If there is one thing most financial experts agree on, it’s that you should have some money, preferably several months of income worth, in savings. Despite the recommendations, just under two thirds of Americans have savings that would allow them to pay for unexpected expenses, such as a car repair or medical bills. Just over half of Americans believe they are saving enough for retirement.
America Saves Week, which went from February 25 to March 2 of this year, encourages people to make savings goals and to learn good savings behavior. The event has taken place yearly since 2007, and has reached millions of people. America Saves Week gives people the initiative and incentive they need to set, work towards, and reach savings goals.
When it comes to saving money, most people need a goal. It’s hard to put money aside without knowing why you’re setting aside. The goal can be simple, such as saving for a trip. It can be more far-reaching, such as saving for a down payment on a house. Or it can just be saving for the “what if’s” in life.
Part of setting a savings goal is picking a final number. What amount do you want or need to save? If you’re creating an emergency fund, you might want to save six months worth of income. If you’re saving for a house, you might need to save $40,000, depending on the value of the house and the percentage you want to put down.
Once you’ve picked a final number, you need to decide how much you’ll save and how often. Most people recommend saving at least 10 percent of your income, or 10 cents of every dollar. Of course, depending on your income, that might be more than you can afford to save. Depending on when you’ll need the savings, it might be too little. Examine your income and choose a frequency and amount that works for you.
Trimming Spending and Committing to Savings
Technology makes saving money almost painless. You can, and should, schedule automatic transfers to a savings account. You won’t have to worry about remembering to move the money or skipping a week of savings.
If you are struggling to find the money to save, you probably need to cut back on the amount you spend. About one third of Americans spend as much or more than they earn. Spending more than you earn puts you at risk for high amounts of debt, if you aren’t facing extensive debt already. Trimming your spending might not be fun, but it’s an essential part of creating a healthy financial future.