We’ve all heard the statistics about Americans and our savings rates. According to some recent data gathered by the Center for American Progress, nearly one-third of Americans have no savings. This is a problem that must be addressed. However, since you’re reading this, hopefully, you are ready to boost your savings. Here are some tips to improve the saving rate of your household.
First of all, it’s time to set some goals for your finances. Since it’s hard to set specific goals if you don’t know where to start, we’ll give you a jump start. The experts say it’s a good goal to save 15%-20% of your income for retirement and other savings goals. So, if 15%-20% is the goal, how do we get there?
The first step is to just get started. I haven’t met many people that can start saving 15%-20% of their paycheck on day one. I’ve learned that the more drastic the change, the harder it is to stick with it. Try starting at 2% of your paycheck and save it as soon as you get paid. A great place to do this is in your employer’s retirement plan. Once you get used to the 2% coming out of your paycheck, then try increasing it to 3% and then 4% and so on. Gradually getting to the 15%-20% savings rate is a great way to trick your budget over time.
Another helpful tip is to start paying attention to how much you are saving. When saving into a 401(k) plan with an employer match, seeing your savings double from the match each paycheck can really add momentum to accomplishing your savings goals. Once you see that it’s working, it will be harder to find reasons to stop saving. And don’t just stop once you hit the match, keep increasing that savings percentage each year until you are maxing out your savings goals.
Once you start paying attention to what you’re saving, you should try making it a game. Compete against yourself, your friends or total strangers. Competition is a great motivator and there are apps and websites out there to help you compete and win your personal savings game! Saveup.com is one of many savings game websites. Or if you have trouble remembering to save, try using apps like "Digit" to remind you to save small bits here and there.
Lastly, if you have any tricks that boosted your savings that you would like to share, let us know in the comment section. We love to hear what works for those around us and can help spread the winning strategies.
Emily Biehler, CFP®, AIF®
Financial Planner
