier to overspend when you’re just swiping a card.”
4. Say no to prepaid cards. Ulm doesn’t recommend using prepaid cards because of their fees. “Any small amount of money saved by curbing spending will be taken away in fees. If you must use a debit card, you are better off with a regular debit card tied to a free checking account at your local credit union or bank.”
5. Pay down credit card debt. Some financial experts advise paying off credit cards with the highest interest rate first, while others recommend starting with the one with the largest balance. Ulm says to start with the smallest balance. “I recommend paying off the card with the smallest balance first, then the next smallest, and so on. The card with the largest balance should be last. Paying off balances keeps you motivated to keep going.”
Ulm’s final words of advice for financial success in 2017 are to take a hard look at all your monthly expenses and see where you can make cuts temporarily to reach your goal faster. “Maybe you can cut out cable, eat out less, find a less expensive phone plan, carpool to use less gas, cut out non-essentials at the grocery store or bundle your auto insurance plan with homeowners insurance to get additional savings. Get creative. Be willing to make sacrifices now, so you can enjoy more later.”