Americans need to save more money!

Hey Readers,

Just wanted to give you a quick update on some things. Man is it just me or did January flyyyy by? Seriously, I can not believe it is already February 1st! If you didn’t see my post from last week, Lauren and I finished off 2017 strong by paying $57,000 in student loans.

Our goal this year is to jump that number closer to six figures – fingers crossed. As for sticking to NYE resolutions, I decided to do something a little differently. Knowing that nearly 9 in 10 are finished by February with their NYE resolution I decided to do small 30 day challenges. 

My January challenge – No Beer, No Eating Out, No Soda and run at least 2x a week. I am proud to say that I did all of those minus the eating out. That is actually my goal for February along with spending no money on our grocery card! A no spend grocery month sounds pretty hard, but we have been stocking up!

That actually leads perfect to today’s post on saving money, how much you should have saved, and a few quick ways to save. Enjoy!

-Josh

 

Americans suck at saving money.

 

Collectively, as a whole, together we stand tall as the best spenders in the world. We are really good at spending money and really bad at saving money.

Our automated life and constant bombardment of consumerism makes it more challenging then ever to save. The United States of America is home to global commerce giants such as Walmart, Amazon, and Costco who every day try to find ways to make you spend more money. 

Each and every day, it is estimated we are exposed to 5,000 brands or advertisements up from 500 in the 1970’s.

You can order Cheezits (My favorite) with a button and have someone deliver your groceries to your home. Wan to watch a movie? You can rent it from your phone and order your favorite pair of shoes from an app while you watch it. 

The daily luxuries of the digital age are nice, but are they coming with a price?

 

Americans are saving at a rate of 2.5%.

 

Like many things that have changed from the 1970’s, 80’s and even 90’s, the rate at which American’s are saving is extremely low. 

In December of 2017, according to Slate, Americans were saving at a rate of 2.4%, the lowest since 2005. In fact, it is only the third time that savings rates have dropped below 3%.

 

Saving Rates

 

For better or worse, this doesn’t appear to just be a blip on the radar either. As stocks sore and confidence is high, more people are spending and not saving. The bigger issue at hand – people are probably spending money they don’t have.

 

Stats never lie.

 

Go find 10 people, line them up, and chances are 7 of the 10 do not have $1,000 in savings.  According to a recent Go Banking Rates survey, 69% of working class adults do not have $1,000 in savings account.

Even scarier, 34% reported not having a single dollar in savings. If you are reading this and you have $5,000 or more in savings – congrats welcome to the 20 per-centers when it comes to saving.

 

What savings used to be.

 

In the 1960’s and 1970’s American saving rates were consistently above the 10% mark, staying that way until the mid 80’s when American’s started saving less and less. The good ol’ days of only getting what was necessary and stockpiling the rest was a bit more ingrained.

Most of the boomers can relate to the classic statement, “If you want something, save up and by it yourself.” Money was seemingly harder to come by some 50 years ago and for that reason it was a bit more challenging to let it slip through your fingers.

So why aren’t more people saving at a higher rate?

 save that money

 

Confidence in the economy.

 

In 2017 Americans spent more money on big ticket items like the new truck or fancy car, as well as, expanded their budgets for things like eating out and entertainment according to Market Watch.

With stock prices soaring, more small business owner confidence, and a generally good feeling in the American economy, the overall feeling can be attributed to falling personal saving rates.

Just because people are not saving at a high rate doesn’t mean there should be a cause for concern. But it is wise to have an emergency fund saved up that could run you 6 months.

Ultimately, experts recommend working towards these amounts once you enter the work force.

 

According to CNBC Money, here is how much you should have saved by age:

 

In your 20’sAim to save 25% of your gross pay

By age 30Have one year of your salary saved

By age 35Have twice your annual salary saved

By age 40Have three times your annual salary saved

By age 45Have four times your annual salary saved

Catch the trend? By age 65 it is recommended you have nearly eight times your annual salary saved! So what are some really simple and quick ways to save more money?

 

Here are some simple ways to start saving more money!

 

For starters, come up with an amount that you will automatically save each paycheck. Have it roll right into your savings account when your direct deposit hits. If you are someone who doesn’t have a steady pay schedule, consider finding a % that works for you every time you get paid and deposit that amount.

Next, highly consider using a separate savings account outside of your checking account. Why?

So you do not have easy access to your savings. Savings literally means to keep for future use. Tapping into your savings every time you want something at the store is not what savings accounts are for.

Ally Bank is where we keep our emergency fund and they recently jumped their interest rate to 1.35%.

 

Quick list of 9 Saving Habits (read more about monthly savings here)

 

1. Stop eating out so much – have a limit like $50 a month and use cash.

2. Meal prep more often – most people spend money on food when they are not prepared. Consider meal prepping.

3. Submit reimbursements ASAP – if you are someone who spends money for work, get your reimbursements in quicker.

4. Stop falling for “sales” – quit rationalizing every purchase as a good deal.

Sale or save

5. Cut the cable – Save $1200 a year by simply cutting the cable subscription (Sorry Mr. Ajit Pai).

6. Get rid of two things before you buy a new thing – Sort of unique, but if you know you have to donate two shirts you might be less tempted to by the new shirt.

7. Go to more free events – Entertainment adds up quickly. Look around for free movie nights and music nights in your community. Consider going to a winery that allows you to bring your own food. You can read about ways to have fun and save money here.

8. Get outside more – Aside from saving money by going on hikes and playing outdoors, there is a large amount of research proving that outdoor activities will make you happier and healthier.

9. Use credit card reward dollars for entertainment – Use travel rewards, miles, points and cash back cards as much as possible to cover travel and entertainment costs. Bank of America currently offers a $150 cash back card we use for gas purchases.

Full list of cash back cards: Here

 

Thanks for reading and be sure to subscribe below! I have been promoting the heck out of the GOOD Budget Sheet (Get Out of Debt) so more people can become debt free in 2018. So if you are new to the Money Life Wax personal finance blog grab the free download here!

 

Q: What is your magic number you want to save each month?

 

Your future self will be glad you read.                  – Josh

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