Tips On How To Save More & Spend Less In 2011
CHICAGO (CBS) - It's probably on your New Year's resolution list: save more money! The big question is how in this economy? CBS 2's Susan Carlson has three easy suggestions from CBS MoneyWatch on how to build our bank accounts painlessly.
Of those who rang in 2011 with a New Year's resolution, 75 percent say they will resolve to improve their finances.
The most popular money goals: saving more and spending less.
"I hope to, I'd like to," said one man.
"I'm hoping to build back up, pay my pension fund back that I've been raiding," said a woman.
"Save up for my kid. He's coming out of school, so I want to put him through college," said a man.
For many of us, keeping a resolution to save more isn't easy. But you can improve your luck by following a few smart steps.
If you're a savings beginner, start with a short-term goal, like setting aside $1,000 for a vacation.
"The trick of saving is recognizing that when you save, you're going to get something better in the future," said Brad Barber, Professor of Finance at University of California, Davis. "And it's that mechanism that needs to be ingrained in your brain and gradually reinforced with longer and longer-term goals."
Once you're ready to tackle longer-term goals, like saving for retirement, find painless ways to save.
Sacrifices, like giving up your morning latte, hurt. But if the money is automatically directed into savings, it will feel like less of a loss.
"The next time you have a raise, put half of that raise into your retirement account," Barber said. "You'll never even know that you've done it because the paycheck is still going to go up."
Finally, make it difficult to spend the money you're saving.
Put your money into an account that's not tied to an ATM card, so it's harder to get at.
Or, commit to using cash instead of credit. It'll make buying that flat screen TV a lot more difficult.
Once again, the point here is to make it easy to save. Once you do it, there's a real sense of reward knowing you have a nest egg.
