The week of February 25 – March 2 is “American Saves Week.” “America Saves Week,” which was coordinated by America Saves and the American Savings Education Council, was started in 2007. America Saves is a national campaign comprising more than 1,000 non-profit, government and corporate groups that encourages individuals and families to save money and build personal wealth. The Consumer Federation of America manages the America Saves campaign. The American Savings Education Council is a national coalition of public and private institutions committed to making saving a priority for all Americans.
“America Saves Week” provides an annual opportunity for organizations to promote good savings habits and a chance for individuals to assess their current savings status – how much they have saved in their non-retirement and retirement savings.
Results from the 2012 Annual National Survey Assessing Household Savings showed that having a savings plan with specific goals and objectives has beneficial financial effects, even in lower-income households. But the key is to have a plan to save!
So, let’s get started.
A great place to begin is by setting a goal. What would you like to save for – an emergency fund, a home, a vacation, a new car, pay off revolving credit card debt, retirement, etc.? Knowing what you are saving for provides the motivation to save. Note: If you don’t have an emergency fund, this should take precedence over your other saving goals. You should have at least $500 of emergency savings – this will alleviate using high interest rate credit cards for unexpected expenses. After this saving goal has been achieved, the next goal is to put money aside to pay off any credit card debt.
The next step is to make a plan. How much are you going to save monthly? The best way to come up with this figure is by making a budget. Yes, I know, the ever-dreaded budget. But unless you know where your money is going you can’t determine how much you can save…more importantly where you can save…where you can cut back. The most important factor in making a budget is making an accurate budget – accounting for every expense to include your daily Starbucks Vanilla Latte habit. The budget process is very similar to a diet – you don’t know how much you are eating until you keep an accurate food log. Your expenditure log is your budget. I can promise, this exercise will be extremely eye opening.
The final step is to begin saving automatically. Routinely putting money away is difficult for most of us. But if you make saving automatic, you will never miss having that money.
Once you determine how much you are going to save each month or pay period, either have your employer direct deposit that portion of your paycheck into a savings account or if your employer doesn’t use direct deposit, immediately transfer that part of your pay into an established savings account. The most important piece of this savings plan is discipline. Once you determine how much you are going to save, treat this amount like a bill – pay it and pay it on time!
For more information on “America Saves Week” and/or helpful tips on saving, visit AmericaSaves.org. You can also follow America Saves on Facebook and Twitter.