How to save more money in 2019

The start of a new year provides an excellent opportunity to evaluate your financial health and commit to improvements.

While certain factors—such as shifting interest rates and stock market instability—remain beyond your control, you can adapt to economic and personal changes throughout the year. Here are seven financial resolutions that can yield significant benefits for you and your family:

“If there ever was a year to make paying down your credit card bills a New Year’s resolution, this is it,” said Bruce McClary, vice president for communications at the National Foundation for Credit Counseling (NFCC). “Credit card interest rates are at record-high levels right now, and there’s a sense that a recession is on the horizon, so you don’t want to be carrying high interest credit card debt into what could turn out to be a recession year.”

The national average for credit card interest is currently 17.59 percent, and financial experts anticipate that rates will continue to climb throughout 2019.

To reduce that expensive debt, you must pay more than just the minimum requirement. Paying only the minimum “keeps you running in place or sends you backwards,” McClary told NBC News BETTER. If you continue using the card for new purchases while only covering the minimum payment, your balance will escalate, trapping you in further debt.

It is difficult to manage your spending without a household budget to track where your money is going. NFCC surveys indicate that only two out of every five adults monitor their spending closely, a statistic that has remained stagnant since 2007.

“Those who have a household budget are better prepared to overcome unexpected financial challenges while staying on track to reach savings goals,” McClary said. “Without a budget, you run the risk of taking on too much debt or damaging your credit by missing monthly credit card or loan payments.”

TIP: Managing a budget can be challenging, particularly when your expenses exceed your income. To receive personalized and confidential advice from a financial professional, reach out to a non-profit credit counseling organization in your area.

3. Look for higher returns for cash investments

Increasing interest rates offer better returns for those who save. However, you cannot expect these rates to come to you; you must actively seek them out.

“Most banks and credit unions are still pretty stingy with their payouts,” said Greg McBride, chief financial analyst at Bankrate.com. “Move your money into a top-yielding online savings account. It’s federally insured, fully liquid and it can be linked to your existing checking account for easy transfers back and forth.”

Certain high-yield savings accounts currently offer interest rates as high as 2.4 percent, which is more than 10 times the national average.

4. Contribute more to your retirement accounts

For 2019, the IRS increased the annual contribution limits for both employer-sponsored retirement plans and Individual Retirement Accounts (IRAs) by $500.

The new ceiling for 401(k) plans and similar arrangements has risen from $18,500 to $19,000. Workers aged 50 and older are permitted to make an additional $6,000 in catch-up contributions.

If you are unable to contribute the maximum amount, you should at least aim to contribute enough to receive your employer’s matching funds—it is essentially free money.

The limit for IRA contributions has moved from $5,500 to $6,000, marking the first increase since 2003. Individuals 50 and older may also contribute an extra $1,000 as a catch-up.

“If you don’t have a workplace plan, but you or a spouse has earned income, you’re eligible for an IRA. You can set that up with your bank, brokerage firm or a mutual fund company,” McBride said.

While a $500 increase in maximum contributions might seem minor, it is actually quite significant. If you save that extra $500 annually for 30 years—assuming an average yearly return of 5 percent—you will accumulate an additional $35,000 for your retirement.

Life is unpredictable. Whether you are facing a furnace repair or need new tires, you must be ready for sudden costs. According to the Federal Reserve Board’s report on the economic well-being of U.S. households, four out of ten Americans would be unable to handle a $400 emergency expense.

“Choosing to establish an emergency fund is one of the smartest personal finance decisions you can make,” said Matthew Frankel, a certified financial planner who writes for The Motley Fool. “Having emergency savings can prevent you from having to go into debt or tap into your retirement savings, if an unforeseen expense arises.”

Your objective should be to save enough to cover six months of living costs. Do not let this large number discourage you; simply begin where you can. For instance, if your goal is to have $1,000 in your emergency fund by the end of 2019, schedule an automatic transfer of $40 from each bi-weekly paycheck into a dedicated savings account.

Missing a payment deadline results in unnecessary late fees. More importantly, it damages your credit score, which can lead to serious long-term consequences. A poor score can hinder your ability to secure a loan, rent a home, obtain wireless phone service, or even increase your insurance premiums.

Payment history serves as the primary factor in calculating credit scores. A single payment that is 30 days or more overdue can drop your score by 100 points or more, and the negative impact can linger for years.

If you cannot pay your full balance, ensure you at least make the minimum payment for the month. This is far preferable to paying late. If you struggle to remember due dates, consider setting up automatic payments or digital reminders.

7. Don’t react to current stock market volatility

Resolve to remain calm and avoid impulsive financial moves when you review your year-end brokerage and retirement account statements.

“The ugly fourth quarter in the stock market isn’t fun for anyone, but volatility is normal at a time when interest rates are rising and there are concerns about a deepening trade dispute with China,” Bankrate’s McBride said. “Do not jeopardize your long-term financial security by making knee-jerk reactions to short-term market volatility.”