The statistics don’t lie - Americans have trouble saving. The federal reserve’s 2017 Economic Well-Being of American Households report shed some eyeopening light on our current state. Approximately 40 percent of Americans would not be able to cover an unexpected $400 expense without either selling something or borrowing money.1 While that number is actually an improvement over 50 percent of adults in 2013, it still shows that saving where we can won’t hurt anything. But the problem is, spending is easier (and often more gratifying in the short term). The best way to save more? Trick yourself using one of these hacks:
Trick #1: Automate Your Savings
One of the best ways to save your money is to take willpower out of the picture. If your company has a 401K Plan, enroll and have your savings taken out before you even see your paycheck. Or set up an automatic transfer from your checking account to a savings or investment account. Every month, after your paycheck is deposited, your bank can automatically transfer a sum you have designated without any further effort on your part. After a while, you may hardly remember that you are even saving money, making it much less tempting to spend!
Trick #2: Name Your Savings Accounts
Don’t underestimate the power of giving your money a name or meaning. Setting up subaccounts for specific savings goals can be effective, especially if you rename each account to the goal you’re saving for. Think about it, which account would be harder withdraw money from: Savings or 10 Year Anniversary Trip? Directly connecting your goal with your savings can help deter you and your spouse from tapping into that account.
Trick #3: Find a Personal Budget Software App
You likely don’t have the time (or desire) to sit down and track your spending manually. But with today’s software apps, there are plenty of personal budgeting apps that can sync your accounts, track your spending in real-time and automatically develop a budget to help you save. Giving a visual overview of your spending and saving habits can be a real eyeopener, making it easier to understand how much you’re really spending and where you have opportunities to save.
Trick #4: Divert Payments
An important part of building up your savings may include canceling unused memberships or subscriptions, finally giving up cable TV or paying off debt such as auto loans, student debt, etc. But the truth is, if you’re not diverting that now “unclaimed” portion of your paycheck into savings, you’re just as likely to spend it elsewhere. Calculate how much you were previously spending on these payments or subscriptions, and set up automatic payments in that amount to a savings or retirement account. Or even stash that money in an envelope to build-up your cash emergency fund.
Trick #5: Don’t Spend Your Whole Pay Raise
This one can definitely feel hard to do, but it can be another great “out of sight out of mind” trick to use if you’re able to afford it. Say you’re living on what you’re already making, but receive a bump in your salary of 10 percent. Instead of increasing your monthly spending because you can, consider diverting a portion of it into a savings or retirement account. For example, after sending 5% to savings via your new monthly auto-transfer, you can use the remaining 5% to spend or pay down debt. This allows you to enjoy a modest boost in your savings, and also a well-deserved boost to your quality of life.
Saving money can feel like such an impossible task, especially when the temptation to spend always at hand. But using these tips and tricks, you and your family can work toward automating your savings, developing healthy money habits and seeing your money grow.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.