Wouldn’t it be great if we could wake up on January 1st and have all our debts erased? The magic of a new year — it could happen, right?
Of course chances are that won’t actually happen, and instead most people use the New Year as an opportunity to really get serious about their personal finance situation. To that end, here are some fool-proof ways to spend less in the new year, so come December 2016 you’ll be feeling pretty good about where you are, financially.
1. Start talking
Money has been a bit of a taboo topic in the past, but that actually may be starting to change. In fact, one Fidelity survey found that 76% of millennials say they have no problem starting a conversation with their parents about saving and investing for the future. Talking about money is important for many reasons, including general education (Don’t’ know what a SEP IRA is? Your freelancer friend probably does.) and career gain (it’s good to know your colleague with the same degree and experience is making more than you for the same job before going into that raise negotiation).
How to take action: If talking about money still doesn’t come naturally to you, start small. Ask around to see if your friends have budgets, and how they came up with them. It’s easier to start with more vague financial concepts and then get into the specifics once you start to feel more comfortable. Once you have an open dialogue going, you’ll be less tempted to stray from your financial course, too, since friends and family are likely to hold you accountable for your actions. Download the MagnifyMoney Debt Free Forever Guide to get started on paying down debt.
2. Bulk up savings when you can
Even the most savvy budgeter can get tempted to spend money when it unexpectedly becomes available (think end of year bonus, tax refund or that birthday check from grandma).
How to take action: As the old saying goes, out of sight, out of mind. In other words, whatever windfall may come your way this year (a big tax refund, a raise, an inheritance), vow to put it right into savings. Unless you can use it to pay down debt (which you should if you have it), the best way to avoid the temptation to spend extra money is to put it away as soon as possible into an account that you don’t see on a daily basis. Millennials seem to be clued into this trick already, too — after all, a 2015 National Retail Federation survey found that 54.9% of young adults were planning to put tax refunds directly into savings.
You might think it’s a great idea to sign up for emails and newsletters from all your favorite retails places because, you know, every now and then they send through deals. The truth is, though, seeing those emails in your inbox probably makes you more likely to spend frivolously on things you don’t actually need, just because it’s all a simple click away. In fact, according to some research, people who buy products marketed through email spend 138% more than people who do not receive email offers. Yowza.
How to take action: If it’s only a handful of emails you’re receiving each day, you might be able to unsubscribe through each one individually, but the more likely story is that you’ll need a little help to wade through all your mail. Unroll.me, for example, allows you to see a list of all of your subscriptions once you sign up, and you can unsubscribe instantly all in one place. Buh-bye temptation!
4. Track Your Spending
As with dieting, sometimes we don’t even notice how much we’re spending until we write it all down. (I’m eating three cookies a day? Who knew?)
How to take action: If you’d rather have a system do the work for you, sign up for an online system (like Learnvest or Mint) that allows you to link your credit cards, checking and savings account so you can log on and automatically see where and what you’re spending on. If inputting the information manually is more likely to keep you honest, a simple Excel spreadsheet that you log on to at the end of every day to tally your spending should do the trick. One you’re actually keeping track of how much you’re spending in iTunes each week, you may be more tempted to scale way back.