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How to Kick Start Your Savings in the New Year

To kick-start your savings in 2021, make it easy to do the right thing. Here are five no-brainer ways to get the ball rolling on your savings in the new year.

A new year, new you. You might be whipping out a brand spanking new bullet journal, starting a home workout regime, and are dead-set on undoing any bad habits. And on the financial front, you might have lofty ambitions to save $5,000 and clean up your credit in, say, a month's time.

Let's take a step back. If you're tying in your money goals to your New Year's resolutions, it's important to realize that statistically, most resolutions don't stick. According to U.S. News & World Report, most resolutions drop off by mid-February. And 80% of resolutions fail.

While you might have the best of intentions, the key might be to start small and to use whatever resources are at your disposal. Here are simple, no-brainer ways to kick-start your savings in the new year:

1. Figure out future savings needs by looking back

It can be hard to figure out how much you need exactly for your savings. You never know when you'll be thrown a curveball, or its size for that matter. A good place to launch your savings plan. Try this: Look back at your spending from the last 12 months, explains Brittany Davis, an accredited financial coach (AFC) and founder of Brittany Davis & Company. From there, do some simple math to determine what expenses popped up for you that you had to pay for with debt.

"Typically, these expenses aren't surprises, such as holiday shopping, says Davis. "But some of them are, such as medical expenses, were very common this past year. Instead of being blindsided, list out those expenses and save for them in the coming year."

2. Use what you have in your home to make more money

You don't necessarily need to pour a significant amount of resources toward taking an online course, going back to school, or starting a small business. It can be as simple as seeing what you have around in your home and converting it to cash. Here are a few ideas on how you can use what you have at your disposal in your home to make more money:

Sell unwanted items. If you now work from home or are currently unemployed, make the most of the time to go through your clutter. Go through a purge of your belongings to rake in more dough to save. Another way you can go about it is to divvy up any extra earnings. Part of it can go toward your debt repayments, and part of it can go toward savings.

Set up a produce stand. If you have trees that are bearing fruit, or are harvesting a garden in your yard, consider selling veggies or fruit locally. You most likely won't need a license, but to err on the side of caution you'll want to check local rules about selling produce from your backyard. Some places might require a city permit or license.

Sell home-baked goods. Along the same lines, if you love to bake, consider offering baked goodies for sale. See if there's a local "Chefs Food to Go" or "Chefs Who Bake at Home" type Facebook group you can join and offer your treats. These groups feature food that's prepared in one's home and can be delivered or picked up. One thing to note: check the Cottage Food Laws in your state to see what rules you need to follow to sell food made in your home.

3. Use the carryover method

If there's a month when you actually spent less than you allocated in a given category, consider saving whatever you didn't spend. For instance, let's say you spend, on average, $500 a month on groceries. And if you only spent $450 one month, squirrel away that $50 that went untouched. If you can cobble together this "leftover" money from a few different categories each month, it can give your savings a boost.

4. Pay yourself first

As expert habit builders are known to say, "make it hard for you to do the wrong thing, and easy for you to do the right thing." Make it easy for you to save by setting up a system where it's painless to save.

One tactic is by paying yourself first. In other words, stash a bit of your take-home pay toward savings, and the rest goes toward bills. There are a handful of apps and banks that have a built-in feature where you can opt to save a percentage of each paycheck.

For example: If you can afford to, try setting aside 5% of each paycheck. If you're bringing in $1,000 every two weeks, 5% of each paycheck is $50. In a year's time, you'll have $1,200 in your savings.

5. Set up auto-savings

Instead of fretting over saving that $5 or spending it, set it on autopilot. A lot of times we feel as if we can't afford to save, only later to blow $50 on a trip to Target or our favorite clothing store. And by setting up auto-transfers to our savings accounts, we can rest easy knowing that we're making steady progress on our savings.

Again, the key is to start small. See if you can afford to save $10 a week and bump it up every so often. There's a good chance you might not even miss that money. And if you do? You can always scale back. "Automation saves time and eliminates the temptation not to save by doing things manually," says Davis. "If possible, create separate accounts for your savings goals and send money to them on a monthly basis."

The good news is that most banks allow for automatic transfers. However, not all banks allow you to create multiple savings accounts. If they do, it might be a good idea to have your savings housed in a separate place than your checking.

That way, you won't have easy access to those funds, and will prevent you from tapping into those funds prematurely. "Keeping these savings goals automated and separate from your most active account will increase your chances of success at the end of next year," says Davis.

Final thoughts

New Year's resolutions need more than a one-liner scribbled in a journal or an announcement in a Facebook post to have staying power. Instead of trying to aggressively save, consider beginning small by changing one habit at a time. That, combined with finding ways to earn extra money, and creating a structure to make it easier to save, will have you kickstart your savings in the New Year.

Jackie Lam

Jackie Lam is a personal finance writer whose work has appeared in Salon, Business Insider, and GOOD.