I love the blank slate of a new year especially when it comes to my finances! No matter the financial mistakes or successes I had in the past year, January always bring a renewed sense of motivation to make this the best year yet. Do you feel the same way? Check out my top 5 tips for saving money in 2015.
1. Set Measurable Financial Goals Together (Then Budget)
We all know that we need to make and stick to a budget and many of us start the year off with great intentions. But by a few months in, we’ve completely lost track of our spending and commit to starting fresh the next year. What’s the fix? A successful budget is always designed with both spouse’s financial goals in mind!
What do your financial goals look like? Eliminate debt? Create an emergency fund? Save money for holidays/vacation/car/house? Retirement? College? My husband and I have a lofty goal of being able to retire early!
Why a measurable goal? Because if you can’t put a concrete number on your goal, you will never know if you’re doing the right amount of the right things to get to where you want to be. So instead of setting a goal like “create an emergency fund in 2015,” give it a real number and a date to accomplish it! Once you have a goal that you’re passionate about, you can put your budget to work for that goal, and track it throughout the year.
Why set goals together? A joint budget and joint spending without joint goals is unlikely to succeed! Here’s how our budgeting is done!
2. Get Your Mind Right To Reduce Spending
The act of spending (and saving) money has so many emotional factors that influence our behavior. Think about the plethora of marketing material that we are constantly bombarded with. Marketers are crazy smart and have each of us summed up into a list (e.g. new mom, tired, needs a break, loves a sale, wants anything that will make life easier…); they use this knowledge to appeal to our emotions and make us want their stuff! Will you be influenced by marketing this year?
Additionally, most people are easily influenced by peer pressure. We want to have, say, and do everything as good as, or better than, our peers. We love to talk about the things we spend our money on and it makes us feel great to show off our new stuff.
But what if the peer pressure worked in a little different way? Imagine a world where we all have our own net worth plastered onto our foreheads. What if our net worth was the single most prominent and noticeable aspect of our lives? We would still compare ourselves to our peers. But imagine how our spending habits would change!
We decided that our family doesn’t need many of the things the Joneses have and made some major changes in our lives!
3. How To Handle Windfalls
Doesn’t it feel great when a big pile of money or an unexpected savings lands into your lap? Don’t you think you’ve earned the right to frivolously spend it? FALSE! Go back to step 1 and consult the goals and budget! Are the goals and budget off-track? Darn… that stinks! Grandma’s money needs to be used to pay down debt, or bolster your other financial goals. Still think you need that fancy watch? That’s fine, work it into the budget! (Sorry about the Dwight Schrute style tough love with this one!)
4. Invest to Reduce This Year’s Taxes
I get it… it’s a big bummer to put money into the bank that you can’t touch for a really long time. However, many of us desperately need to begin saving more money for retirement ASAP. Consider this, there are several types of investments that will earn extra money for you (for later) and save money on your taxes now! (See Step 3 for what to do with windfalls like tax returns.)
With my big goal of saving as much as possible for retirement, it’s great to see that by putting more money into our 401k and Traditional IRAs, we get a bigger tax return each year. And of course, with our bigger tax returns we can increase the amounts that we put into these accounts (see the cycle). Also, if you have access to an HSA medical insurance plan, be sure to use it. That’s another great way to reduce your taxes!
Want to reduce the federal taxes that you’ll be paying by April 15 this year? Even though it’s already 2015, you can still allocate money towards your 2014 Traditional IRA!!
5. Travel For Free With Credit Card Points
Try this only if you’re already a ninja with your credit cards and always pay them off every month. Shop around for the cards with the best travel rewards. When playing this game, loyalty means nothing! You can get awesome bonus points from many new cards by spending certain amounts within the first few months. This year my husband and I will each have new credit cards in each of our names and we will use them for as much of our budgeted expenses as possible. We predict that by using the cards for our normal spending, we will have enough points later this year to cover a round-trip flight for our family of four!
Are you ready to make 2015 the best financial year yet?
