We’re always being told to save money, and while some of us are better at it than others, is it possible to be too good at it? In other words, are there ever times in your life when you feel like all you do is save money? Like, you never enjoy today because you’re always worrying about tomorrow? If that’s the case, you may actually have the opposite problem of the many people who don’t save enough — you may be saving too much.
Or you may know how to save money just fine, but you’re saving it in a way that is making the process harder than it should be.
So if you’re wondering if you are saving too much, or just saving money badly, you should ask yourself a few questions first.
How Old Am I?
This is an important question because if you’re in your 20s and paying off a ton of student debt, you may need to reduce the amount that you save to repay your student debt first. Just don’t ignore saving money. Most financial pros will tell you that if you’re always prioritizing your debt over your savings, you may never save money. After all, you’re going to have a lot of debt in your life. Between student loans, mortgages, car payments, credit card debt or personal loans, if you wait to put away money until everything is paid off, you may never build a savings.
If you find yourself struggling to have a good life right now, because you’re always putting money away for the future, and meanwhile, you’re constantly spending money to repay debt, like paying down student loans or credit card debt, maybe you should give yourself a break and actually save a little less.
How Much Am I Saving?
This is a very important question. Many financial advisors suggest trying to put as much as 15% of your salary to your retirement accounts and adhere to the 50/30/20 rule. What’s the 50/30/20 rule? That’s when, after taxes are accounted for, 50% of your paycheck goes to your needs, 30% to your wants and 20% to your savings and debt payments.
LET’S BREAK DOWN WHAT THAT MEANS:
- Needs. Expenses like rent, groceries, utilities, car payments, etc.
- Wants. Your streaming subscriptions, the vacation you plan on taking soon, the books you buy at the bookstore, and more.
- Debts and savings. Credit card debt, student debt, your retirement accounts.
Of course, it can be difficult to define your needs, wants and debts in a way that keeps your budget adhering to the 50/30/20 rule. You might feel like you need to pay your student loans and credit card debts down every month, and so you mentally put those payments in the needs, when really you need to eat but you don’t need to pay off that credit card debt.
But in general, if you’re concerned that you save too much or too little, reviewing your budget today to see if it’s anywhere close to 50/30/20 is a good place to start.
If you constantly feel deprived and you realize that only 10% or less of your budget is reserved for “wants,” and if more than 20% of your salary is going into savings, then you should probably readjust your budget. If you’re putting away more than 20% towards savings and are happy with how things are going, obviously, for now, don’t change a thing.
What Am I Saving My Money For?
Saving money can be extremely challenging, and while it’s very important, learning to balance your spending and saving may help you get more enjoyment out of life. If you only save for tomorrow and spend nothing today, you may miss out on opportunities or experiences.
Likewise, if you save too little, you may seriously regret it during your retirement years. If you aren’t sure if you’re saving the right amount, it’s best to reflect on your financial goals for saving.
Assuming your financial situation is stable, you should be putting your money towards several funds:
- Retirement
One day, you’ll be old, but if you’ve saved enough during your youth, you’ll be able to live out your golden years comfortably.
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House or Other Permanent Residence
Of course, you may not be interested in a house or a condo. But plenty of people are, and while a house is a home first, it is also an investment, one that can grow in value over time. If you’re buying a home for the first time, you’re going to want to save for a down payment. And unlike retirement, this is a goal you’ll likely want to achieve several years from now, instead of several decades from now.
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Your Kids’ College
Setting money aside for your kids’ higher education can help set them up for success.
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Vacations
We all need to take a break once in a while, and saving for something that will come sooner rather than later is far more fun.
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Holidays
Yes, this is a long savings list. But you spend a lot of money during the holidays every year, right? Maybe it would help to continually save money for the holidays and have a holiday budget plan.
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Emergencies
This is your rainy day fund. Accidents and emergencies happen, so we can’t stress enough the importance of building an emergency fund.
This is a lot, but if you can split up your savings into various funds, saving money might feel less overwhelming or depressing. After all, some of the money will be going into accounts, like retirement, that you won’t touch for years, while other funds, like a holiday savings account, you’ll spend every year. Knowing that you’re constantly protecting yourself from cash flow and shortage problems might make it easier to save.
Am I Making It Easy for Me To Save?
The reason you may feel like you spend all of your time-saving money and not living your life could be due to how you save money. Hopefully, you participate in all three of these money-saving techniques, but if you don’t, you may want to consider adopting at least one or two:
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Automatic withdrawal
If you have money automatically withdrawn from your paycheck into a retirement account, it will be easier to save for retirement. You can automate it so that every month, or more frequently, some money is going into an emergency account or a vacation fund or whatever you want to save money for.
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Utilizing your credit card rewards
If you’re paying your credit cards off in full every month, you could strategically use credit cards with rewards, constantly getting anywhere from 1% to 5% off of everything you buy. Some credit cards have even been inching up to 6% cash back rewards. If you’re constantly saving money on everything you buy, you’ll have more money to spend or save.
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Budgeting regularly
Creating a budget is extremely important. Everyone’s budget will be different, but you should review yours regularly, at least once per month, since our spending habits are always evolving. You may realize that you’re saving too much, or, if you’re like most people, not enough.
Am I Thanking Myself for Saving Money?
If you aren’t, you should start. Look, it isn’t easy to save money, and quite honestly, there’s a decent chance that however you’re saving money, you’re doing it wrong. Maybe you aren’t saving enough, or maybe you’re saving too much. Or maybe you’re doing it just right, but sometimes you go off the rails a little and do some impulse shopping, and then you beat yourself up, which would be wrong. You’re human, and there are all sorts of obstacles in our path every day that can cause us to spend too much and save too little.
Regardless of your current spending and saving habits, what really counts is that you’re out there, trying. However, carefully evaluating your budget, modifying your spending habits as necessary, and using money-saving tools will allow you to save for the future, without depriving yourself in the present.
This article originally appeared on MoneyGeek.com and was syndicated by MediaFeed.org.
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37 money-saving resolutions for 2023
It’s time once again to make a fresh start. That’s the beauty of the New Year. We can all pause and reflect on the past year and figure out what we can improve in the year to come.
Along with promising to eat better this year and turbocharge our careers, many of us are also examining our personal finances and seeing how we can manage our money better in the 365 days ahead. Last year, a Statista study found that a top-ten resolution was “to live more economically,” showing that financial wellness is definitely a big concern.
If you’re focused on saving more money in 2023 and beyond, here are some resolutions you can consider adding to your list. They offer you dozens of smart, creative ways to help you reach your goal.
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Here’s our first New Year’s resolution: Consider ramping up your savings by following the 50/30/20 budget rule. This wise formula says to save 20% of your income every month. The other 50% of your money should go toward your needs (housing, food, utilities, debt), and 30% can go toward discretionary items.
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With so many transactions coming in and going out (and so many of them being automated these days), keeping a monthly budget can seem intimidating. How do you track and manage all of the credits and debits? Are you going to overdraw your account? With a weekly vs. monthly budget, the amounts you have to track are smaller and more manageable, and you’re much more likely to stick to them. Make a spreadsheet of all your weekly income and expenses, and then decide where you can cut back to save money.
Recommended: Pros & Cons of a Weekly Budget
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Has your once-a-week latte habit become a daily thing? And exactly how many streaming platforms do you subscribe to? Spending money on entertainment, takeout, coffee, and other wants can add up quickly. So when you create your budget, figure out ways that you can reduce spending on things you don’t actually need.
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Is one of your New Year’s resolutions to reduce your spending? If so and you try to slash everything at once, you can wind up feeling deprived and losing motivation. Instead, you might try cutting back on, say, those fancy coffees one month and on movies the next. You’ll still save money, but the rotating nature of cuts and the challenge of “no flat whites this month” can keep it interesting.
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Yes, adding your credit card details to your online accounts makes it super easy to check out, which is exactly the problem. That simplicity can also lead to increased spending on impulse purchases. Instead, remove those saved cards and force yourself to manually type in your credit card number when you want to purchase something. If you have to get up to find your card, that can be a way to avoid impulsive purchases that you don’t actually need.
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Economizing can be easier when you have a kindred spirit to support you. If you have a friend or relative who is also trying to save money or has succeeded at doing so in the past, recruit them to help you. The two of you can text when you need advice on a big purchase you are contemplating or when bills pile up and stay strong together.
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When your paycheck hits your checking account, it likely makes you feel flush and ready to splurge a little. Instead, pay yourself first. Make it a 2023 resolution to set up automatic transfers from your checking to your savings account. All you have to do is set the amount and the date you want the recurring transfer to occur. Then, you can watch your savings blossom automatically in no time.
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If you’re not already earning rewards with your credit card, make 2023 the year to do so. With credit card rewards, you can get cash back when you make purchases. Then, once you reach a certain amount, like $25, you can automatically transfer it into your savings account. As long as you pay off your balance in full each month and don’t overspend, credit cards can be helpful when it comes to reaching your savings goals.
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If you haven’t already tried a round-up app, consider doing so this New Year. These work by, say, charging you $7 for a purchase that really cost you $6.35, and depositing the additional 65 cents into savings or putting it towards your debt. Acorn and Qoin are a couple of the ones to research; they can help move you towards financial security.
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Credit card interest rates are notoriously high, with rates averaging just over 19% in November of 2022. If you’re not careful, you could be spending hundreds of dollars every month on credit card interest. Create a plan to become debt-free for 2023 and prioritize paying off your high-interest credit cards. For example, you could use the debt avalanche method, where you pay off the card with the highest-interest rate first and then move on to the card with the next highest interest rate, and so on.
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If you have credit card debt, you may want to pay it down faster as a New Year’s resolution in 2023. Signing up for a balance transfer credit card could help. You’ll pay 0% interest on your debt for a certain period of time (say, six to 18 months), before your interest shoots back up. Just make sure you pay off your balance before that introductory period is over or else you’ll be right back where you started. And if the interest rate is higher than your current credit card, your situation could be made worse if you don’t pay it off in time.
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Yes, it’s more convenient to toss cans and bottles in the trash. But each one probably could net you five to 10 cents if you redeem them, which is typically easily done at your local supermarket. Plus it’s good for the planet. While it may not yield the down payment for a house, every little bit of cash put into savings can help, especially when compound interest kicks in.
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If you have any free time at night or on the weekends, then you can freelance or work some other sort of side hustle. Whether it’s tutoring school children or driving for a rideshare service, those extra dollars can make a serious impact on your savings.
There are plenty of low-cost side hustles to consider. Even renting a room in your house on Airbnb could put hundreds or thousands of extra dollars in your account every month.
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Decluttering your home may be another New Year’s resolution you have for 2023. Knock out that resolution along with your money-saving resolution. There are plenty of places to sell your stuff, from clothing to electronics to cookware, whether it’s gently or never used. Consider sites like eBay, Craigslist, and Facebook Marketplace.
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If you’re young, you may feel like you don’t have to worry about retirement just yet. But the truth is that time is likely to pass faster than you think it will. Plus, if you start saving right away, you’ll make more money on your investments through the power of compound interest. Take advantage of your company’s 401(k) matching policy, if they have one, and beef up your retirement savings in the New Year.
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If you were to lose your job tomorrow, would you have enough money to last you until you found something new? What if you had a medical emergency or your house suddenly flooded? Having at least three to six months’ worth of savings in an emergency fund will help you cover any sudden, unexpected expenses, and help ensure that your budget and financial goals won’t be derailed.
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If you’re not a couponer already, 2023 is a great time to start saving this way. Check your weekly newspaper for the latest deals and discounts at your local grocery stores. Adjusting your purchases to match that week’s sale items can help you save. You can also clip coupons from sites like Coupons.com and P&GGoodEveryday before your weekly shopping trips for more savings.
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Did you know that generic products might be the same as name-brand products but without the fancy label? Whether you’re at a grocery store or a pharmacy, look into buying those store-brand and generic products instead, because you could end up saving a lot and still having high-quality products.
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In order to stay on top of your financial goals in 2023 (or any year, in fact), it’s helpful to set aside one day a week to go over your spending. Pay your bills and check your accounts on this day as well to ensure you’re meeting your benchmarks.
The average interest you’ll earn on a traditional savings account is only 0.21%. But if you research different investments like stocks and bonds, you’ll see that the market typically earns 10% annually. Perhaps 2023 is a good year to invest in the market or invest more; just make sure you invest according to the risk you are willing to take.
For instance, if you don’t have much to invest, then you might stick to investing in high-performing, more established and stable companies. But if you have money to spare, you may try investing in riskier, smaller and newer companies.
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A high-interest savings account is going to give you more bang for your buck when it comes to your savings. The rates frequently fluctuate, but they are averaging around 2.75% to 3.25% annually in November of 2022 — much higher than the rate of a standard savings account rate.
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If you use cash instead of credit and debit cards, you’re going to be much less likely to spend money in 2023. Credit and debit cards make it easy to swipe without thinking about the consequences. Paying $100 in cash for your groceries is going to have much more of a psychological effect than simply swiping your card, and it can help encourage you to save more money.
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Are you aware of all the monthly bank fees you’re paying just to keep your account open? If you overdraft your account, do you get charged a hefty fee? Does your bank charge you to use an ATM outside of their network? Examine all the fees you are currently paying and then look into competitors to see if they charge lower fees — or perhaps no fees at all. Online banks vs. traditional banks typically charge fewer (or no) fees and pay higher interest rates.
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Let’s go old-school in 2023. Put all your loose change into a coin jar, and then at the end of the month, take it to your bank to cash it in. This is better than using a Coinstar machine, which will take 11.9% of your money when you convert it into cash. Note: You may have to roll the coins before depositing at the bank, but this can be done while listening to your favorite podcast.
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Financial apps are an easy way to keep track of your spending in the New Year. All you have to do is link your financial accounts to these apps to see how much you’re spending and what you’re spending your money on. These apps will even give you suggestions on how to save money and improve your finances, as well as remind you when bills are due. Your bank is likely to offer a tool like this. If not, some of the popular ones include Mint, YNAB, and EveryDollar.
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Think you’re spending too much on cable? Is your cell phone company ripping you off? Be a savvy consumer, and tackle it in 2023 to save more. Call your service providers, and try to negotiate a lower monthly rate. If you aren’t successful, you could always use services like Trim to negotiate your bills down so you can save more every month.
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You know how it goes: Suddenly, it’s 7 pm, you’re starving, and haven’t even started to think about dinner so you wind up ordering in. Avoid that in the New Year by preparing your meals in advance. That way, you will have food in the fridge when you’re hungry, and you won’t be tempted to eat out. It’s also a good idea to bring lunch to work so that you won’t be tempted to purchase food on your break with coworkers.
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Go through your bank statements to see if there are any automatic subscriptions you don’t need or remember signing up for. Cancel them immediately. If a company was charging you without your knowledge, you may be able to request your money back.
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Not having an energy-efficient home can be costly. You may be wasting hundreds of dollars each month because you’re leaving the lights on or running the heater or A/C for hours on end. You can make a few changes like sealing up drafty windows and attics and using LED light bulbs to start saving money on your utility bill in 2023.
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If you have a problem with making impulse purchases, then unsubscribe from your favorite retailers’ email lists. That way, you won’t be as tempted to spend because you’ll no longer receive news about flash sales or buy-one-get-one offers.
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Gas prices have fluctuated considerably lately and are still quite high. Trading in your SUV for a vehicle with a smaller tank could be a smart move. Hybrid and electrical vehicles are good options as well. Though you may pay a premium for them up front, you’ll save a lot on gas in the long run.
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Here’s a New Year’s resolution to adopt: Whenever you’re purchasing tickets, booking a hotel, or going to an event, ask if there are any discounts. You may be able to snag a discount if you’re a student, a senior, a member of the military, a resident of the state, or even a AAA member.
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When you go to retail stores, you’re going to pay full price. Instead, when reasonable, look for used items on sites like eBay and Facebook Marketplace. Flea markets and thrift stores may also have the goods you might need, at steeply discounted prices.
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Enlist a friend to join, too, and then share the spoils of buying in bulk. Since the likes of Costco and BJ’s tend to have mega-sizes and packs, you can split the low-cost food and other items you purchase. Say, you buy a dozen burgers and keep half; your friend buys the same number of buns and gives you six. It’s a win-win.
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Don’t spend any money for a week and see how you feel. This means you’ll need to brew your own morning coffee and eat homemade meals. You’ll also need to avoid shopping late at night on Amazon, but at the end of the week, you should be able to more easily distinguish your wants from your needs. This will help make budgeting that much easier.
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This year, instead of spending your tax refund on a new pair of Jordans or a vacation, put it into your savings. It’ll accrue interest and you can then put it toward a larger purchase down the line if you want.
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This one is a double whammy if you want to get fit in the New Year, too. Purchase some weights online, and tune into your favorite trainers on YouTube to start burning fat and gaining muscle. You can cancel your expensive gym membership and forget pricey personal trainers while feeling better about yourself in 2023.
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