Resolutions to Save Money in The New Year

With post holiday season and the start of a new year, it's time to get back on track with your personal finances while most of us are motivated to accomplish our new year's resolutions.

Here are a few simple steps to help you save money in the new year:

1. Create a realistic budget that will really work!
2. Go back to the days before ATM cards and withdrawal the amount of cash you need for your weekly or bi-weekly expenses (depending on your pay schedule) rather than using your card for each and every transaction.
3. Stop using those credit cards.
4. Make sure that you have a cushion or slush fund to cover you financially in the event of a downturn or an emergency.
5. Split up unexpected winfalls of money that come your way!
6. Avoid the budget busters.

Creating a Simple But Effective Budget

• Establish a savings goal (education, retirement, renovation, vacation, etc)
• Track your spending habits, using your sales receipts for 1 or 2 months to see how your spending compares to the amount of money coming into the household
• Review your spending habits and figure out where you can cut or trim some expenses; viewing where the money is spent can really put a perspective on wasted dollars
• Return to your budget on a regular basis to confirm that you are on track to reaching your savings goal; make adjustments when necessary

Why Cut Your ATM Card?

You don't have to literally cut your ATM card or debit card. However, unless you have free or unlimited transactions with your bank, these are fees you can avoid by using cash instead. One of the best examples of using cash in a manner that is effective, is the technique taught by the money maven Gail Vaz-Oxlade on Til Debt Do Us Part. She instructs the guests of her show to divvy up the money set forth in their budget in jars labelled for their expenses. They can literally see how much or little the jars contain after they spend from each. If jars aren't your thing, an envelope labelled with the expense name would work just as well.

Stop Using Those Credit Cards

Unless you are strictly disciplined to pay your balance off in it's entirety each and every month, I would recommend that you put away those credit cards. The interest that you accumulate on borrowed purchases will not end up being cost effective overall. If you always practice paying your credit card in full, then there is an advantage to earning loyalty reward points on your purchases.

Split Up Unexpected Windfalls Of Money Into Thirds

Whenever you have an expected windfall of money, such as a gift card from a survey, a bonus from work, contest prize, etc; divvy it up into three equal shares as follows:

• The Present - Use one third of the money to buy something for yourself personally or towards a home improvement or personal improvement
• The Past - Use one third of the money to cover past debts that you owe
• The Future - Use one third of the money to save for the future in a savings account, TFSA or another investment vehicle

An Emergency Fund Or Slush Fund For Unexpected Expenses

Experts state that a three month operating budget is the MINIMUM that you should set aside as your emergency fund. How do you figure out this number? Track all of your spending for a month including all of your bills and incidentals, then multiple by three. This money should remain liquid for you in some form of a deposit account. (Liquid means that it should not be locked into an uncashable investment tool, it must remain accessible.) While it's nice to make some interest on this money, it's really there to bail you out of a jam. The amount of interest earned in really inconsequential to the peace of mind this money will give you.


Avoid Blowing Your Budget With The Worst Budget Busters

1. Having no emergency or slush fund. In the event of an emergency where you do not have a cushion in place, it can set you back by needing to find some kind of loan or using any asset you have to bail out.
2. Budgeting too rigidly. If you budget too strictly and don't allow yourself some fun, then you could end up deviating from your budget and overspending. It's like a dieter who doesn't allow themselves a dessert now and again, they might end up binge eating. Allow yourself some small indulgences in your budget to keep you on track.
3. Gift giving. Buying our friends and loved ones gifts is a type of emotional spending that can have people dish out more cash than they can actually afford. Limit gift exchanges to a couple of close people in your life and include these expenses in your budget.
4. Impulse buying. Following a detailed budget will allow a person with impulsive buying habits to see exactly where the money would be coming from. For example, should they borrow from their grocery money to buy a new pair of shoes. The impulsive buy may not look as attractive when you look at where the money is coming from.

What are some other simple yet effective ways that you save money and trim your expenses?

• Use coupons and price match your purchases whenever possible
• Learn about SCOP and take advantage of price errors
• Join loyalty rewards programs and get rewarded when you buy
• Complete compensated surveys online to make extra cash/gift cards
• Follow gas savings advice and tips