Americans are the world’s worst savers. Nearly a quarter of American consumers have no money left over after paying for their essential living expenses and spending discretionary money. Instead, we’re take on more and more debt. Poor savings not only hurts individual consumers it also hurts our national economy.
Why aren’t more American’s saving? We give plenty of excuses why we don’t. Further analysis show that these excuses are bunk.
“I don’t have enough money to save.” Hogwash! You don’t need hundreds in access dollars to start saving. Most banks allow you to start a savings account with as little as $25. Some require less. Even if you saved small amounts each month, it’s better than nothing.
“I’m focused on paying off my debt.” Paying down your debt is an admirable goal, but its not wise to do so at the expense of saving . Without savings, you might find yourself going back to credit cards when an emergency hits.
It’s too late to start saving. If you’re in your twenties and thirties and you’re giving this excuse, you need to be smacked across the head. You’ve got plenty of time for the wonders of compounding interest to work for you. If you’re older and are giving this excuse, you should be smacked, too. While you don’t have as much time for compound interest to work for you, having a solid savings built up will protect you from any financial misfortunes you might face- job loss, hospital stays, ect.
How to Start the Savings Habit
If saving money is not a habit for you, here 3 tactics to make it one.
Start today. Not tomorrow, not next week, today! If you don’t have a savings account, go down to a bank and open one. It takes about 15 minutes. If you already have a savings account, but are looking for a better interest rate, check out some of the online banks like ING and HSBC. (If you’re interested in ING, shoot me an email and I’ll send you a referral that will give you $25 for free when you start an account.) After you open your account, start looking for ways you can start filling it.
Automate. There’s no better way to make saving money a habit than making it automatic. Go down to your employer’s HR department and ask to have a percentage of your paycheck deposited in your savings account automatically. If saving is new to you, start small. Try 5% at first. Gradually build yourself up until you can save between 15 and 20 percent of your paycheck each month. After you set up your direct deposit, forget about it.
Save the difference. Next time you use a debt card, before you enter the amount in your registry, round up to the next dollar. So, if your total is $12.24, enter $13 in your registry. At the end of the month, your actual balance will be more than you have in your check registry. Take the difference between the amount actually in your checking account and the amount in your registry and stash it in to savings.
What tactics have worked for you in developing your saving habits? Drop a line in the comment box.