Americans are not saving for retirement or a rainy day. In fact, one-quarter of all Americans fail to save a single penny from their paycheck.
Many people start off with good intentions to follow a strict budget and put aside money. The issue is that it almost never happens. Unexpected costs are inevitable and extra money is quickly used up.
People from across the country are wondering how to save money fast. Some financial experts are instructing citizens to ditch the tired and ineffective budgeting approach. Creating a weekly or monthly budget does not work.
Read on for a comprehensive guide on how to save money fast. Explore tips to help you start saving and get out of the financial rut.
Good Intentions to Save
According to the First National Bank of Omaha, Americans want to do the right thing and save. Roughly 40 percent envision using savings for an emergency fund. They are well aware that the car may break down or an appliance may fail.
Nearly 40 percent of Americans use their tax return for savings. Also, one-quarter of survey respondents are not withdrawing savings for frivolous expenses. A majority of people believe they are on track to meet their savings goals by retirement.
Bad Savings Habits
In spite of all the good intentions to save, far too many Americans fail. Nearly three-quarters of people deposit less than 10 percent of their paycheck to savings. With such a small portion going towards savings, it is no surprise that it is absorbed by unanticipated expenses.
A majority of Americans do not have savings goals. Many are prohibited from saving by student loan or credit card debt. Others cite the high cost of living as a reason for insufficient savings.
The truth is that nearly half of Americans do not have enough in savings to cover living expenses for even one month. So, what does this all mean?
It means that Americans want to save and they try to. However, their good intentions are drowned out by the realities of debt and living expenses.
The bottom line is that budgeting does not work and is one reason why Americans are failing. People are managing money under the false impression that excess funds will go into savings.
However, it rarely happens this way and people are left high and dry with no money in their savings account. Continue reading to learn some tips on how to save money fast.
Separate Bank Accounts
One of the best savings tips is to create a separate account for savings. The vast majority of Americans now receive their paycheck via direct deposit.
You can set up a split paycheck disbursement so a fixed percentage goes directly to your savings account. This amounts to a forced savings mechanism.
This is an effective way to achieve your savings goals. People who adopt this strategy use the other bank account for living and other routine expenses.
The savings account is considered off limits for expenses. This way, there is less money in the expenses account, which reduces the urge to spend money unwisely.
Debt is one of the primary reasons that Americans cannot save money. In general, debt statistics are staggering.
Approximately 157 million Americans have credit card debt. In addition, another 44 million Americans are in student loan debt.
Now, it is important to caveat that there is good and bad debt. Mortgages, for example, are considered good debt because they accrue equity and increase personal wealth over time. Another example of good debt is student loans because they are an investment in a higher annual salary.
On the other hand, credit cards and auto loans are considered bad debt. Credit card debt does not offer any return on investment (ROI). Along these same lines, auto loans offer little ROI due to asset depreciation.
The average American holds over $16,000 in credit card debt. Furthermore, the average auto loan balance is over $29,000. This equates to hundreds of dollars each month. If you can eliminate bad debt, these payments can be reallocated towards the savings account.
Take Advantage of Employer Benefits
A shocking number of Americans do not take advantage of employer-funded programs that encourage saving. Many employers promise to match your 401(k) retirement contributions up to a certain percentage. For example, an employer matches your savings contributions dollar for dollar up to 5 percent.
Stunningly, one out of five Americans does not take full advantage of this benefit. This amounts to leaving free money on the table.
In addition to turning down this benefit, you are also sacrificing compounding earnings. Over the course of an entire career, failing to take the full employer match could cost you hundreds of thousands in savings.
Acquire Liquid Assets
The old adage that it takes money to make money is true. For the vast majority of Americans, it is impossible to get ahead on a 9 to 5 job. Even worse, wages are barely keeping pace with annual inflation.
Now is the time to think outside the box. Some people do not have the luxury of playing the long game when it comes to savings. Instead of slowly waiting for a savings account to grow, the best strategy is to acquire liquid assets.
One possible solution is to do some research on the best personal loans. This type of loan gives you access to fast cash.
While true that this strategy carries some risk, it also yields the potential for a substantial ROI. Some people decide to use the fast cash on an investment, such as a rental property or small business startup. This way, you can pay the loan off quickly and start banking the earnings.
A Recap of How to Save Money Fast
The hard truth is that Americans are failing to save enough money. The tired budgeting approach does not work anymore. There are far too many unexpected costs that eat away at the savings account.
Taking steps like creating separate accounts are effective methods. If you enjoyed this article about how to save money fast, check out our blog for other great content.