We need help and we need to adopt an attitude of dedication to savings. Simply reminding people to save isn’t accomplishing what we need. Let’s look at a four-step process to increase our savings.
Be aware of savings. Take a few moments and analyze where you are in your savings. Check your retirement accounts, savings accounts and any other pots of money you might have.
Set a goal. Take a look at where you should be. The experts tell us that we need six to nine months of our regular expenditures in a savings account in case of job loss or other financial emergency. Since we’ve already determined that most citizens have less than $1,000 in savings, it seems almost impossible to get there. Let’s set the bar a little lower to see if we can get some success. The average emergency that a family has costs about $2,500. That equates to an unexpected doctor or hospital bill, a home repair or an automotive repair. If you have this much money in an account and you have an emergency, you won’t have to resort to your credit cards to pay it. Set your goal to get $2,500 in a savings account this year. Later, we’ll tackle the larger savings goal.
Make a plan. Once again, the statistics tell us why this step helps us save. The Consumer Federation of America says that folks who have a specific savings goal (55 percent of those saving) are making more progress in meeting their savings goals than those without a plan (23 percent).
Let’s go back to our $2,500 example. It breaks down to just a little more than $100 a month or $25 a week. Is there a way you could squeeze that much money out of your budget to meet that goal? How about taking your lunch from home three days a week instead of eating out every day. Eat meatless meals one night a week, reduce your entertainment budget (movies at home instead of at the theater) or put a moratorium on eating out. You know your budget and your ability to change your spending habits, so examine ways you can come up with the $25 and do it without fail.
Save automatically. Some people find great success in a system of automatic savings. You simply tell your bank to take out a certain amount each month. Or you can do a payroll deduction and ask your employer to deposit a certain amount in a savings account each pay period. The beauty of this method is that you can’t miss what you haven’t seen. When it happens automatically, you don’t have to make the decision to set it aside. It happens without conscious thought.
Take the pledge to save more money this year. Let’s see if you can establish an attitude of savings and improve your bottom line.