Experts will tell you that you should have 3-6 months of living expenses saved up in case of an emergency. That’s great advice and definitely something to aspire to. But for many people, that goal is just too far-reaching, and can be so overwhelming that they’re discouraged from saving at all. If that’s you, then we encourage you to start with a smaller savings goal. For example, did you know that the typical loan from a payday lender is $300-$400? But if you have to borrow from a payday lender, the fees you pay to borrow the money can equal an annual percentage rate of 300-400%. That can be extremely difficult to overcome, especially for people living paycheck to paycheck. So if you are currently one of approximately 25% of Americans with little to no savings, now is a great time to change that! We encourage you to set a savings goal, even a small one that will keep you away from payday lenders. Once you develop a habit of savings, it will get much easier. Trust me.
Review your expenses
The first thing you need to do when saving money is to review your current living expenses. Can you cancel cable and go with an on-line streaming service instead? How about canceling the satellite radio in your car? Many people find that they can trim money from their eating out budget pretty easily, especially if they start bringing lunch to work. Or if you spend $5 a day on a latte, now would be a good time to scale back.
Give your budget a good look, see where you can save some money, and then move on to the next step.
Set up automatic savings
People who are good at saving agree that the most painless way to save is to do it automatically. Set up deductions to come straight out of your paycheck and go into a dedicated savings account. You won’t have to give saving a second thought, and there’s an excellent chance you won’t even notice that that money isn’t in your checking account. Having it in a separate account will help you forget about it until you need it. And the dividends you’ll earn will help it grow.
For those who are easily tempted
If you’ve tried to set up an emergency savings account before, but found that buying new shoes fell into the category of an emergency (raises hand), then we have some additional options to help you. For example, we have a Holiday Club account that lets you to put money in year round, but only allows you to withdraw in October through December. Another option is to take money you’ve saved and lock it away in share certificate that you can’t access until it matures. (We have share certificates that you can open for as little as $500). These are some helpful tools for those who are challenged in the financial self-discipline department.
Why wait? Get started now.
We encourage you to sign up to be a part of America Saves Week, which runs February 25-March 2, 2019. In addition to the benefit of saving money, you’ll be part of a community that encourages and supports each other to set savings goals and plans. Stay tuned for the savings pledge. Once we post it, sign up and you’re entered to win $500! Messages and alerts will keep you on track.
Don’t let another year go by without automating your savings. Save in 2019 and roll into 2020 with money in savings and a great habit in place. And remember, if you need a professional to look at your budget and help you out, you can reach out to our friends at GreenPath Financial Wellness at 1-877-337-3399. They’ll be happy to assist!