savings 2022

New Years Savings: 12 Resolutions to Make in 2022

The new year can be the best time for a financial reset. Plans to spend, save, and set new goals dovetail nicely with making new year’s resolutions around setting meaningful, well-timed financial goals. Each January is truly a great time to start saving more effectively, especially if you use the below new year savings tips.

12 Tips for New Years Savings 

The good news is that new year savings don’t have to be an “easier said than done” situation. The below money savings tips provide clear paths for making good on your financial resolutions, both in the new year and the long term.

1. Budget Everything

Every month, you spend a certain amount on groceries, rent, utilities, and other items. You should set a budget for each of these item groups. You don’t need to get as granular as, say, a jewelry or electricity budget. Instead, you should factor these costs into, respectively, your discretionary spending and utility budgets.

Most financial experts agree that certain spending categories should comprise certain percentages of your monthly income. We’ve extensively detailed these percentages and categories in our $50k a year budget guide, a great starting point if you earn around that salary.

2. Put Aside Some Money Every Month

Perhaps the most obvious new year savings tip is to actively, intentionally set aside money every month. You should break your savings into two categories: an emergency fund and general long-term savings. 

In the new year, try to funnel 10 to 15 percent of your monthly income to your emergency fund. Do so until it equals three to six months of income. Once you’ve built up your emergency fund, you can move on to building your long-term savings. Set aside another 20 percent for this purpose. Once you’ve calculated that 20 percent, deduct any monthly debts, such as student loans, from that number. Deposit the difference in your savings account each month.

3. Save For Retirement

The savings goals you set in the new year should look into the longer term, too. Namely, your New Year’s resolutions should include setting up a retirement account. You could divert part of your general long-term savings into your retirement account or set up an entirely separate budget. If you establish a separate budget, aim for it to comprise 10 percent of your monthly income. Speak with your work’s human resources department to learn more about if your company offers retirement benefits. If they don’t, or if you’re self-employed or own your own business, there are options that you can open as well.

As you budget to save in a retirement account, keep in mind that pre-retirement withdrawals may be taxed or penalized. You should also factor in your employer-matching retirement contribution arrangement if you have one. If your employer matches two percent of your income per month, then you can deduct this two percent from your 10 percent goal. You can then save a slightly lower amount of 8 percent for your retirement account.

4. Invest More Intentionally

It’s easy to get in the mindset of occasionally putting a bit of money into an exciting new investment opportunity that you encounter in passing. This approach, though, lacks strategy and intention, both of which are necessary to make substantial long-term gains. So, in the new year, pay closer attention to the investment classes that interest you. Then, based on how these assets are performing, put certain amounts of money in them. 

You should set an ideal number of dollars per month that you hope to invest. You should then divide this amount across several asset types to lower your risk and allow yourself flexibility to move with the market. For example, if a certain stock is up but bitcoin is down, you could invest more in stocks this month and less in crypto. If need be, you can rope in a financial advisor or broker, though their fees can chip away at the extra cash your investments earn.

5. Dine In, Not Out

Restaurants are convenient and provide exciting social spaces, but they’re several times more expensive than making your own meals. Yes, it’s arguably impossible to entirely avoid dining out, but you should still make a concerted effort to prioritize homemade meals in the new year. You’ll likely save big-time.

To see how this notion might be true, try comparing your favorite restaurant meal’s prices to what the ingredients would cost at a supermarket. That $14 sandwich might only be a few bucks to throw together yourself. At that rate, you can easily put together meals for friends too and bring the social environment home. That way, everyone, not just you, saves.

6. Use Your Credit Card Often, But Wisely

You’ve probably been told to avoid using credit cards to pay for purchases you can’t afford. That advice remains true, but don’t conflate it with only minimally using credit cards. If anything, using your credit card more frequently but wisely is among the best possible New Year’s resolutions. Using your credit cards signals to the three credit bureaus that you’re a responsible spender, which can help keep up the health of your score and make you eligible for favorable consideration for certain financial products.

On top of that, you can time your credit card usage to powerful cashback rewards on your purchases. For example, your credit card might offer increased quarterly cashback bonuses at major e-commerce websites or a certain partner brand. It might do the same at all restaurants, gas stations, and gyms. Use the credit card in question whenever making purchases that fall into these categories to earn extra cash that you can then use to funnel into your savings. Just make sure to pay your balance off before its due date to avoid fees that reduce your cashback earnings.

7. Check Your Subscriptions

When you think of subscriptions, you might think of streaming services or magazines. Streaming services can indeed be hard to go without, but among all your other subscriptions, you might notice products you’re not actually using.

For example, that monthly protein bar subscription might be excessive if you’re stockpiling bars faster than you eat them. A more concerning example might be discovering that what you thought was a one-time purchase has actually led to monthly charges. The good news is that canceling subscriptions typically takes just a few clicks on a company’s website. Canceling the subscription is worth the small bit of effort and time to save money in the new year.

8. Plan Your Debt Payments

Debt is a clear obstacle to maximizing your savings. It might also be something you can pay off sooner than later with some savvy New Year’s resolutions. To start, determine your monthly savings budget. Assuming the 20 percent mentioned earlier, this figure might be $1,000 per month on a monthly income of $5,000. 

Now, let’s say you have $20,000 remaining in student loans that you’re looking to pay off within five years. That’s $4,000 per year, or $333.33 per month. If you funnel $1,000 of your monthly income to savings, you can easily use part of that to repay your loan within five years. You might need to set aside some extra money for interest payments, but you can take that money from your savings budget, too. 

9. Refinance Your Debts 

Another way to pay less debt and save more money is to refinance your debts. In doing so, you can lock in loan rates less likely to change with inflation. Interest rates on loans such as mortgages often follow the prime rate, which may change as the economy expands or contracts. As such, if you can lower your rates now, you’ll pay less now and maybe later too, leading to excellent savings.

Refinancing your loans can also lead to changes in your loan terms. The result is either a larger number of smaller payments or a smaller number of larger payments. Pursue whichever situation best fits your financial needs to save more money in the new year.

10. Make More Payments More Quickly

If you wind up saving especially large amounts of money, you can cover future months’ debt payments now. For example, if you bring in double your mortgage budget one month, you could pay two months at once. Doing so means that your mortgage would end a month earlier, saving you money down the line on pricey interest payments. 

As you plan extra payments, check your loan’s terms. If you see that you’ll be charged a prepayment penalty for finishing out the loan early, you’ll have a decision to make. Does this penalty outweigh the savings of finishing out early, or will your total interest over time be less than your prepayment penalty? Choose whichever option saves you more money in the new year.

11. Look at Your Insurance Plans

Rare is the person who enjoys comparing and contrasting insurance plans during enrollment season. However, doing so ahead of the new year is a great way to save. You might find a health insurance plan similar to yours at a lower premium. Or maybe you’ll discover some up-and-coming disruptors that give your longtime auto insurer a serious price challenge. Make the switch and take advantage of the money you save, and put the difference in a savings account.

12. Don’t Open New Credit Cards

Maybe, as you’ve read this list, you’ve thought that, no matter how much you save in the new year, you’ll simply need more money. You might thus feel tempted to open another credit card so you can charge purchases and save the cash. Doing so, though, is often ill-advised. Each credit card you own introduces another account to track – or, potentially, forget to track. If you miss payments on these accounts, you’ll be stuck with fees that eat away at your savings.

Instead of opening a new credit card, inquire with your current card issuer about a credit limit increase. This way, you can feel like you have more money without opening a new account you could accidentally overlook. While it’s important to be responsible with your higher credit limit, you’ll at least avoid tracking another card. With more credit, no new accounts, and all the above tips, your new year is more likely to come with new cash.

How to Make the Most of Your Savings

As you follow the above tips next year, you’ll likely see more money in your savings account than in previous years. Your choice of savings account provider can further increase the dollar amount in your account. Our guide to high-yield savings accounts can introduce you to several options that will pay you especially high interest on your savings. With these accounts, you save money and earn it simultaneously. And that’s a surefire way to earn extra cash in the new year.