Nearly 61% plan to save more in 2021 – GantNews.com
“I have to be better with the money.” This New Year’s resolution is to quit smoking or lose weight as a favorite every year.
Americans often swear to spend less and save more in the coming year. Since few ultimately reach their goal, MoneyRates.com offers a course of action for success.
A new survey from the personal finance site reveals three specific financial resolutions that many make at the start of each year but struggle to keep.
In a survey of 3,000 people, a majority listed their financial priorities as follows: save more, spend less, reduce debt.
Find the full survey and guide here: Long on resolutions, short on results? How to actually achieve your financial goals.
Hordes of well-meaning people are entering the New Year armed with multiple financial goals, but a few simple tweaks to those resolutions could make all the difference in 2021.
“I want to save more money”
The MoneyRates survey shows that 60.7% of respondents intend to save more in the next 12 months. The results show that this is a more pressing problem for people 55 or older, but unfortunately saving large sums of money becomes more difficult after 50 years.
Of those surveyed, 38.4% say they create a budget with a specific amount of savings as the primary savings approach, followed by setting up automatic deposits into savings accounts.
“It is concerning that 28.1% of those who say they plan to save more do not identify any specific steps on how they plan to do so,” said Richard Barrington, senior financial analyst and spokesperson for MoneyRates.
“On the positive side, over a third of people who intend to save more plan to create a budget first. Having a budget is the most important step in increasing savings. This creates a specific savings goal, but also ensures that more money comes in than comes out.
“I have to get out of debt!”
Almost 55% of those polled in the new survey say they hope to reduce their debt in the coming year. Respondents say they plan to minimize discretionary spending and increase monthly payments as a strategy to get out of debt.
While it makes sense to spend less and increase monthly payments, there might be a few missing elements that create speed bumps towards success.
Having an emergency fund should be a top priority. Using it as a staple, it could prevent turning to credit cards or loans for unforeseen expenses. High yield savings accounts can be a good place to store that emergency fund.
It is also important to focus on lowering interest rates. Making minimum payments on a high interest rate card hardly reduces new interest charges. The money spreads further by using a balance transfer or a 0 percent APR card.
“Prioritizing debt so that you pay off the highest interest rate debt the fastest is the most cost effective way to reduce debt,” continues Barrington.
“It helps if you can lower the interest rate on some of your debt balances. However, you prioritize your payments, however, still make sure you meet the minimum monthly requirement for each debt.
“I should start saving for retirement”
One of the best ways to save for retirement is to spend less on other expenses. What went into one pot now fills the other. This concept is on most people’s radar, with MoneyRates’ survey revealing that almost 60% plan to spend less in 2021. Mostly, respondents say they will create and stick to a budget in order to spend less.
Creating a budget describes an exact strategy for where the money is going and what reductions are possible, with the excess money then routed to a 401 (k), IRA, or other retirement account.
To achieve this, however, it is helpful to first become familiar with the concepts of retirement planning. Another recent survey finds that many Americans lack investor skills and do not know how to properly manage their retirement finances. It may be beneficial to work with a financial advisor to design the ideal plan.
Making a financial resolution is the first step to New Year’s success, but putting all the pieces together into a solid plan is what sets off the fireworks.
Seven essential steps to reach financial resolutions
- Create a budget
- Create an emergency fund
- Open a backup account
- Start a snowball of debt
- Get a Balance Transfer Credit Card or 0% APR Credit Card
- Talk to a financial advisor
- Arrival all year round
“Reaching financial resolutions is primarily a matter of organization,” concludes Barrington. “The process doesn’t have to be overwhelming if it’s broken down into smaller steps. “