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Rob is a 51-year-old man with only $3,500 to show for all his year in year out efforts at savings. Rob has always had a weekly $50 automatic transfer from his checking account to a savings account. Unfortunately, he has lacked the discipline required to save. Over the years Rob has time and time again used up his savings on vacations and that every other day unexpected expense.
Statistics show that the average American owes more than they save with the average personal debt figure standing at $38,000. Rob is actually doing quite well because he does not have debts that he is financing.
The average American household, however, has $11,700 held in their savings account. And while the crème de la crème 1% of American families claim an average savings kitty of $1.1 million, the picture is quite bleak when it comes to the most impoverished household. The bottom 20% population has nothing saved for a rainy day.
A $1.1 million savings kitty can undoubtedly help you live a fuller and happier life but aren’t such savings only meant for old money hedge fund kids and Hollywood stars? Certainly not!
Anyone can save!
Lyn is 30 and already has $205,000 in savings after graduating college with a $50,000 student debt. Coming out of college with her net worth in the red and having to foot costly health problems and care for her mother, this penny-wise lady is probably going to join the 1% club soon.
Lyn has invested what little she could save in investing platforms that give a fantastic rate for savings. So while she has managed to save up $40,000, the bulk of her net worth, $165,000 comes from her side hustles and investments. Lyn is a perfect example that anyone can save faster and better no matter their financial history.
How to save your money better and faster
Budget! Budget! Budget!
If you want to save and live a rich fuller life, you need to establish some basic facts first. Your income is not limitless and neither can your bills and debts service themselves. You also do not have a magic wand also that will afford you enough money to cover all your needs and wants.
If you do not have a budget for the little you have you will lose even the few savings you have and worse, lose your home due to unpaid rent and bills. Senator Elizabeth Warren’s 50/30/20 rule for budgeting can help you come up with a budgeting process that does not bore you to death.
Who likes to regiment and track every single coin, right? Elizabeth’s and her daughter Amelia Warren’s All Your Worth: The Ultimate Lifetime Money Plan approaches budgeting through percentages.
The savings and spending rule has three main percentages that will get all your horrid spending habits under control and help you save faster.
The percentage budget, first of all, works with your current after-tax earnings and divides them into three categories. The rule asks you to apportion 50% of your total income to meet your needs. Know what your needs are? Let me tell you what your needs are not. Your regular Pumpkin Spice Latte or Amazon Fire prescription is not a need.
Needs comprise of rent, food, car and student loan payments or utility payments. These should be catered to by half of your take-home pay. A 30% of the income should finance your wants. These include optional costs that are of value to you. See? You can budget, save and enjoy some of life’s good stuff. Your 30% if for example is a $1,500 can pay for your precious streaming service or your dinner out.
The remaining 20% of your take home is what will help you save better and faster. You should keep it in a rainy-day fund, an investment plan, your retirement account, IRA or 401K or in a simple deposit account.
It is prudent to prioritize those percentages and ensure that you are saving. If there is some budget crossover for example if you are in debt sacrifice part of your 30% or 20% to settle out debt first so you can enjoy your life more.
Once the debt is all but paid, you can return to your regular percentage budget. As your income and lifestyle change, keeping tweaking the budget and increase your savings or debt repayments where possible.
If you are all of a sudden earning less, you can cut back on your 30% wants spending quota and direct that cash to debt payment or to meeting your needs. Now with a working budget in place, it is time to find out proven methods that can you save money Better & Faster.
Automate your savings
It is easier to save if you ensure that the funds allocated for your 20% savings quotient are automated. If this money is deducted automatically from checking to a savings account, then there is little possibility you will end up withdrawing it and using it for other purposes. Move the money automatically, and it will become much harder for any spendthrift habits to use it up.
Start saving now
You will never have more than enough cash at your hands, to build a savings account. Rob for example automated a $50 weekly savings kitty. Yours can be as low as $20 per week but watch that little amount grows steadily to a sizeable amount.
Beef up your income
You can choose either of these two paths to help you save more. The spend less path or earn more path. If going thrifty depresses you or doesn’t help you save as much as you want, it is time to find ways to make more.
You can, for example, work more extended hours or ask for a raise. How about that part-time Uber gig you have been thinking about or an online side hustle? Lyn decided to make more by joining an investment platform. You can too and make more to save more.
Grow your emergency account
Your emergency kitty will be your lifeline when that rainy day comes around. Beef it up because on the day you are laid off, a car breaks down or lose a loved one it will have your back. Get it up to a $1000 and keep growing it till you have at least six months worth of your expenses in it. If you can get to a year worth of payments in it, it would be perfect.
Tips on painless cash saving methods
to swipe less
The average American household has a credit card debt of $8,107, while the nation at large has a whopping $974.2 billion worth of credit card debt. Credit card debt is a high-interest type of loan similar to short-term loans available at this website here so avoid it. If you pay in cash, you will find that you will spend less leaving out some money for your savings.
- See to every coin you have left over after a long day. Save those pennies in a purse or jar, and with time they will turn to a sizeable amount.
to every grey charge
Banks and credit card companies make a living off charges levied that could be draining your potential savings. Ensure that you eliminate unnecessary costs and payment subscriptions that you no longer require.
If you keep tracking your net worth, you will have a feedback loop that encourages you to keep saving. You can track your savings on a spreadsheet or use tools such as Mint.com or Personal Capital. These tools can actually link your accounts and display your liabilities and assets to keep you on track. It will also keep your spending in check.
The final word
If you want to live a happy and stress-free life save. Savings can actually improve your outlook on life as per studies. You will have less stress, headaches and fewer chances of suffering from depression. Make some financial changes and save your way to a happier future.