The recent news on Americans and their saving habits is concerning.
Here are headlines from three recent news articles:
- 47% of Americans would have trouble finding $400
- 2/3 of Americans would struggle to cover $1,000 crisis
- 1 in 3 Americans has saved $0 for retirement
This is not good news. Certainly, our current economic climate is not one that encourages saving (you know, with low interest rates and all), but that doesn’t mean it’s not important.
Money in savings provides a safety net for unexpected expenses. Saving money forces us to spend less than we make. And when the time comes for a major purchase, you’ll be glad you’ve been saving up.
The problem isn’t that we haven’t thought about saving money, the problem is that too many of us just aren’t doing it.
There are any number of reasons why people are not saving money. They may not think it is urgent or they may not have taken the time to set up a savings account. But my suspicion is that most people are not setting aside money for savings because they don’t think they have enough to do so.
When everything that gets earned, gets spent, saving is impossible. At the end of the month, there is simply nothing left over to save. So the action gets pushed to the next month… and then the next… and the next.
How then can we break that cycle in our lives?
I’d like to offer a simple idea to get you started—in fact, it is the same idea I give when people ask me about charitable giving.
Start small and start today.
I speak often about the benefit of generosity in our lives and how it improves our well-being and life satisfaction. The conversation is often followed by a simple question, “How do I get started? I want to be charitable, I just don’t see how I can be.”
My answer is this, “Just start with $1. Literally, $1. Go find a cause that you believe in and donate $1. Don’t be embarrassed. Because of online giving, you’ll probably never stand face-to-face with anybody anyway. So just start there. Go donate $1 today and see what happens.”
Of course, my hope is not that the person will end their charitable giving with a $1 donation. Instead, my hope is that they will donate $1 and soon discover that they still have food on the table, a roof over the head, and clothes on their back. They can be generous and still survive.
Soon, I hope, they will try giving $5/month. Inevitably, again, they will discover their needs are still being met. Maybe they had more capacity for generosity than they thought. Maybe then they will try $10/month or $15/month.
They did have room for generosity all along, they just needed to discover that was true.
The same is true when it comes to saving money.
If you want to spend less than you make, start building a savings account, and begin getting ahead financially, you can do it. Even if you don’t think it is possible, I believe it is. Start small and discover it is true yourself.
Think of the stress you can begin to alleviate by taking two small steps:
1. Set Up a Savings Account.
It is important to put your money for savings into a different account than you use for daily, weekly, and monthly bills.
Almost every bank offers savings accounts so check with your local bank first—wherever you already have an account established. However, sometimes these local banks have minimum balance requirements for savings accounts. If you are starting small ($10/month), you’ll want to check that first.
If you cannot find a local financial institution with a no minimum balance savings account, or if you prefer to conduct your finances online anyway, I use Capital One 360. They have a convenient, no minimum balance savings account available—and will even give you $25 for signing up. It’s easy to use—it took me less than 10 minutes to open an account with a $10 opening balance.
2. Set Up a $10/Month Automatic Withdraw.
Just start with $10. Literally $10. Set-up a savings account today and deposit $10. Don’t be embarrassed at the amount. If you select the online option above, you won’t ever have to interact face-to face with anybody anyway.
Deposit $10 and then set up an automatic withdrawal of $10/month, as close to the day you get paid as possible.
And then see what happens. Almost certainly, you will still have food on the table, a roof over your head, and clothes on your back. Once you prove that you can survive and save at the same time, raise your monthly contribution to $15/month or $20/month. Over time, perhaps, you’ll be able to increase the amount even more. But the first goal is to prove to yourself that you can save.
Your first investment into your financial security doesn’t need to be a big one. But you do need to start somewhere.
Julie says
I love your posts always but this one has really hit home. Thank you so much.
sal says
Good place to start for those daunted by naming every dollar. Shocking stats in your links. Thankful for the emergency fund and savings we have amassed on a student budget for our family of 8 in the past 18 months. Life is very different though the budget is tight. For us the key move was decluttering and beginning a journey into simplicity and intention. The finances have naturally followed. Now every dollar has a job and is spent on paper before it’s spent in real life. Dave Ramsey’s a great resource but this blog post makes it much more accessible for those not prepared to go full on DR at the outset.
Daisy @ Simplicity Relished says
I’m so glad you wrote this. It’s unfortunate that so many Americans grow up without being exposed to proper saving habits– and then our consumerist culture exalts spending as a vital component of our identity. I’m hoping for a better future; even the fact that our world is so much more connected now– and information is readily available– is an encouraging sign.
Katie says
I love this! One thing I learned growing up is that when you have two incomes (you plus your spouse for instance), live off of the person who makes the least amount monthly and save the other income. My husband and I recently got married and have been doing this the past couple of months. It’s nice to know that you can survive off of one salary if one of us were to lose our jobs. Plus, it helps to increase our savings at a faster rate. :)
Mimi says
Wow! This is such a great idea. Thank you for sharing.
Wilkop says
We have all heard the proverbs like “a penny saved is a penny earned”, “unless things change they stay the same”, “the longest journey begins with a single step” and many others. None of these mean anything if we don’t take action. Thanks for clearly describing a simple set of actions almost anyone can take as the “single step” at the beginning of their journey.
Rosanna says
I like this post. I would add that one more component to saving is having a written budget. When my husband and I started tracking how much we spent, then developing a written budget we were able to go from not being able to save anything to having a sizeable extra to save, with no income increase.
Lisa Avellan says
When my husband and I started tracking every single dollar that came in and went out, we were surprised by all the wasteful spending and found ways to give and save more. I’m also thankful for a sweet woman who gave us a ceramic piggy bank for my first baby shower. Our daughter is now 4 and loves feeding the pig every night before bed. And we love teaching her the importance of saving. Best shower gift we received.
Tony W says
“Start small and start today” is GREAT advice for young and older alike. I am still surprised how quickly savings have accumulated. Having a sizable nest egg can reduce stress and add quality to your life.
Martha says
Thanks Joshua…I really needed this!
Fredt says
and the big one: Stop spending on all non-essential items.
joshua becker says
I actually think one of the benefits of the monthly withdrawal set-up (especially for people with very tight incomes) is that the automatic withdrawal helps people further decipher essential from non-essential.
SE Connelly says
At Chase Bank, if you set up an auto transfer from checking to savings once a month, you will not have to pay a savings account fee. (Please ask about this policy if you choose to bank with Chase.)
Paige says
To add onto this reply, Chase often does promotions to draw new customers by giving a sizeable amount of money to a new customer for setting up a new account that has a monthly automated deposit. In my case, I received $250 for opening a new account that has an automated deposit each month. I did this three years ago and have been very pleased with Chase ever since. I don’t work for Chase or anything like that. I just want to let others know that if they see their offers, they are legit.