12 Smart Savings Tips that Yield Return in 2012

In contrast to recent years, many Americans are now focusing on saving rather than spending.

And what better time to give yourself a fresh start and boost your savings than the beginning of a new year?

Here are 12 savings tips to help you reach your goals in 2012.

Put saving on autopilot

Only 24% of Americans have an adequate emergency savings cushion, and an equal 24% have no emergency savings at all -- so the majority of people need to heed this tip. Since the biggest barrier to saving is not being in the habit of saving, the best way to get in the habit is to pay yourself first.

Have money directly deposited from your paycheck or even your checking account into a dedicated savings vehicle. This can be done concurrently with other goals, such as paying down debt or saving for retirement, not instead of those goals. You won't miss what you don't see. And putting your savings on autopilot is a great way to reinforce the savings habit when unplanned expenses inevitably come along and chew a hole in what you've saved. You're only one paycheck away from beginning to replenish your savings balance.

Get a high-yield savings account

When it comes to savings accounts, "high yield" seems like a gross exaggeration when the top-yielding accounts barely pay 1%.

There are three requirements you should have when you create your rainy-day fund. It must be liquid, meaning you can get to the money whenever you need it. It must be free of investment risk. And you must earn a return that preserves your buying power against the erosive effect of inflation.

The top-yielding savings accounts insured by the Federal Deposit Insurance Corp. and money market accounts meet the first two of those requirements. And while returns presently trail the rate of inflation, they are the first to eclipse inflation should the pace of price increases fall or interest rates eventually pick up.

Best of all, these accounts can be found with little or nothing in the way of a minimum deposit and are available to consumers anywhere in the 50 states. Check Bankrate.com's search engine for the highest-yielding, FDIC-insured savings accounts available nationwide.

Find a free checking account

Having the wrong checking account can take hundreds of hard-earned dollars out of your pocket every year. According to Bankrate's own checking survey, the average interest-bearing checking account charges a monthly service fee of $14.15 and requires maintaining a balance of nearly $5,600 at a near-zero rate of interest to avoid fees. Instead, look for an account that charges no monthly service fees or per-transaction fees and doesn't require a minimum balance.

Bankrate.com found that 45% of large banks and thrifts in markets around the country and 76% of the nation's largest credit unions still offer a noninterest, free checking account.

Even if your bank has eliminated free checking accounts, that doesn't mean you're stuck paying the fee. Many banks and credit unions will waive the fee for customers with multiple accounts or even for something as simple as signing up for direct deposit. Check out Bankrate.com's story on how to avoid fees, and use Bankrate's search tool to find a free checking account that meets your needs.

Track your monthly spending

Fewer than 6 in 10 Americans, just 58%, track their spending against a monthly budget. Whether you call it a budget or a spending plan, getting a handle on your spending accomplishes two things: It helps you determine where you can cut back, and it helps maximize your savings efforts.

Begin by tracking your spending for a two-month period. Then take this information and build a realistic monthly budget. Each month, track all of your expenses -- everything from the $1 tip to the grocery store bag boy to the monthly mortgage payment. At month's end, tally up your spending against the budget and see where you did well and where you didn't. If you spent less than planned, move the excess into your high-yield savings account or use it to pay down debt.

Pay down high-interest credit card debt

For many households, the best return on their money is to pay down credit card debt. Whether carrying balances at 12% or 22%, credit card debt is typically the costliest debt households have.

Plowing excess cash into repayment of credit card debt is a double-digit, risk-free return because it reduces the outstanding balance and the resulting interest charges. Furthermore, this is a sound move now while credit card rates remain low. Consumers with strong credit profiles can find interest rates in the single-digits as well as 0%, balance-transfer offers lasting 12 months or more. To shop for lower-rate card offers, visit the credit card channel at Bankrate.com.

When prioritizing your debt repayment, start with the highest-rate card first and focus on paying off the balances in descending order. Use Bankrate.com's debt pay-down calculator to develop a customized, month-by-month plan for repaying your debt.

Start or hike contributions to a retirement plan

The burden of supporting ourselves in retirement is increasingly on our shoulders. The first introduction to retirement savings often comes through a workplace retirement plan such as a 401(k).

Contributions not only reduce your taxable income now, but your investment goes to work immediately and grows without the headwind of taxes until you begin withdrawals in retirement. The regular contributions made with each paycheck represent the best example of dollar-cost averaging, or buying fewer shares when values are high but more shares when prices fall. Any employer contribution represents free money, so be sure to contribute at least enough to maximize any employer match.

If your employer offers a Roth 401(k), your contributions are made with after-tax dollars, but withdrawals in retirement will not be dinged by taxes, allowing you to keep your entire nest egg. For more information, see the retirement channel at Bankrate.com.

Make an IRA contribution

If you or your spouse has earned income, then you are eligible to contribute to an individual retirement account, or IRA. In 2012, those younger than age 50 can contribute a maximum of $5,000, assuming your earned income is at least that much. Those 50 and older can contribute up to $6,000 thanks to the permissible catch-up contributions.

You can open an IRA with a bank, credit union, brokerage firm or mutual fund, and invest the contributions how you choose. An IRA can be a great way to supplement the asset allocation of your workplace retirement plan where you may be limited to an available menu of investments.

With an IRA, you can choose investments that aren't available in your workplace retirement plan, such as commodities, individual stocks or certificates of deposit, or CDs, giving you access to investment options that result in a more diversified portfolio.

A traditional IRA offers tax-deferred savings while a Roth IRA offers tax-free savings for retirement. But Roth IRA contributions are limited based on household income.

Rebalance your investments

Bonds have had an up year, cash yields are still near zero, and there has been plenty of volatility in the stock market. Many international markets are taking it on the chin while the U.S. market has been treading water.

Given this variation in returns, your portfolio may look different than it did at the beginning of the year and may have strayed from your intended investment mix. So rebalancing your investments back in line with your goals and risk tolerance is a prudent step.

Rebalancing also enforces the discipline of buying low and selling high, as you'll be shifting some money out of the assets that have performed well and into those that have lagged on a relative basis. This also helps reduce the susceptibility of your portfolio to a sharp correction in the markets.

Rebalancing is a good habit to undertake each year, but it is particularly important in a year of volatile movements and disparate returns between asset classes.

Sign up for a flexible spending account

Almost everyone incurs costs for medicine, prescriptions and copayments. Perhaps you also have dependent-care expenses while you're working or pay commuting costs to get to work. If your employer offers a flexible spending account as part of your benefits, consider signing up.

A flexible spending account, or FSA, allows you to pay for medical, dependent-care or transportation costs with pretax dollars set aside with every paycheck. By paying with pretax dollars instead of after-tax dollars, you're essentially getting a discount on all these expenses you regularly incur. How big a discount? It depends on your marginal tax bracket. But those in the 15% bracket are saving 15% by paying with pretax money instead of money that already has been taxed. Contact your employee benefits department to get specific information.

Consider a rewards credit card

Do you always pay your credit card balance in full? If so, you're the ideal candidate for a rewards credit card. With a rewards credit card, you are compensated in the form of cash back, airline miles or one of many other methods for the everyday purchases you make.

Identify what type of reward is most appealing to you, and compare card offers based on what percentage of your purchases are paid out in rewards. A 1% reward ratio is the most common, but many cards exist that have higher payouts for certain categories of spending or above a certain spending threshold.

In fact, Bankrate.com's 2011 survey of cash-back credit cards found that 22% have payouts of more than than 1% on all spending and 28% offered higher payouts in certain categories of spending, so it's important to shop around. Finding the card that best fits your spending pattern can put hundreds of dollars per year in your pocket for expenses you'd incur anyway. The keys to success are always paying the balance in full and resisting the urge to overspend just for the sake of the reward. Check out Bankrate.com's search engine to find the best rewards credit card for you.

Adjust your tax withholding

If you either receive a big tax refund or get stuck with a large tax bill, adjusting your paycheck withholding is an appropriate move. While many people look at a tax refund as "found money," the reality is that it is your money, and a refund indicates you've made an interest-free loan to Uncle Sam for the preceding year. Give yourself a raise by having less withheld from each paycheck, and you can enjoy that money throughout the year.

If the shoe is on the other foot and you ended up making a big payment at tax time, having additional money withheld from each paycheck can keep that from happening again next year.

The IRS has a tax withholding calculator you can use to figure the optimal paycheck withholding. Then file a new W-4 with your employer's payroll department to put the adjusted withholding into effect.

Refinance your mortgage

How is this considered a savings tip? With wages at a standstill for many households, mortgage refinancing can create some much-needed breathing room in the household budget. Mortgage rates are at record lows, and with expanded eligibility for the Home Affordable Refinancing Program, many deeply upside-down borrowers will now be eligible to refinance their mortgages at more attractive interest rates, cutting monthly payments by hundreds of dollars per month. Check out the free mortgage rate search engine at Bankrate.com.