Did you know that more than half of Americans spend more than they earn? That’s not just living paycheck to paycheck, it’s also falling further and further into debt. So, it’s no wonder saving money feels impossible to so many people. Something I hear frequently is, “I want to save money, but there’s just nothing left over at the end of the month.”
Friend, I hear you. Here’s the thing, though—saving only what’s left at the end of the month is never going to work. It doesn’t matter if you make a lot or a little, a successful saving strategy is one that saves money first.
“But I can’t! I don’t make enough money.”
It’s not about how much money you make; it’s about how much you spend. If you want to get serious about saving, you have to get serious about what you’re spending. Spending more than you make, or even exactly what you make, is not a recipe for financial success. Make a budget and base it on data. Assembling a list of your bills is a good start, but it’s not going far enough. Dig deep into a few months’ worth of transactions to see what you’re actually doing with all your money. The results will probably surprise you. Once you’ve identified the problem areas in your spending, you can tighten the reins and free up that money for savings.
Our mission at GOLD is to empower you to take charge of your financial future. Money is the biggest source of stress for Americans, but we don’t want it to be a stressor for you. Here’s how building your savings will help reduce those anxieties:
- Retirement security: How do you picture your retirement? If you don’t want to still be stressing over money in your golden years, you’ve got to prioritize saving for retirement. Retirement plans like 401(k)s are powered by compounding interest. That means the earlier you start saving, the more your money will grow. Retirement feels so far away when you’re young, but if you wait to save until late in life, you lose the power of time to grow your money. That could mean delaying your retirement significantly, depending on your children to support you, or running out of money during retirement.
- Emergency fund: If you lost your job tomorrow, how long could you keep paying the bills? Long enough to get another job? What if your partner lost his or her job too? Unemployment rates are very low, so maybe you wouldn’t go very long between paychecks. What about a major medical crisis? A car that “kicks the bucket?” An unexpected home repair?
No one is immune to financial crises. No emergency fund means relying on credit cards. If you’re living paycheck to paycheck, how will you ever pay that debt off?
- You can afford the extras: Afraid saving means you have to give up vacations, holiday splurges, nice clothes and jewelry, or whatever it is that’s “your thing?” Not at all. Saving means you can afford those things because you’ve planned for the expense.
Do you have a holiday spending hangover every January? Put aside a little bit from every paycheck throughout the year in a separate savings account (out of sight, out of danger of being spent). By the time the holidays roll around, you’ll be able to fund your gift purchases without throwing off your regular monthly spending or charging it all to a credit card.
You can do the same thing for vacations and any other big purchases. All you have to do is plan for the expense and stick to your plan. The money needs to be somewhere you can’t easily get to it. Keeping it in the checking account with all your spending money won’t be effective. GOLD has accounts designed to make saving easier; we call them club accounts. They’re a type of savings account that is designed to help meet short-term savings goals. Deposit a set amount of every paycheck straight into your club account, then withdraw the money when you’ve reached your goal.
Are you feeling inspired to start saving? I hope so. Saving seems hard and scary. Often, it feels like too much of a sacrifice to save money rather than spend it. The truth is saving (and budgeting) is the path to financial freedom. Planning for your expenses allows you to make big purchases without wrecking your budget. Building savings keeps you secure when financial surprises hit and all through retirement.
Need help getting started? Let us walk you through opening your first club savings account and setting up automatic transfers to make saving a no-brainer. Give us a call at 484-223-4200 or send a secure message through GOLD Online Banking.