Not as many people make New Year’s resolutions as they used to. According to Stephen Sapiro of, only 45% of people will make a resolution this year. That’s down from a high of 88% in past years. However, of those who do make New Year’s resolutions, 34% will be financial ones. And one of the best financial resolutions you can make is to save more money.

Here are five suggestions to save money in 2006…

  • First of all, start saving money now. The U.S. Department of Commerce reported a negative national personal savings rate in October — its lowest level in decades. If money is really tight, you can start off with saving as little as 1% of your gross income. But you want to get it up to 10% as soon as you can.
  • Have money automatically deducted from you paycheck for savings. Take a look at your paycheck now. There is already money automatically deducted for Social Security and federal and maybe state income taxes. So the government is making sure it gets its share. Money set aside for your own financial well being should be treated the same way. For example, if your employer offers a 401(k) retirement plan sign up for it. You won’t spend money that you don’t see.
  • 20% of your savings should be allocated to an emergency fund. And that money can only be used for true emergencies. Traditional financial planning says that you should have three to six months living expenses set aside for emergencies — those “unexpected” things that happen like a loss of a job, or unplanned medical expenses, or major repairs.
  • 20% of savings should be allocated for “emotional spending.” Emotional spending is defined as spending for things we want, but don’t necessarily need — vacations, a new TV, down payment on a second home, and all the “stuff” we like to accumulate. An emotional spending account is important because that’s what makes saving money fun.
  • 60% of saving should be for long-term investments. This is the money that should go into investment accounts like 40(k) plans and/or Roth IRAs. If you want to be financially free you must become an investor.

If you increase your savings for 2006, you will automatically improve your financial life. And that right there will put you ahead of most people. According to In2M Corporation’s financial fitness survey, 73% of Americans say they are in the same or worse financial condition compared with last year. That doesn’t have to be you.

(C) Larry Holmes