America Saves Week: 5 Ways to Start Saving
The key to saving for retirement is to start early and stay committed. Making the choice to pay yourself first is a decision that can have a big impact on your ability to retire confidently in the future.
During this, America Saves Week, we celebrate people making a commitment to start saving with 5 ways for you to get started.
1. Save Automatically
It can be hard to put aside money for savings, but there is an easy way to save money without ever missing it by making your savings automatic. Instead of waiting to put money into your savings until after you pay your bills every month, automatic transfers allow you to save money first.
There are two ways to do this:
Use direct deposit to help you save.
Most direct deposit programs allow you to split your paycheck so a portion goes directly into your savings account. Ask your HR representative for more details about how to set this up.
Schedule automatic transfers.
These let you regularly transfer money to your savings account from another eligible account such as your checking account.
You can adjust your transfers or deposits any time you want, but if you stay the course, you could see big rewards over time. For example, if you save $58 a week, in one year you would have $3,000 saved, which could be enough for a home repair, a vacation or a down payment on a car.
2. Save with a Plan
Savers with a plan can be over twice as likely to save successfully for things like retirement and their education. Costs add up fast, and building your savings can seem like a pipe dream, but small changes now can yield big benefits later.
Here are 3 Easy Ways to Get Started
Prioritize your future self
Each month, you pay regular bills: your cell phone, your student loan, your rent. Add someone else to that list: your future self. When you treat savings as mandatory, you make it that much easier to stay serious about staying on track.
Think one percent at a time
Resolve to put just one percent of your income into savings over the next month. By doing so, you’ll flip an important mental switch: Before, you were someone who wasn’t saving for the long term, but now you are.
Go slow and steady
Saving for a down payment on a house, an emergency fund or a hard-earned vacation might seem an impossible hurdle. But remember that you can achieve your most ambitious savings goals if you work toward them gradually and in small increments.
3. Save for the Unexpected
We’ve all been there. You’re driving down the road and your car starts to make a funny noise. You pull over to check it out, and realize it’s smoking. Another unplanned car repair.
Don’t you want to have an emergency fund for situations like this? By creating an emergency fund, this will prevent you from having to borrow the money.
"One of the first steps in climbing out of debt, is to give yourself a way not to go further into debt."
First, let’s define an “emergency”. An emergency fund is for something that happens to you unexpectedly. A broken down car, a hospital visit, losing a job, an unplanned, generally undesirable event. It’s important to understand what an emergency fund is used for and when it’s an appropriate time to take out those funds.
How much do I need to save?
How much to save up for an emergency is totally up to you. Your savings depends on your financial situation, but a good rule of thumb is to cover 3-6 months worth of living expenses. This may be a lot for some people, but it’s important to understand that it doesn’t matter how small you start, just start. Getting started is one of the hardest things to do but once you’re started, you are able to build your fund overtime.
4. Save to Retire
Saving now for retirement will ensure you have enough money to have a comfortable standard of living when you stop working or reduce the amount of hours you work. It may seem like a long time before you'll be ready but that doesn't mean you shouldn't start preparing for it today. It is important to participate in a work-related retirement program such as a 401(k) or open an Individual Retirement Account (or IRA).
Start saving for your retirement as early as possible.
The earlier you start saving for your retirement the more flexibility you'll have to create the future you want. Earning interest on your interest over many years builds wealth. Because time is on their side, the youngest workers are in the best position to save for retirement.
Increase the amount you save toward retirement by 1 %
But how much should you be saving? The best way to determine your savings target is to meet with a financial advisor or use an online calculator. This will help you figure out how much you should accumulate and how much you must set aside in the meantime to reach that target.
5. Save by Reducing Debt
In today’s day and age, it’s pretty common to be in debt. However, it doesn’t have to stay that way. If you’re still paying student loans, car loans or credit card bills, you are financial debt. There is no greater feeling than being able to pay off that debt. With our financial advisors, you will be able to do that.
We know being in debt can be stressful and you might not know where to start. Our financial advisors will sit down with you, assess the situation and will pull you out of the hole. However, you can’t put it off. Start paying off your debt today!
Here are a couple of easy ways you can start paying off your debt today:
- Create a budget: Whether you’re single or married, take the time to sit down and construct a budget for yourself. This can be cutting down on eating out, stop paying for the gym membership you don’t use, or even start commuting with someone to work to cut down on gas money.
- Pay the most expensive debt first: Start with the most expensive debt you have. Let’s say that it’s your student loan, construct a budget and set aside the money you’re saving for that.
- Stop using your credit card: If you can’t afford to buy something, you probably shouldn’t be buying it. When you cut back on credit card spending, you’re essentially cutting back on potential debt.
- Change your habits: Stop eating out as much, take your credit cards off online clothing stores, make a grocery store budget, etc.
It is important to regularly revisit your unique opportunities and challenges and to hold yourself accountable to your future goals.
I encourage you to chat with a mentor or a financial professional today.
Posted by Brandon Cutler
Brandon Cutler is a mentor for Financial Elements, Resources’ employee wellness solution powered by people and amplified by technology. Brandon helps participants by breaking down financial concepts to increase financial literacy that will impact everyday financial decisions to reach the desired outcome.LinkedIn