You’ve probably heard the stat: some 40 percent of us would not be able to cover an unexpected $400 expense without either selling possessions or borrowing funds.1
That number is actually an improvement from 50 percent of adults who would have had to borrow in 2013, but the truth is, spending is way easier than saving (and often more gratifying in the short-term).
How can you make a habit of saving? Try one of these tricks:
#1: Make Saving a No-Brainer
Take willpower out of the equation by setting up an automatic transfer from your checking account to savings, a retirement account, etc. Every month after your paycheck is deposited, your bank will automatically pull over a lump sum of your choosing. After a while, you may completely forget you’re even saving money.
#2: Give Your Savings Account a Name
Giving your money meaning is powerful. Setting up subaccounts for specific goals can be more effective if you rename each account to the goal you’re saving for. Which would be harder to take money out of? “Savings” or “10-Year Anniversary Trip?” Directly connecting your goal with your savings can help deter you from tapping into that account.
#3: Try a Budgeting App
You likely don’t have the time (or desire) to sit down and track your spending manually every day. But there are now personal budgeting apps that can sync your accounts, track your spending in real time and automatically develop a budget to help you save.
A visual overview of what you routinely spend and save can be a real eye-opener, making it easier to understand your habits and where you have opportunities to save.
#4: Cancel Subscriptions and Divert the Found Money to Savings
Cancelling unused memberships or subscriptions, cutting the cable cord or paying off loans like car payments, student debt, etc., can be a great way to find money.
Just be sure to divert that now “unclaimed” portion of your paycheck into savings, so you don’t absent-mindedly spend it elsewhere. Find out exactly how much you were spending on these payments or subscriptions, and set up automatic deposits to a savings or retirement account for those amounts, or stick that money in an envelope to build up your emergency fund.
#5: If You Get a Raise, Pretend You Didn't
This can definitely feel hard, but it can be another great “out of sight, out of mind” trick. Say you’re living on what you’re already making, but receive a 10 percent bump in your salary. Instead of increasing your monthly spending, divert a portion of it into a savings or retirement account.
For example, you could put five percent of the 10 percent raise into building up your monthly budget, but automatically roll over the other five percent into a separate savings account. This allows you to enjoy a modest boost in both your monthly spending and your savings.
Saving money can feel impossible, especially when the temptation to spend has gotten so high with constant siren songs from mass media and social media. But by using these tricks, you and your family can work toward saving automatically, developing healthy money habits and seeing your money grow.
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This content is developed from sources believed to be providing accurate information, and provided by Kelly Financial Planning. 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.