Share Effective money-saving New Year resolutions

The start of the New Year is a great time to give your personal finances a makeover. As you form your resolutions for a new and improved you, consider some financial resolutions that will help you save money and build up your reserves. With some perseverance and self-control, you can make your pocketbook as healthy as the rest of you.

Build an emergency fund

Everyone should have an emergency fund that can last you three to 12 months if you suddenly lose your job. But even if they have such a fund, many people regularly dip into it to pay for everyday expenses. Start creating a “life happens” fund with a goal of having N40,000 to N300,000 set aside to avoid dipping into emergency reserves. So if your car breaks down or your dishwasher is busted, you can use your ‘life happens’ fund to settle the bills.

Eat at home

Eating out takes a huge bite out of many people’s budgets. Instead of heading to a restaurant, start cooking your meals more often. If you must eat out, save money by avoiding appetisers or drinks. For instance, a family of five can save N1,500 to N2,000 if they don’t eat out. However, you will realise that many families eat out twice a month, which is about N4,000 that could be put in your ‘life happens’ fund.

Create a budget

Nobody likes to be on a budget, so it takes a mental flip to view a budget as a positive thing. Think about a budget as freedom instead of something that confines you. A budget can tell you what you can and cannot do so you have a parameter, but not a rule. Start with a simple ledger that tracks money you bring in, spend and put in your regular savings, emergency and “life happens” funds, and it should equal zero.

Build up your savings

Every time you get extra money, such as a birthday present or a bonus, put 10 per cent of that into your main savings account, separate from your “life happens” or emergency fund. Consider also the general guideline that 33 per cent to 36 per cent of your paycheque should go toward housing expenses. If you’re spending 40 per cent of your net paycheque on housing, it won’t allow you to save and invest in the way you need.

Shop wisely

Whenever you go shopping, ask yourself if what you are buying is a “want” or a “need.” Do this for everything from grocery items to clothing, and if it’s not a “need,” put it back on the shelf.

Make wallet-friendly reminders

Motivate yourself by writing on a small card how much money you need to get out of debt or to fill your emergency or “life happens” funds. Keep the card in your wallet, so that whenever you reach for money, you are reminded of your goals.

 Avoid sales

Stand firm against sales gimmicks. Everyone loves a bargain, but few people consider that you never save when you spend money. People will say, ‘I’m saving 50 per cent,’ but the truth is that you’re not saving because saving is the act of putting money into an account.

Source: ehow.com