Saving: The act of setting money aside for use at a later date. Savings can be held for emergency situations or rainy days. It can be used for specific goals like homeownership, vacations, or even retirement. The challenge many Americans face, however, is how to save. Here we will discuss that as well as the art of saving.
Based on a survey conducted by GoBankingRates in 2019, Statista has concluded that nearly 70% of Americans have less than $1000 stashed away. And the survey revealed that 45% have nothing saved. To put this into perspective, there are nearly 332 million Americans in the United States as of August 24, 2020. This means about 232 million Americans have less than $1000 saved. And 149 million have nothing saved. That’s a lot of people without adequate funds!
Why is Saving Important?
As time passes, inflation continues to grow. The value of products and services increases exponentially. Why, annually, renters typically see a rent increase of as much as 11% of their current rent. If they are barely getting by at that point, what are they going to do when an unexpected event occurs.
Consider, Covid-19 and the impact it has had on families worldwide. Many Americans have experienced job losses. And while some reparations were made available to help the economy to thrive, there has only been one stimulus payment for struggling Americans. There are many Americans who have yet to receive their stimulus payment. There are also many who found themselves jobless and unable to receive unemployment due to a barrage of Americans applying for it throughout the U.S.
Clearly, someone who has adequate savings would benefit greatly during these trying times! Someone with adequate savings was likely able to remain consistent with mortgage/rent payments. They likely were also able to avoid the mental despair of wondering how they were going to provide for their families or themselves.
But asides from a global pandemic, there are many other unforeseen circumstances that may occur. Someone who relies on their vehicle to work may experience mechanical issues which can be costly. If you are unprepared for this, you’ll likely face the challenge of deciding what is more important to you between your car and rent or your car and your dinner for the next week.
The Challenge of Savings
Why is it though that so many people find it hard to save? What prevents people from having adequate savings? There are many circumstances that affect people’s ability to save. Some, for instance, may have experienced job loss at one point or another and have not been able to overcome the financial burden this placed them in. Even if you attain a new source of income, the debt that you may have had previously didn’t go away because you lost your job. Some people have had unexpected medical bills that may have arisen. They may feel that any additional income should be directed towards paying the debt they have incurred. Others just don’t make enough to get by. In fact, nearly 80% of Americans are currently living paycheck to paycheck according to CNBC.
Some people simply live above their means. Someone who makes $50,000 may attempt to live a lifestyle of a person with that income or as though they have income of $70,000 which can put themselves in the red. Even as your income increases, you may find yourself becoming dependent on the new income, even though it was something you lived without before your pay raise or bonus.
What Can You Do?
How can you overcome these circumstances? As mentioned earlier, each person’s set of circumstances are different. But there are steps you can take to begin the art of saving. For Starters, create a budget. Be honest with yourself and make a list of your necessities. That is, things you NEED to sustain yourself such as a roof over your head, food, toiletries, money for transportation, phone and utility bills, etc. Afterwards, make a list of the things you have spent your money on frivolously within the last six months. Make an honest self examination and determine whether or not the other purchases are necessary for you to get by. If not, make it a goal in writing to set the money used for unnecessary purchases aside.
Next, you can sort through your stuff to see what you use and don’t use. If you have things you don’t use that aren’t of sentimental value, why not sell those items. There are many websites like Craigslist and Ebay that provide an excellent well known platform for items you no longer want. The money you make from those items can be set aside as well for a rainy day.
To maintain the art of saving, it is important as well to open a savings account somewhere that is not your primary institution. Perhaps a local credit union where rates are more favorable and where access to your funds may be more limited. This will cause you to really consider how badly you need to access those funds when you are tempted to withdraw it.
It is important to note that if you don’t put in any effort, you have failed already. While valid points can be made that you fear failing to save as much as you can, the point here is to start saving. Writing down your savings goals and watching your account grow slowly can be motivating. As you get into a habit of finding more ways you can save your money, you will feel good about yourself. You will become more frugal and start thinking of other options before making unnecessary withdrawals. When you attain your first $1000 in a savings account, you likely won’t want to see that balance dip below $1000 because of the hard work you did to attain it. The motivation you feel at that point will keep you from failure.
And if you find that you need to pull from the money you have saved, you will know that this was necessary. And you will be able to return to the habit of saving because you have mastered the art of saving.
Read more articles here to find ways to save and reduce debt.