Thursday, January 21, 2016

New Year's Resolutions to Help you Save in 2016



By Robert H. Flashman, Ph.D., State Extension Specialist in Family Resource Management; and Ilana Pinsky, Graduate Student, Family Sciences, University of Kentucky

Even after the New Year has begun, you might still want to consider resolutions and begin keeping them now. So what if you haven’t kept the resolutions you made a few weeks ago? Any time is a good time to begin anew.

Improving your money habits can be a great resolution, and it is simpler than you think! Here are three great ways to get started developing better money habits in 2016:


Set Short-Term Goals.

Your first step is to set short-term goals. If you’re young, forget intermediate and long-term goals for now. Establishing helpful habits is much easier if you can have early and regular successes. Begin by keeping all goals very short-term and doable so you will begin to feel successful soon. When making diet and exercise resolutions, most people give up in less than three months unless they see success early. This might mean saying, “I’m going to lose three pounds in January,” rather than “I’m going to lose 35 pounds in 2016.” (If you lose three pounds each month, you will lose 36 pounds this year; but keeping goals to the short-term enables you to have successes early and regularly.) This type of goal-keeping works as well with finances as it does with health goals.


Cut Unnecessary Spending (especially on items you buy daily and weekly).

This is the place to begin, with the mystery cash you can’t often account for. Students establish spending habits in high school and carry them over into life on their own.

Many teens receive an allowance or have a part-time job. They may be able to do what they want with most of the money they earn, without having to think how they spend it; so they develop poor money habits. If you don’t track your daily expenses, you will have no idea how much you overspend in a year. Common unnecessary expenses include buying snacks and drinks every day, eating out daily instead of packing lunch, and splurging while shopping. Instead of buying coffee every day, start brewing your coffee from home; this will save you a lot of money over the course of a year. If you enjoy coffee from shops and cafes, then try buying it once a week as a treat.

Here is a formula to help you figure out how much you are spending on coffee: Price of coffee X number of days each week that you attend class or go to work = Weekly Cost of Coffee. Multiply that weekly cost X the number of weeks you attend class or go to work = Total Yearly Cost of Coffee. Let’s say you get a coffee from Starbucks, and it costs $4.50. Assuming you do this all the time: If you go work five days a week, and work 50 weeks a year, then you are spending $1125 on coffee per year! You could buy a great new computer or make a down payment on a vehicle with that money, especially if you save for four years.

If you do not have time to make coffee in the morning and you really need to buy it each day, there are less expensive places such as McDonald’s. A medium-sized coffee is around $1.39 there, so if you bought their coffee every day instead of Starbucks, you would be spending $347.50 per year. What a difference!

Even if you aren’t a coffee drinker, you can probably find less expensive alternatives for everyday purchases. The same can go for eating out every day; there may be less expensive places for you to eat, and you can do even better by packing your own lunch. You can use vending machines to buy drinks and snacks, or you can bring a water bottle and snack with you.

To be a savvy shopper, use magazines like Consumer Reports to compare products, then phone apps that help you find the best price. Many stores, particularly food stores, provide coupons online, so be sure to take advantage of those. Make a shopping list before going to the grocery, and eat before you leave so you are not tempted to spend more on food than you plan on.


Coupons Are Your Friend.

Many consumers overlook coupons, which you can find online or have delivered to your mailbox (both snail mail and e-mail). They are easy to find. If you receive coupons, look through them and clip out ones offering discounts on food and products that you buy anyway. (There’s no sense getting a bargain on something you don’t need.) For every coupon you use, the savings will add up; you might be surprised at how much you can save. For more information on couponing, read the Kentucky Cooperative Extension publication, “Couponing 101”: http://www2.ca.uky.edu/hes/fcs/factshts/FRM-AP-087.pdf.

For more money saving tips, contact your local county Cooperative Extension office.


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