If you look at headlines, you’ll come to discover some startling statistics.
- 47% of Americans would have trouble finding $400
- 2/3 of Americans would struggle to cover $1,000 crisis
- 1 in 3 Americans has saved $0 for retirement
Do you find yourself as part of those statistics?
I’ve heard many reasons why people don’t save. The one reason that sticks out the most: “banks don’t pay much on savings accounts so it’s not even worth it for me to save money.”
My argument to that line of thinking has been: savings is meant as a safety net to give you security for unexpected events. You need to save in order to lessen the impact of these events and to achieve goals.
Basically, you don’t save money for the sake of saving money.
You save money to have it for when you need it most and for the things you want to buy.
I’ve also heard from others that they don’t save because they believe they don’t have enough money to save. Or simply put, they don’t make enough to save.
Well, let me tell you everyone can save money.
And I believe you too can save money!
I get it. You work to earn money to spend money. But do you really want to keep working for the rest of your life?
The answer is probably an emphatic “no!”
Saving money must become a priority for you.
To live financially well, you’ll need to save, then invest, and focus on growing your wealth.
Tips to help you prioritize savings and build a positive savings habit
Pay yourself first. This is a personal finance rule you’ve heard repeated many times. Every payday you must pay yourself first. You pay yourself first by transferring small amounts of money into a savings account. Start with a rainy day fund with a $400 goal.
Need help saving? Use an AI-powered savings assistant.
Automate your savings. Elect to have your paycheck direct deposited into a checking account and set automatic transfer each payday. Open the savings accounts with the same financial institution or find an online savings bank. Make sure they offer the option of naming your savings accounts with better titles (i.e. My Emergency Fund vs. Savings Account)
I wrote about how to set up automatic savings in detail in my book, You Only Live Once.
Find money to save. Start by reducing the amount of money that is going out. Spend less, lower your expenses and cut your monthly bills. You can do this by canceling or negotiating for better terms. Consider looking for alternative services too. For example, when you reduce your cell phone bill by $10, you now have $10 to put into a savings account.
You can get help from services that will identify and cancel subscriptions for you.
Have a budget. Budgeting is fun and helpful when done correctly. Budgeting helps you allocate your money to things you value. It makes you more accountable to your goals. When you know how much money is coming in and where it’s going, you’ll make better spending decisions. A budget doesn’t have to be complicated. Remember, a budget is how you’ll spend your money today and how much you’ll save for future expenses.
How to use budgeting to save more money
The budgeting process will show how you’re spending money.
Budgeting can be tedious but extremely helpful in managing money and living financially well.
Here’s how to use budgeting to find money in your current situation:
- Calculate your income and expenses.
- Make a list of all income sources and calculate the total monthly income.
- Keep a record of one month’s fixed expenses and discretionary spending.
- Organize based on categories and total expenses such as housing, transportation, food, utilities, credit card payments, etc.
- Using paper or a spreadsheet, calculate your income compared to your expenses.
- Analyze the results and calculate how much you can save and how much more you can pay towards your savings goals.
- Determine where you can decrease fixed expenses and cut spending to free up money.