Did you know that 69% of Americans have less than $1,000 in the bank? The list of things to spend money on is endless, from luxuries like eating out at restaurants and going on vacation, to necessities like household repairs and gas. There’s always something to spend that money on that feels more pressing than saving, which is why so many people struggle to put away the 20% of each paycheck that experts recommend as a baseline for healthy savings.
Here are a few things that successful savers do as part of an effective savings strategy:
They don’t leave savings for last. Too many people wait until they’ve budgeted out all their monthly spending, and then put the leftover into savings. But if you want to make saving a priority, it should be one of your first line items on your budget — up there with rent and utilities. This is often referred to as “paying yourself first.”
They automate their savings. Out of sight, out of mind! If you don’t even see the money before it’s in your savings account, you’ll have less temptation to spend it. Use recurring automated bank transfers or a saving software to set up rules for savings that happen whether you think about them or not.
They’re aggressive with their debt. When it comes to saving money, bad debt is your worst enemy! Truly effective savers prioritize paying off debts so that their income can start going into their pockets again. The Debt Snowball Method is one popular strategy for paying off debt quickly. (Also, if you are in the process of, or interested in, obtaining home financing we’re here to talk to you about debt repayment strategies.)
They spend less than they earn. This one sounds obvious, but many people don’t follow this shockingly simple rule. This can be achieved by spending less, earning more, or some combination of the two. Either way, there’s no way to save if you’re spending more than you earn each month.
More than anything else, the key to beefing up a savings account is simply creating a plan and sticking to it. If you take the time to work out a budget, set goals, and create systems, you’ll start seeing bigger numbers in no time.
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