Many Americans are still struggling when it comes to saving. 53% of U.S. households have no emergency savings accounts, according to an October 2019 AARP report. And a Bankrate study said 21% of Americans have no set savings plan; that is, they don’t regularly put money from each paycheck into savings.
So, how do you build solid saving habits? Here are a few tips:
|If you're a beginner, start small||
Celebrate the $5 you stash away each week. It’ll add up to $260 by the end of the year. As long as you continue to build, you’ll establish the habit of saving and build a strong foundation for the future.
|Set up automatic transfers||
Schedule monthly or even weekly transfers from your checking account to your savings account. Better yet, divide your paycheck between your accounts so the allotted amount goes straight to savings. You’ll save without thinking, plus it’s harder to miss what was never there in the first place!
|Evaluate your purchases||
Keep your goals in mind when making a purchase. Does a new pair of shoes line up with the dream vacation or home renovation you’ve been saving for? Keeping tabs will help put your saving goals into perspective – and pump the brakes on impulse spending.
|Budget for your savings||
Keep track of your expenses by figuring out how much you think you’ll spend each month versus how much you actually spend. The difference should go into your savings account. Doing this can help solve the problem of spending extra money before it’s saved. Or, you can work backward: Start with your salary and take out your expenses. Direct whatever’s left to your savings account.
|Try an anti-budget||
If the word “budget” sounds a lot like “diet” to you, try another method for saving smart. Pull your savings off the top of each paycheck. You’ll only need to know how much you can afford to save each month (a good rule of thumb is 10% of your income), then you can automatically transfer that amount to savings and live off what’s left.
|Set realistic goals||
If your new saving habits are too strict, it can make you more likely to snap at some point. Don’t undo all your hard work! Set up occasional rewards, like a nice dinner when your savings account hits a certain amount. Saving money doesn’t have to be miserable. Create small rewards for yourself along the way.
|Participate in your company's 401k||
Savings grows faster because it’s not taxed until it’s used later. Often, the company contributes to the fund as well. Keep in mind these are long-term savings and could be more costly if used in the short-term.