Did you know that the average American family has a saving account balance of $3,800, but 25 % of American families have no savings at all, and shockingly 40 % of working Americans have no money savings for their retirement!?*
31% of the UK adult population – around 14.9 million people – are failing to save, according to the seventh annual savings and investment report from Scottish Widows, part of Lloyds Banking Group.*
Even though the general rule of thumb is to have an emergency fund that will cover at least six months of expenses, neither in the US nor the UK people seem to acknowledge the importance of it.
Since the recession hit in 2008 most people will agree that it has become harder and harder to save money, but with a few behavioural tweaks it might become less stressful.
Saving money on things you purchase is one area you should invest time in exploring, but most importantly, is to start a Money Saving System.
By using an automatic system, you can create a cushion for yourself and your loved ones and emergencies effect you less in the future. You can either start using envelopes, jars or a special savings account, but you should always pay into the account at the beginning of the month. Depending on your income and fix costs you could set yourself a specific amount for each month and increase it with each pay rise or profits you make if you have a business. Some people might prefer to use a percentage of their income as a rule, for example between 10-45%.
“At the point the money hits your hands; you have the power to determine your financial future. One of the key fundamental practices to achieve financial freedom is to work for yourself, rather than work for a bank or a credit card company. Learn to pay yourself first before you pay someone else. By doing this you achieve two things: you make yourself richer, and you stop getting poorer. Only when you save money today can you invest it tomorrow, ensuring your financial freedom in the process.”- Robert T. Kiyosaki
Here are a few Money Saving Kick-Start Ideas;
Pay with Cash instead of a Credit Card – You won’t pay interest charges on a revolving credit balance or overdraft fees on your debit card.
Turn Habits into Treats – Your habits such as buying food or drinks on- the- go, instead of taking it from home are costly and they can add up quickly. Occasional treats will save you money and you will appreciate those more.
Take care of yourself – Quit smoking, drink no or less alcohol, eat less or no meat and exercise at least once or twice a week, most health insurances offer special deals for healthy people too.
How do you save money? What type of system do you use?
I would love to know what works for you! Please let me know what you think.
All the Best,
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(*Source: Federal Reserve, US Census Bureau, Internal Revenue Service 26th July ’12, The Guardian.com 25th February ’13, Monday, Bankrate.com)