How to start saving for a new project in the new year
New year, new hobbies. It’s exciting to kick off the year with new activities, but it can also be expensive. Here’s how to plan ahead and stay motivated while you try something new.
5 min read
Many of us greet the new year ready for a fresh start and some exciting challenges. At first, starting a project or hobby in January can be highly motivating, but committing to it for the long term may take some planning—both mentally and financially. So, before jumping into saving for a new project or hobby, here are a few points to consider so you can get the most out of it!
Find the “why” behind your new hobby
Picking up a new hobby or project can be incredibly rewarding. Not only can hobbies bring us joy, but they encourage us to keep learning, meet other like-minded people, and can even help bring a sense of meaning to our lives. Studies have also proven that we often find experiences more valuable than possessions. As a result, our activities generally have a more significant impact on us than the things we own.
However, before pursuing a new hobby, it’s important to work out the “why” behind it—and yes, this might mean some self-reflection time. Are you excited about skiing because you see others doing it? Or are you suddenly interested in screen printing because you’ve been inundated with targeted online ads? Take some time to think about whether the hobby you want to start is truly aligned with you and your lifestyle. Bird watching might not be as Instagram-friendly as food photography but you might find it just as—if not more—rewarding!
Weigh the demands of different hobbies
Any project or hobby comes with certain time and financial restraints, depending on how seriously you want to commit to it. Maybe you can learn a language for free using online resources, but paying for weekly lessons or taking a trip to immerse yourself in the language can quickly add up. Ultimately, how much time and money you invest in your new hobby should depend on how much you’re getting out of it. It’s a good idea to get a feel for your new project or hobby first without investing too much upfront.
However, there are some hobbies such as golf, guitar, and photography that can require a substantial initial investment. Before spending a sizable amount on the newest camera or a set of quality golfing clubs, see if you can borrow or loan the equipment for a few months. Once you’ve tried it out for a while, you’ll have a better sense of how much time and money you want to dedicate to it. And if you do decide to buy expensive equipment, check out how much you could resell it for in case you change your mind.
Saving for a new project or hobby
Once you’re confident in your choice of hobby, it’s time to work out how much you can contribute to it each month. Getting to grips with your finances can be empowering, especially when you can self-sufficiently fund your leisure pursuits! Here’s where to start.
Assess your financial situation
To figure out how much you can contribute towards your new project or hobby, first you need to know how much money you have coming in and out of your account each month. This is the first step to creating a budget. The easiest way to do this is to review three months’ worth of bank statements and list all of your expenditures on one side and all of your incoming money on the other.
From here, you can see exactly how much cash, if any, you have left over at the end of each month. And if you want to start saving more seriously, consider setting up a budget.
The 50/30/20 budget
If the idea of budgeting sounds overwhelming, the 50/30/20 budget is a great place to start. With this budgeting method, you allocate:
- 50% of your income on your essential “fixed costs” (e.g. your rent and bills)
- 30% on your unessential “variable costs” (i.e. gym memberships, hobbies, and shopping)
- 20% toward your savings
With the 50/30/20 budget, you could allocate up to 30% of your monthly income—your entire “variable costs” amount—toward your new hobby or project. However, it’s probably better to start small, at least until you’re sure that you want to continue.
Keep other spending goals in mind
How much you have to save for a new project or hobby also depends on your other savings goals. For example, if you’re saving to get out of debt, this should take priority above all other savings goals to prevent the debt from growing. If you want to get out of debt, but don’t know where to start, check out the debt avalanche and debt snowball budgeting methods.
Another note: if you have to choose between saving for a hobby or making monthly retirement contributions, while it’s not as fun, contributing to your pension is generally considered the smarter thing to do. Likewise, if you’re saving for an emergency fund, this should also come first—financial security means you can navigate an unexpected crisis much more easily.
How to free up more funds for your new hobby
If you’d like to have more money available to spend on your hobby or project, there are a few strategies you could try:
- Cutting your variable costs
- Cutting your fixed costs
- Increasing your income (i.e. asking for a raise, landing a higher paying job, or starting a side hustle)
- Choosing a less expensive hobby
Saving, made easy
The easiest way to save for your new project or hobby? Create a dedicated savings account for it where you can watch your hobby fund grow. N26’s Spaces sub-accounts let you create multiple savings accounts and set individual savings goals for each of them. With our online bank accounts, you can set daily spending limits and stick to your budget. Plus, you’ll also receive push notifications after each transaction, so it’s easier to keep track of your spending.
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