Six Easy Tips to Save Money This Year

Personal finance has been a longtime passion of mine, but because money is such a “taboo” subject (I feel like even more so than politics, sex, alcohol, etc.) I’ve always shied away from talking about it on the blog. That’s why I really love the Refinery29 series Money Diaries – I started reading the daily posts a few years back and thought it was so illuminating to see how much other women were earning and spending, and really made me think about why this isn’t a topic we talk about more openly.

Lately, I’ve been doing a lot of research on personal finance and having a lot of conversations with my fiancé on how we plan to combine finances after we get married. If anything, this pandemic has really shined a light on personal finance and led to a lot of candid conversations around money. I’m not the only one – personal saving levels reached record highs in the United States during the pandemic. I think this is a topic that is on a lot of peoples’ minds. And I really believe there should be more transparency and candid discussions around personal finance.

As tempting as it’s been to buy ALL the new loungewear and home decor, I’ve been making an effort to find ways to save money while still spending on the things I love. If you’re trying to do the same, here are my easiest tips on how to save money this year and get your personal finances in check.

Tips to Save Money This Year

+ Set a goal

If this sounds basic, it’s because it is! Setting a goal enables you to have a bigger picture in mind and understand why you’re trying to save money. Whether it’s saving for a vacation, a future wedding, house, babies, retirement, setting concrete goals helps you track your progress and stay on course. It’s easy to set “saving money” as a goal (because you need it for all the things!) but without a number or purpose in mind, it can feel daunting. Having a vision for your money also helps when you’re tempted by something in the now. You can think to yourself, “do I really need that new handbag? Or would I rather put that money towards X”? And cut down on impulse purchases.

+ Make a budget and track your finances

So many of us just spend our money and check our account from time to time. But do you really know where your money is going? A basic rule of thumb is the 50/30/20 rule. 50% of your income should go towards necessities (housing, food, transportation). 30% should go towards wants (think of this as your “fun money”). And 20% should go towards savings and tackling debt. Take inventory of your monthly income and use this split as a general rule of thumb. It can be hard to follow if you’re living in high cost of living city. But having even a framework for what you want your budget to look like will go a long way.

If you’ve never done this before, I would suggest looking at your spending from the past 3 months and adding up your spending in different categories – things like groceries, shopping, subscription services. Once you have a general sense of how much you spend on different categories every month, you can match that with your budget and set a guideline for how much you can spend in each area.

+ Cut down in one area

If you feel like you’re living paycheck to paycheck or don’t know where all your money is going, instead of having an “all or nothing” mindset, pick just one area to cut down on for a month. A really easy one to do, especially now, is coffee. Maybe you find yourself eating out every single meal. If this is the case, challenge yourself to cook at least 1 meal a day at home. Think of this as a “Marie Kondo” exercise for your budget. If buying a latte every day makes you really happy, then add coffee to your budget. But maybe consider making lunch at home.

+ Sell used items

Now is the best time to purge your closet and home. One man’s trash is another’s treasure. And you’d be surprised how much activity there is on resale sites right now. I’ve been selling my clothes on Poshmark for years. And recently I’ve taken an even more ruthless approach in getting rid of clothing and accessories I no longer love. I realized I get sick of stuff pretty easily. So now I donate or sell items from my closet as soon as I’m ready to move on. I’ve really tried to stick to a rule of “one out, one in” when it comes to my closet. For every new item I purchase, I have to get rid of something.

On a similar note, decluttering your home seems to be a popular theme of the pandemic – so I would really recommend looking at everything in your house and donating or selling items you’ve outgrown on Craigslist, Facebook Marketplace, or OfferUp. You might be surprised at how much you can make through purging items you no longer love. And you can easily put this money towards your savings goal.

+ Open the right accounts

Think of various accounts as tools in your personal finance kit. I like to have a checking account where I only keep enough to pay my bills and then put the rest of my paycheck in other accounts. If you keep most of your money in cash in a checking account, you are literally losing money to inflation. Interest rates are super low right now, so savings accounts are not as attractive as they were a year ago – but even earning 0.8% interest on your money is better than nothing!

If you work a corporate job, you most likely have access to tax-advantaged retirement accounts like a 401k. Ask your HR department or employer about these – at the bare minimum, put enough into these accounts to get a free match if your employer offers one. Many people are also eligible for Roth IRAs, which allow you to invest and withdraw your money tax-free. If you’re self-employed or a freelancer, you might want to consider a SEP IRA. Educate yourself on the different types of retirement accounts to learn about which ones are right for you. These accounts will help you save on taxes and help tremendously with retirement and other financial goals you may have.

+ Educate yourself

There are SO many free or close to free resources out there on personal finance. If you’re just starting to learn about personal finance, I highly recommend doing research on the internet, reading books, and learning about basic accounts and financial terms before spending money on a financial advisor or paying for advice.

How are you finding ways to save money right now?