How To Save Money If You’ve Never Even Saved A Dollar: A Complete Guide

There’s no time like a new year to resolve to save money for many purposes, such as major purchases, an emergency fund, and especially retirement. Committing to a savings plan now gives you a whole year to see how even a little bit of effort can grow your bottom line. This guide to saving money shows exactly how to enact a strategic plan to cover all the savings bases in 2019.

It’s more important than you might want to admit to save

It can be challenging to think long-term when there are things you want to buy and enjoy right now, especially when you work so hard. However, there is real value in saving money. First, by setting up an emergency fund, you can reduce the fear of the unexpected. You’ll feel a deeper sense of security knowing you have money in reserve to cover those costs. Second, by establishing a regular savings account, you can avoid relying on credit for many purchases. Finally, by opening a retirement account and making regular contributions, you reduce the need to work past your expected retirement age and enable yourself to actually enjoy those years. As Tennessee Williams said, “You can be young without money, but you can’t be old without it.”

Start with a money audit

Start by writing down your current bank balance. This can be as simple as checking your mobile banking app. It tells you where you are starting from. This way, at the end of 2019, you’ll be able to see exactly how far you’ve come.

Seek out professional advice

Since you are gathering information for taxes at the start of the year, it’s a good time to get some advice from a tax accountant or bookkeeper about tax-deferred financial strategies. Employing those strategies helps you reduce your tax burden while simultaneously setting aside money for retirement. Your accounting professional can recommend the exact type of retirement account for your specific financial situation.

Create a real budget

Your next step will be to create a budget that covers all your expected purchase decisions for 2019. As Joe Biden once said, “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” Your budget should consist of monthly expenses like rent or mortgage, utilities, car payments, credit card bills and more. You will also need to account for other costs, such as grocery shopping, entertainment, clothes, travel, and gifts. Review previous bank and credit card statements to start filling in your spending patterns. This will show you where you have exceeded your income or where you have spent less.

Like a business, think about where you can cost cut

E-commerce entrepreneur Sophia Amoruso said, “Money looks better in the bank than on your feet.” Whether your temptation is shoes, concerts, daily coffees, or expensive lunches, this is the time to reel in your spending and put that money into one of your three savings funnels. Besides curbing any temptation to splurge, you should also shop around to see what expenses you can reduce, such as home or auto insurance. Next, consider cutting the cord on expensive cable or satellite service and choosing lower-cost streaming choices. Be more mindful with all purchases, from groceries to gifts, and comply with your budget at all times. After reducing costs, use some of that money to pay down any debt, such as credit cards and loans. When those expenses are finally eradicated, you’ll net even more money you can then direct into your savings.

Follow the news

Make sure you stay informed on any changes to laws, regulations or rules that may impact how you save money. For example, recently the IRS announced a $500 increase to IRA contributions, bringing the annual amount to $6,000. In addition, 401(k) or workplace retirement plan contributions rise $500 to $19,000 in 2019. These are just a few examples of why it pays to stay informed.

There’s an app for that

Your smartphone can help you save more money thanks to apps that offer budgeting tools, financial software, and money tips. Plus, other apps remind you that every transaction can create a way to save. For example, Acorns encourages you to round up purchases and put the spare change into a savings account. Apps like Truebill help you cancel unnecessary costly subscriptions, get refunds on bank charges, and negotiate costs on recurring bills. And Blooom monitors your 401(k) and optimizes your retirement amount.

Do an annual review of your own finances 

At the end of 2019, review your results, compare to your budget, and see how much you have saved during the year. Whatever the final amount might be, it will be more savings than you had in 2018. You may find your mindset changes after seeing what’s in the bank. Assessing the entire year may also reveal further improvements you can kick off in the following year. John Boitnott has been writing for TV, print, radio and internet companies for 25 years. He’s written for BusinessInsider, Fortune, NBC, Fast Company, Inc., Entrepreneur and Venturebeat, among others. Feature Illustration: Laura Caseley For The Money Manual