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It’s the top resolution, coming only after losing weight or getting exercise: saving money. About half of Americans say it’s on their New Year’s resolution list. But so many people have absolutely no idea where to start.
But don’t worry. Here at the Motley Fool, we have you covered. If you’re hoping to start investing this year, you’ll first have to put some savings aside. Here are three ways to get started and save $10,000 in 2022.
If you get a paycheque every month, odds are you know exactly how much that contribution will be. You then have bills to pay, a mortgage, groceries, it all adds up. But what if you added just one more item, treating it like a bill payment?
It doesn’t have to be much, but creating automated contributions aligned with your pay schedule can certainly rack up savings. Even if it’s just $50 bi-weekly, that’s $1,300 per year, right there. If you want to hit that $10,000 mark, that would be $384 bi-weekly.
A great place to start is putting aside between 5% and 10% of each paycheque if you can afford it. The best part is you never have to think about it, it just happens automatically. From there, you can always increase or decrease the amount.
The “envelope” method
Now this one is for the more crafty individuals. Or, those that maybe don’t get a standard paycheque coming in every two weeks. For this, you take 100 envelopes and label them $1 to $100. Then shuffle them up. Every day, you pick an envelope. Whatever is on the front of the envelope, you then place that amount either in the envelope itself or into your savings account.
So one day, you might contribute $5. The next, $98. But by the time you get to 100 days, you’ll have $5,050. Then perhaps take a break, and do it all again. By the end of next year, you’ll then have $10,100 in savings set aside. The best part about this is it gets you in the habit of setting money aside every single day. You’ll find ways of creating savings. Believe me, the feeling at the end will make it all worth it.
Credit card rewards
Canadians simply do not use their credit card rewards enough. Many believe using a credit card is bad because you have to pay it down. However, using a credit card can help you earn rewards on everyday purchases. This can help you use those rewards to pay for items, or even pay down your credit card.
The key to using your credit card is don’t spend what you don’t have. In my case, each week I look at my balance and pay it down completely. This is excellent for my credit, and piles on rewards. I use it for everything, pretty much leaving my debit card completely alone. From tea to diapers, it’s the credit card. In combination with the other two methods, this can be a lifesaver when you’re trying to put savings aside.
If you’re using all three of these methods, it should be easy to put aside $10,000 in a year. Start with automated contributions to get started. Then, move on to the envelope method. Finally, make sure to consistently use your credit card to use those rewards when you’re stretching your budget. Taken together, these are sure-fire ways for savings in 2022.