5 money saving tips for the New Year

With the holiday spending frenzy coming to a close, many people are starting to think about how they can take control of their financial health.  The burden during the holiday season is especially tough, with so many families affected by the recent recession and rise in unemployment.  In fact, a a study published in the British Medical Journal found that nearly 5,000 suicides worldwide in 2009 were tied to stresses from the global financial crisis.

Taking care of your financial health is one resolution you can make this New Year.  To get you off to a good start, author Hitha Prabhakar offers helpful financial advice in an article in U.S. News and World Report.

• Create realistic financial goals – having a goal is how you can measure success and feel a sense of accomplishment.  If your goal is unrealistic, it won’t take you long to start feeling disappointed.  Crafting a well-defined goal, such as paying of a credit card or paying off some student loans, can help you nail down a target and then create a plan to achieve that goal.
• Use credit wisely – credit is important to build, but if you don’t pay attention, you can start building up debt on a credit card very easily.  The average American adult with at least one credit card had $5,047 in debt in the first half of 2013, according to creditcards.com.  Prabhakar suggests you pay off your balance in full and on time, if possible.  She also suggests picking your cards smartly by selecting cards that have reward programs you can take advantage of.
• Start an emergency fund – get into the habit of saving a small amount of money in a separate savings fund.  The fund can cover any unexpected costs that come up and save you from going into debt with alternatives like short-term loans or high-interest credit cards.  The easiest way to do this is to start an automatic funds transfer for a modest amount from one account to this savings fund.  The money will start building in the savings fund without you noticing too big of an impact on your day-to-day budget.
• Use cost saving measures – if your employer offers a flexible spending account, make sure to follow the procedures to claim your dollars.  These accounts can save you valuable money by setting aside pre-tax dollars for things such as medical bills and child care.  Another tactic is hunting for coupons online or in the paper.  Additionally, many stores have loyalty programs that send coupons to you via mailers or email.  Start clipping these coupons and keeping them with you so that you’ll have them handy the next time you are shopping.  It may only be a dollar here or there, but every dollar adds up.
• Cut back – cutting back on the non-essentials is the most immediate way you will see savings.  Your mortgage/rent may be a fixed cost, but you can try packing your lunch instead of going out, or you can make your coffee at home instead of being a regular at your local coffee shop.  It may feel like a sacrifice at first, but when you see the dollars staying in your bank account, you’ll feel a lot better.

With budgets tighter these days, growing financial burdens can be overwhelming and tough to overcome.  By being proactive about managing your financial health can help ease the burden and allow you enjoy the wealth you have.