Saving At Any Age – America Saves Week

Saving. Do you view it as an ongoing journey? Or do you consider saving as someplace you arrive at? At America Saves we are in the camp that saving is a habit, not a destination. And it’s a habit that can be formed at any age. Whether you are a parent trying to instill this habit in your children or you want to change your own saving behaviors, there are strategies that savers of all ages can develop.

Research tells us that children’s money habits are often formed by age seven so starting early to teach them about saving can have a huge impact. Many parents are accustomed to hearing frequent requests from their children about a toy, game, or piece of clothing that they “just have to have.” Sound familiar? Using these wants is a great way to help children learn to save.

Children can learn to set a saving goal and figure out how long it will take to save enough money for their goal. Create a fun system to track progress, provide regular encouragement, and use incentives such as matching funds. Talk about how it feels to see your money grow. And don’t forget to lead by example – show children how you are saving.

You can also give children the opportunity to make some decisions about their money. Empowering children from a young age to make choices about money they earn or receive as gifts is a great way to build that confidence.

For young adults, as they begin to earn a regular and potentially higher income, a strong foundation begins with basic understanding of the difference between needs and wants. The America Saves Spending and Saving Tool is an easy-to-use resource that provides a clear view of your finances and can be insightful in identifying essential and discretionary spending. The system of automatic saving, especially through paychecks with split deposit, can set young adults on the path to a lifelong saving habit.

It can be hard to stay motivated when setting aside money for something in the future no matter what your age. It’s easy to focus on what you want in the moment — we don’t want to wait to purchase that expensive pair of sneakers. We want to take a trip in the next three months. Retirement is so far off that it feels OK to spend more of your current income right now and catch up later. In each of these scenarios, we aren’t thinking about our future selves, just who we are and what we want today.

Thinking of our future self – what we will want, what we will be doing, what we will believe – is one way we can develop a saving mindset. Asking questions about our future selves helps us create a vision for our future. For example, consider:

• Where does your future self live?
• What does a typical day look like for your future?
• What hobbies does your future self enjoy?
• How much money does your future self earn?

Later go back and read your answers to see how they compare to the present. Having the ability to look ahead, even if it’s a short time in the future, is a great way to reinforce saving today for tomorrow. This exercise can be done at any age, even with children.

Journeys can take us on many different paths and saving journeys are no different. So stay with America Saves as you and your family embark on a new journey or resume one that encountered a detour. It’s never too late to #ThinkLikeASaver.

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Saving Automatically – America Saves Week

Do you ever find yourself wondering if there is a magic formula to saving?

Does it seem that everyone around you knows the secret to saving successfully except you? It’s not unusual to feel unconfident about saving, no matter how much money you earn. Confidence doesn’t necessarily come with having a lot of money. Rather it comes from building healthy financial habits and using the resources you know are available to you – this is your financial confidence!

A great place to start building your financial confidence is to set up automatic savings. When you are saving a dedicated amount of money every week, every month, or on some other regular interval, you can begin to feel a sense of control over your saving habits. Whether you are saving just $5 or $10 a month or more, it’s the fact that you’re doing it automatically that is important.

Saving automatically is the formula for successful saving for anyone – including you. Getting started doesn’t have to be a hurdle either. Consider which one of the following two strategies would work best for you and follow the steps we’ve outlined.

1. Instructing your employer to split your directly deposited paycheck into two or more accounts at your financial institution with one account being a dedicated savings account.
2. Directing your financial institution to automatically transfer money into your savings account.

For option #1, contact your employer’s payroll department to set up split deposit, telling them how much you want to save per paycheck, and follow their instructions.

If you want to use option #2, contact your bank or credit union telling them when and how much money you want automatically transferred into your savings account.

By utilizing either of these automated saving methods you can feel confident about building a healthy habit of saving. Imagine how good it will feel to see money accumulating in your savings account on a consistent basis. Instead of that voice in your head telling you that saving is hard, you’ll be able to say with confidence, “I am saving regularly!”

America Saves has a number of resources that can help you get started saving automatically: 

1. The Spending and Saving Tool to help you get a clear view of your finances and determine a realistic amount you can save regularly
2. ThinkLikeASaver podcast where you can learn about making saving easier, saving in spite of inflation and many other topics designed to support your saving habit.
3. The America Saves Pledge, which can help you make a saving plan and receive ongoing support through emails and text messages

So, remember your unique financial situation calls for you to make the choices that will work best for you and your family, which will ultimately increase your financial confidence and help you continue making informed choices throughout your saving journey!

Budgeting Basics

As we move deeper into the year, now is a good time to refresh some of those New Year’s Resolutions and continue to integrate good habits so they stick throughout the year. One of the most important and fundamental habits for financial wellness is budgeting. By making budgeting a habit now, you will see lots of benefits over the long run! We’ve put together a budgeting worksheet to help get you started on a financially responsible 2023. Download the worksheet here.

What is a Budget?

A budget is a plan for how much money comes in and how much money goes out each month. It’s really that simple. By breaking down your budget into categories such as a mortgage, food, and entertainment, you can see where you can cut back and where you have wiggle room. Creating a budget that factors in things like savings and investments also makes it easier for you to create a solid foundation.

Why Budget?

Budgeting will give you clarity into your finances and will help you make more informed choices. You wouldn’t enter a dark room without turning on the lights first, right? That’s exactly what a budget is for your finances: it’s a light that you shine on your financial transactions. By seeing your finances clearly, you may notice where you are overspending. You can set other goals too, such as paying down debt, saving, and investing. By placing these items on your budget, you are essentially making your financial goals a bill that you pay to yourself. This makes it easier for you to achieve your dreams on your journey of financial wellness.

Who Should Budget?

A budget is beneficial for anyone who uses one. Almost every business in the United States operates off of a budget, which allows them to make smart financial choices to increase the bottom line. Families who create a budget also find that they are better positioned to achieve financial wellness and meet certain goals like planning for retirement or building up a college fund. For individuals, the benefits are the same: a greater understanding of your finances that enables better choices for how you spend your money.

How do I Budget?

The first step to creating a budget is to list all the money that you have coming in. This includes your paycheck, social security payments, alimony, money from a side gig or any other form of income you receive. Next, track your spending. Here you want to start with all of your fixed payments—the bills you absolutely have to pay such as a mortgage, utilities, car payments, student loan debt, etc. After that, take a look at your last few bank statements and figure out where the rest of your money is going. Record all of your income and expenses in a place that is easy to access and understand. There are online tools, such as Mint.com, that can automate the budgeting process for you.

When Should I Budget?

You can create a budget anytime! The important thing is to stay consistent and continue to track it. For instance, when you first start budgeting, you’ll want to make sure you are sticking to your budget each month. This will ensure that budgeting becomes a habit and will help you make sure you are staying on track with your financial goals. Once you get into the flow of budgeting, you may decide to refresh your budget seasonally. Updating your budget on a semi-regular basis allows you to account for changes in income or expenses, such as a raise or unexpected medical issues.

Some people think of a budget as the financial equivalent of a straight jacket, but the reality is just the opposite. Rather than constricting you, a budget gives you the freedom to spend, knowing that you are able to achieve your financial goals at the same time. Once you know your budget and stick to it, you’ll find a sense of mental clarity on your path to financial wellness.

Seven Ways to Organize Your Financial Life for 2023:

January is a great time to create a checklist for yourself and set a plan for how you can better prepare for the year ahead. This checklist will help you create a better plan of realistic goals for the short-term and long-term.

1. Save More for Retirement

If it is feasible, consider increasing the amount you are contributing to your 401(k) to prepare for your future. If your company has a match program, make sure you are contributing the maximum amount, so you are not leaving any amount behind. If your company does not offer a match program or a 401(k), you can set up recurring auto-deposits into a Roth IRA.

2. Reduce Investment Fees

The beginning of the year is a good time to review what fees you currently pay on your investment accounts. Fees, sometimes called expense rations, can be hidden, so it’s a good idea to take note of ongoing fees charged to run your account. Make a list of mutual funds in your 401(k) and ask your broker to explain each fee.

3. Rebalance Your Investment Portfolio

A good rule to follow when balancing your investments is to subtract your age from 100. Your age becomes the amount you invest in bonds, and the remaining becomes what you invest in stocks. Regardless of this rule, it’s important to note that the market will change over time as bonds and stocks rise and fall. To balance your portfolio, you may need to move money from a winning investment into one that is lagging.

4. Shift to a Credit Union with a Higher-Interest Savings Rate

Move your funds to a credit union that offers a higher savings account rate. Research which credit union offers the highest interest rate for your savings account so you can maximize your funds without putting in a lot of extra effort.

5. Stick to a Budget

Create a budget to help you stay on track throughout the year. Start by making a list of your fixed expenses, as well as your monthly after-tax income. List all your recurring bills, like rent and car payments, and see how much you have left over after those bills are paid. If you find yourself struggling to be able to afford your monthly expenses, consider decreasing your expenses by looking for ways to downsize or make your monthly payments smaller.

6. Consider Professional Financial Advice

A financial advisor can be a beneficial resource to get you on track with your money. Research financial advisors in your area and choose someone that will your best interests in mind. A financial advisor can guide you in terms of investments, insurance, and other financial planning matters. They can also help you set financial goals and make plans to achieve those goals.

7. Buy Items at a Deep Discount

January is a great time to take advantage of heavily discounted items following the holidays. Because of New Year’s Resolutions, like living a healthier lifestyle, businesses will discount exercise equipment knowing that people will be more motivated at the beginning of the year to make big changes. This is also a great time to buy items like winter clothing and holiday decorations because the season is ending.