New Year savings resolutions are plenty, but few are successful

To save more money is a common New Year’s resolution made by many, but financial consultant Joel Doelger of Credit Counseling of Arkansas said few people put an actionable savings plan in place.

That is evidenced by the fact that just 38% of American’s have enough savings to handle a $500 emergency, according to Bankrate.com. Recent data from the U.S. Bureau of Economic Analysis shows that U.S. consumers are setting aside 4.4% of disposable personal income, or just a little more than 4 cents on every dollar. 

Bankrate analysts note that consumers who have not saved the $500 would most likely charge an unexpected expense such as car repair or seek to payout any medical expenses they encounter. At the same time, the average household credit card debt is $6,800, which can take an average 7 years to retire, if no more charges were added.

Doelger said the most critical aspect to saving money for rainy day funds is to create a plan and then follow through with concrete actions.

“Tax season is not that far away and consumers expecting a refund can get a good start by planning to set aside part of their refund to a rainy day fund instead of buying a big screen television, for instance,” he said.

With lower fuel prices putting added money into consumers pockets, Doelger likes the idea of consumers socking those savings away into a savings account. Whether it’s $20 or $50 saved per fill-up, the savings could be set aside without being missed.

Retailers and restaurant owners are hoping the average $1,150 annual fuel savings per average family will be spent, but saving that money could mean the family has the added funds to take a longer vacation or make large purchase needed for their home.

Financial experts at CNN Money suggest using mobile applications like Acorns, that automatically round up debit card purchases to the next whole dollar, and sets aside that change into an investment account with very low fees and no minimums. Bank of America has a similar program called Keep the Change, which takes the change from the rounded dollar amount and puts it in a savings account.

Doelger said some people need to fool themselves into saving with these automatic roundup programs, because that may be the only way the money gets set aside.

Kit Yarrow, a marketing professor at Golden State University, said what people need in order to meet a savings goal is a sense of control and a progress. She recommends separating out funds for various savings goals as it can allow for easier tracking and prioritization.

“It can also keep you motivated and you'll be less apt to raid the ‘Trip to Paris’ or ‘Replace the fridge’ funds for an impulse buy,” she noted. “Dividing your savings into different buckets or accounts, one for each goal, is one solution that can help jump-start savings.”

Programs like Smartypig.com allows consumers to set up individual savings goals that are tied to online savings bank accounts which are funded by direct deposits from a consumer’s checking account at whatever interval and the consumer choses. This program also helps consumers calculate how much to save to reach a certain goal by a specific timeframe.

Doelger said having short-term goals that can be met within a few months is a good moral booster and could help build disciplined savings habits over time. He likes to see consumers set up automatic drafts to savings accounts or investment funds from payroll direct or through their bank. 

“It gets back to paying yourself first. If you don’t do that, chances are there will be nothing left when the month is over,” Doelger said.