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.
Marjie says
I too never thought I had enough to save until the last couple of years.. I just decided to start small! It really does grow… amazingly!! The automatic transfers are the way to go. I now have a few different savings accounts for different things; son’s college, emergency savings, vacation savings. I have automatic transfers done weekly so the amount seems like just another coffee, gas, or misc. purchase that I’d probably be spending on something else anyway. It’s funny how you think you don’t have enough, but I always would for the other stuff. The key is, don’t start out with too big of an amount and don’t steal back out of it unless it really is an emergency!
sonja says
Good advice. As someone who has been retired for almost 20 years I can tell you living on a fixed income is hard. Learning to live simply and save is easier if you’ve been doing it all along.
Rhonda says
Thank you very much for this inspiring post. I am 49 and never saved, although in recent years I know I should be but never think I can afford it (my husband being out of work for the last few years has made it more difficult, but he has part-time work now which has potential to increase to full-time, so things are on the up :-)), but after reading this I logged onto my bank account and have set up a fortnightly automatic payment into my savings account (already had it set up from a brief stint at trying to save previously), so we will see how it goes. Thank you, again.
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Mackenzie says
Thank you for this post. I needed this :)
Ximena Cabezas says
Dear Joshua, it is always a pleasure to read your articles. Both your solutions and your approach to life are simple and reassuring. It’s good to be reminded of good habits.
Thank you for your effort and for the excellent information you always send us.
Scott says
My top tip for people working city jobs: stop buying coffee, cappuccino, latte etc. Get a French press for the office and a bag of fresh coffee that will last weeks. Honestly, the small amounts saved from every takeout drink really adds up! Those small amounts can be your savings.
Rachel May says
I split each paycheck to auto-deposit a set amount into checking and into savings each pay period. This really helps me save money without thinking about it. I basically give myself 1/2 of my paycheck to live on and pay bills, and save 1/2. I learned this from a past coworker and it has been a huge help for me for saving money and paying off debt. When you don’t see the money, you’re less likely to spend it.
Sammi says
I don’t buy non-essentials and I still don’t know if I could save $10 a month and not miss it for necessary things. I have a lot of expenses because I am recovering from severe health problems and natural medicine is not covered under health insurance, I help my mother pay her mortgage, I am a stay at home homeschooling mom and I am caring for a destitute dying relative. All that said, I think given the circumstances I am doing the right thing by spending my money on what is important-my health and helping those in need- so I am ok with not saving at this time. I do have about $3000 in savings that I wouldn’t touch unless we had an emergency and I will start adding to that when I am able. My point is that saving is great but sometimes it is not an option.
Mary Kay says
Thanks for the inspiration! I’ve been meaning to set up automatic investment for the kids’ college funds. This was a useful reminder. Now it’s done!