Knowledge and Insights
Looking to achieve a financial goal? Whether it is something small like the latest new gadget, large like a down payment for a house, or ongoing like retirement, saving is the best ways to get there. The biggest upside to saving: you don’t pay someone else for the interest on debt you’d otherwise incur.
The national personal savings rate has dipped to the lowest point since the Great Depression. For many, today’s high cost of living makes saving harder than ever. If this sounds like you, don’t think you’re alone. The majority of Americans don’t save as much as they’d like – if at all. With national “America Saves” week taking place from February 25 to March 1, it’s time to get yourself – and your money – in gear.
Pay Yourself First – You’re used to paying everyone else first, right? At the top of your list is probably your rent or mortgage, gas and electric, car payment, etc. Instead, before any of the other expenses are paid, put something into savings. Start small. Try $50 a month. You’ll never miss it, I promise. Then divide up your remaining money to cover the rest of the necessary expenses. Most banks will do this for you so the money won’t sit in your checking account begging to be spent. Set up an automatic transfer to savings each month. Want to eliminate a step? Ask your employer if a portion of your direct deposit paycheck can be put into a savings account.
Prioritize Your Saving – It’s a lot easier to save when you have something you’re saving toward. Take the time to figure out your saving goals. Is it a dream vacation, car, college, house, or retirement? How much will it all cost? Now, make your plan.
- When do you want to reach your goal? Set a timeline and be realistic.
- Make a schedule by dividing how much you need to save by how long you have to get to your goal. If I need $10,000 to achieve my goal, it’s going to be much more realistic to save for it over a few years than over a few months.
- Don’t give up! Make sure you’re contributing to savings just like other required expenses.
Where to Find the Money to Save – While it may seem tough to meet your necessary expenses, you probably have some money you didn’t know about. Where is it? Take a look at these tips:
- Keep track of what you spend for a week. Did you need each and every thing on that list? What might you be able to do without?
- Leave the cards at home and make your purchases with cash. This can easily help you steer clear of unnecessary purchases and stay on budget. Decided what you will spend on your groceries and go into the store with that amount of money. Over budget? Something’s gotta give.
- When was the last time you asked for a reduction on your interest rate? Make a call to your creditors and ask. You’d be surprised by how often they’re willing to reduce the interest rate.
- Reduce your expenses. Lowering the temperature in your home by just two degrees can save 5% on your heating bill. Turn out lights when you leave a room. Those pennies add up quickly.
- Pack a lunch and cook more dinners at home. Hundreds of dollars a month can disappear if you’re eating out a lot.
For information on The Mercadien Foundation and our response to the Financial Literacy Challenge, go to www.mercadien.com.