Why do Americans find is so hard to save money?
Two years ago, it was said that the average American only saved about 3.6% of their disposable income.
That is even after the so-called “Great Recession” forced many to save more than they ever had before due to fears of job loss, etc.
In fact, it was only a few years ago when Americans had a negative savings rate. Yep, you read that right. Americans were spending more than they were bringing home. You know what? We’re up to it again! The savings rate is back in negative territory.
So, I’ll ask again: why do Americans (and others) find it so hard to save?
I’m not going to get into the reasons why I think we have saving issues, but I do like this list of the top excuses for not saving.
In order to kick those excuses to the curb, here are 5 simple (and motivating) ways to start saving today.
1. Save Your Raises
Even though we are still in one of the longest stretches of slow economic growth ever, the majority of you are probably still receiving some sort of raise each year. Why not live off of the same amount as you did last year and save the difference?
This technique can be a little difficult if some of your fixed expenditures (housing, utilities, etc.) increase by the same percentage of your raise on a yearly basis. However, you should be able to find some wiggle room in your budget elsewhere to make up the increase.
2. Save Your Budget Savings
Now that you have a budget (if you don’t, get on that) and are living on less than you earn, you should be finding some extra money to save. If you’re out of debt, put it in the bank (or retirement account)!
I also found a great technique where you “save the savings” on some of your impulse purchases. In other words, if you are thinking about spending money on eating out for $30 and instead stay home and cook a meal for $5, immediately transfer the difference to your savings account. You will be surprised at how much you save over a 30 day time period!
3. Market Savings To Yourself
One of the coolest tricks that I have read is marketing to yourself. You could even call this “visualizing the prize”.
With this method, you simply place triggers or images around the areas that you frequent that show a financial goal that you may have. For example, if you really want to purchase a single family home, place an image of one that you want on your fridge. It will be a quick reminder that you are trying to save and make you think twice about ordering that pizza.
4. Write Down Your Goals
Another great way to keep reminding yourself of your goals is to write them down in a financial mission statement.
A financial mission statement should include what goals your family desires to achieve over a set period of time. If your goal is to pay off all of your debt in 5 years, write it down. If you want to save 15% of your income in your retirement accounts, write it down. Put whatever your heart desires in your financial statement.
When you have it all finished, place it on the fridge for that visual savings reminder!
5. Automate Your Savings
Some of you may look at the previous techniques and say to yourself “nope, none of them will work for me”. If that is the case, automating your savings may be just your style.
Many companies now have the option for you to send part of your paycheck to a savings account. In other words, the majority will go to your checking account and a portion will go to your savings. You can make the percentage whatever you want.
If you do not want to go that route, chances are good that your bank will allow you to set up automatic transfers on a periodic basis. Therefore, if you get paid every two weeks, set up an automatic transfer to move a certain amount to your savings each time.
Some of the larger banks (such as Ally Bank) will even let you open multiple savings accounts so you can have separate accounts for each goal. Personally, my wife and I have three savings accounts (emergency fund, vacation, and house fund). This also makes it less likely that we will tap into those accounts if we know why the money is being saved.
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Do you have any savings techniques that work for you? Share them with others in the comments!