Despite the growing economy, 20% of Americans aren’t putting any money in their savings account, according to a recent survey. Only 16% of people said they put aside the expert-recommended 15% or more of their monthly income. Reasons included high expenses, low salary, or simply just not getting around to it. Thankfully, if you’re among those struggling to save, there are a few easy ways to kick start your efforts.
Out of Sight, Out of Mind
You may have heard it’s a good idea to separate your checking and savings accounts, but have you considered de-linking them as well? When your savings account doesn’t pop up on the ATM screen when you go to pull money out of checking account, it makes it harder to treat it like an extension of your checking account, and tap into it on a whim. Yes, it seems artificial. But it makes it less likely you’ll impulsively reach for the money when you mean to save it for another goal.
Find a Reason You’re Saving
When you dedicate your savings for a certain purpose, you’re less likely to be tempted to use that money for something else, making it more likely that you’ll reach your big goals. Consider opening specific savings accounts for specific purposes and giving them a name that lines up with your goals.
Name one “Emergencies” or “For A Rainy Day”
While you’re at it, one of those savings accounts should be specifically designated for emergencies. Right now, according to the Federal Reserve Board, 40% of Americans can’t cover a $400 emergency. Although it’s optimal to have three to six months worth of living expenses (that’s money you have to spend rather than money you typically spend on a monthly basis) begin by aiming to build a rainy day stash of $1,000 to $2,000. That’s your insurance against a leaky roof, surprise medical expense or anything else you would otherwise have to put on a credit card.
Set It and Forget It
Modern-day technology not only saves a lot of time and energy, but it can also save a lot of money. Simply set up a direct transfer to automatically move money from your checking into your savings account. You can choose to have this occur every pay period, or every month, for a set dollar amount of your choosing. This way you never have to worry about forgetting to save — it’s happening for you.
Be Strategic About Savings Rates
Lastly, we’re now at a point where we should be getting strategic about being paid more on the money we’re saving. Although the average interest rate on savings accounts in the US is .1% (yes, 1/10th of 1 percent), you can find rates of 2% or more by shopping around. Credit Unions are known for having better than average interest rates. Talk to your credit union or bank about whether you qualify for a higher rate than you’re getting now.
Wherever you are on your money journey, saving more is one of the best ways to ensure you reach your financial goals.
With Megi Meskhi