So often, I hear friends, family, clients, and prospective clients talk about how difficult it is to save money. Considering that the average American is reported to have $8,863 saved in a savings account (not including any retirement funds), it is evident that while people make an effort to save some money, they fall woefully shy of saving enough.
Ultimately, every individual, couple, and family, regardless of age, should aim to have roughly three to six months worth of fixed expenses saved and accessible. Having liquid cash at your fingertips prepares you against the certainty of life’s uncertainties. From minor inconveniences like a car repair to major events like homeowner’s insurance deductibles to cover losses due to hurricanes or fire, having enough cash can inoculate you against financial ruin.
As if it isn’t enough of a struggle to save for the “just in case” moments in life, what about saving up enough to pay for a car in cash? Or that Disney World vacation you dream of taking with your kids? It doesn’t take much to realize that the average savings of $8,863 for all Americans across every age group does not come close to what most people need. And that is a disheartening reality that leads too many folks to borrow more than they can afford.
I have good news. There is a simple and painless way to save more money. Here is how to put your cash savings on autopilot so you can save more and continue to afford your day-to-day expenses.
Automate Your Savings
This may sound too easy, but automating your savings is one of the most effective ways you can save more money instantly.
You see, when you save a set amount of money every paycheck or every month, it becomes routine. When you automate your savings so that funds automatically get deposited into a savings account without you needing to intentionally do it every time, it ensures you save every time.
Control Your Cash Flow
Every month, a certain amount of income comes into your household. Whether it is a fixed amount you can count on because you and your spouse are salaried employees or somewhat variable because you are a business owner or are a commission-based earner, controlling your cash flow is key to your savings success.
To make sure you are saving enough money to protect your financial reality and prioritize the kind of spending that means the most to you and your family, observe the following rules:
- Know how much money you have coming in every month
- Prioritize saving and investing (10 to 20 percent of your monthly income before taxes)
- Cover your non-negotiable fixed expenses (rent, mortgage, insurance, groceries, et al.)
- Make a plan for paying off debt (student loans, car loans, personal loans, credit card balances)
- Assign a purpose for the money that remains after you address the first three areas
Make a Decision
Ultimately, your ability to save more money comes down to your decision to do so. For some people, simple reorganizing their financial life and making adjustments to how their money is allocated is all that it takes to save more money. For others, it’s a bit more complicated because maybe there really isn’t enough income to go around. If that is the case, this exercise may initiate a re-evaluation of lifestyle choices or provide enough motivation to ask for a raise or even switch employers in order to increase your income.
In any case, the ability to save more is possible and you can do it by first deciding to save and then doing what you can to see it through.
HANDY, DANDY & ACTIONABLE MONEY-SAVING TIP:
Do you need help with aggregating all of your financial accounts in one centralized location, establishing a budget, and automating your savings? Well I can help!. I am super excited to offer readers of the FRANKly SPEAKING Financial Planning Blog access to Future Map Financial’s secure Financial Planning Tool. This free tool will help you:
- Create financial goals.
- Review your cash flow history by aggregating your financial accounts (i.e. checking acct, savings acct, credit card accts, student loan accts, etc.). The account aggregation tool pulls in all your financial transactions for the past three months and updates daily.
- Establish and monitor your budget.
Access the secure Financial Planning Tool by clicking HERE
NEXT FRANKLY SPEAKING POST…
Be sure to visit us again in two weeks for the next issue of FRANKly Speaking where I’ll share ways you can break the cycle of debt in your life. Nothing can hamper your ability to save for your future like looming debt. Find out how to overcome debt once and for all in the coming weeks!
As always, I invite you to reach out to me – in real life – with any comments, feedback, or questions! [email protected] Are you ready to take the first step towards securing your financial future? If so, schedule your free 45-minute no-obligation consultation with me today. Schedule Your Consultation with Frank.
Disclaimer: The information contained in this article is for informational purposes. None of the information provided in this article is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. Please consult with your accountant, finance professional, and/or legal counsel regarding your specific circumstances. Reproduction of this material is prohibited without written permission from Frank Shields, and all rights are reserved. Read the full Disclaimer.