While the worst of the recession is over, figures by the U.S. Census Bureau show that 15% of America is still below the poverty threshold. Financial stability, though, is far from a certainty for other 85%.
According to various Gallup polls, a third of Americans simply do not enjoy saving as much as spending. A fifth have no savings whatsoever. Many try to save but fare so badly, they lose hope. What could they be doing wrong?
If you have often tried to save but have had no success, these 10 tips below should help you find out where you go wrong, regain control, and eventually reach your savings goals.
1. Define your goals
Well-defined goals are able to motivate much more effectively than vaguely defined ones. Rather than merely telling yourself that you wish to put money by for your retirement or to buy a house with one day, it makes sense to use clear terms: you $25,000 for the down payment on a home in five years, $6,000 a year towards your retirement and so on. Clear goals have the power to inspire action.
2. Make a budget and follow it
A Gallup poll finds that only a third of America prepares detailed household budgets and follows them The other two-thirds, doesn’t. These people persist in believing that they have an intuitive grasp of their finances despite all evidence to the contrary.
While a few rare people really are naturals, most people do need guidance from a real budget to know how to spend the money that comes in each month. Without one, they are lost and can never spare enough to save.
3. Learn financial skills
One reason why people do not have an intuitive grasp of their finances is that they do not have the financial education necessary for it. Unless you grow up watching parents expertly manage their money, you likely won’t have the financial skills needed to manage your money well.
Social activists have urged the government for years to make financial education mandatory in school. Until their actions bear fruit, you need to pick up a few good books about managing your money and learn by yourself.
4. Make more money
While a better income level does not guarantee better savings, it can certainly bring your goals within reach if you are careful. If a better job does not seem possible, you may be able to manage some sort of income stream on the side using with an unexploited talent. Even an extra $100 a month can put your savings goals within reach.
5. Revisit your student loan arrangement
The default payment levels for student loans can be unaffordable to many. It can be a good idea, then, to write to your lender and ask for a payment modification. Other options include applying for consolidation, forbearance, deferment and suspension.
6. Work on your emotions
The way you spend your money is closely related to how you feel. If you are someone who desperately needs to feel admired, you will find yourself spending more than you can afford to keep up appearances.
If you like to shop as a way to deal with a bad mood, you may often overspend. Being in control of your emotions is central to staying on track with a plan to save money.
7. Learn to save the right way
Good, reasonable advice that everyone follows may not necessarily be right for you. For instance, one piece of universally accepted financial advice recommends that one pay off all debt before saving for retirement. While this is good advice in general, it can go wrong in one way: 401(k) accounts.
Many employers offer match contributions made to company retirement plans. When you don’t make a contribution, you miss out on the free money. It can be a setback to your savings plans.
8. Keep your eye on the right examples
If many of your friends are big spenders who do not believe in saving, the way you spend yourself can seem completely normal to you. Watching good role models, on the other hand, can motivate you to cut down and live within your means.
9. Start a 30-day waitlist
Whenever you need to make large, discretionary purchases – clothes, gadgets or even a new data plan for your phone – consider putting them off for a month. Give yourself a chance to think about them. The urgent desire to shop may wear off.
10. Consider not having a pet
Over 10 years, the average small dog with a 14-year lifespan costs $6,000. The average cat or large dog costs $8,000. Certainly, a pet can be a great stress buster and give meaning to your life.
Having enough savings can have the same effect too. The simple act of giving up on the idea of getting a pet can help you save thousands over a lifetime.
The reason many people find it difficult to reach their savings goals is that many of the changes they need to make require fundamental lifestyle modifications. As difficult as it can be to change, though, it is often necessary. It can certainly be difficult at first. If you keep trying and refuse to give up, though, success is a given.