By Stephen Fournier – KeyBank Central New York Market President
Everyone’s financial picture is different – but one thing many Americans have in common is a desire to increase their savings. Research has consistently shown that a majority of consumers consider saving more money among their top financial goals and it’s the most common financial priority by a wide margin across a varied range of consumers.
Those attitudes aren’t surprising when you consider that the median amount of savings for American households is $3,500 – meaning half the households have less than that, and half have more – and more than two-thirds of adult Americans have less than $1,000 in a savings account. Additionally, there’s a startling gender gap: More than 50% of women have no savings at all, according to findings from GOBankingRates.
Day-to-day, it can feel difficult to know where to begin increasing your savings – or even simply where to get started. The good news is, no matter where you are on your savings journey, these realistic, manageable, and practical steps from KeyBank can help make saving money easier.
Start with the end in mind
The first step is to set a realistic goal and create some scenarios for how to reach it. For example, if you want to save $500, then consider saving $5 per day for 100 days – just a little over three months. Or save $2.50 per day for 200 days – you’ll reach $500 in a little more than half a year.
Free up cash
Take a good look at what you pay and why, make changes where you can, and add the difference to your savings:
- Evaluate your household utility costs and budget: Can you save on water or electricity by using less? Are you consolidating trips by car to spend less on gas? How often do you eat out per week?
- Monitor regular subscriptions and fees to make sure you haven’t forgotten to cancel a free trial of an app or service.
- Consolidate your debt for lower interest rates or a shorter payoff time.
Have a plan for extra income
It’s tempting to look at a bonus check from work or an annual tax refund as a chance to splurge. And while it’s fine to use some of it to treat yourself and your family to something special, planning ahead to put most – or all – of it in your savings account can be a big step toward meeting your savings goals.
You could also use incremental income to pay off debt, add it to a retirement account or college fund, prepay your mortgage or make an investment in your home or a Health Savings Account. There are a lot of possibilities, but the important thing is to have a plan for these influxes and to stick to it when the cash arrives.
Save automatically, a little bit at a time
There are a couple of ways to set aside money without thinking (much) about it. If you have a paycheck direct deposited into a checking account, you can adjust it so that a small amount goes into a savings account each pay period.
There are also banking apps and options that can place small amounts in your savings account when you make purchases. For example, KeyBank’s EasyUp® allows you to set an amount – anywhere between 10 cents and 5 dollars – that will be transferred from your checking account to your savings every time you make a debit card purchase.
What difference can that make? The average EasyUp user saves $415 in one year, and 18% of EasyUp users save $700 in one year.
Check progress and make adjustments
Achieving your savings goals requires regularly checking on your progress. Did you stay on track last week to hit your monthly target? If something unexpected meant lowering your savings contribution last month, what can you do this month to make it up?
Thinking in terms of maintaining progress over time helps establish the financial habits needed to build up the savings you’re aiming for.
Your Financial Future
Remember that goals can change. There are a multitude of approaches to saving money, so be open to learning about new and different methods of building for a stronger financial future. They often revolve around the key savings contributors of setting goals, planning how to allocate incoming funds – such as tax refunds – and committing to a plan.
The KeyBank team is always available to assist you and help you get started with a Key Financial Wellness Review – so bring us your questions, ideas, and goals, and together we’ll get you moving in the right direction.
About the author: Stephen Fournier is President of KeyBank’s Central New York Market. He may be reached at either 315-470-5096 or [email protected].
Skip Using an ATM and Purchase Directly from Your Debit Card
Ever heard of the cash-only tip for managing your spending? If you try this strategy, you might find yourself using an ATM more often to withdraw your weekly or monthly cash “allowance.”
In theory, this is a great idea because it should limit how much you can spend to how much cash you have on hand. But it might not be the most effective way to manage your money and you might want to skip using an ATM and rely on your debit card instead.
Why Plastic Might Provide a Better Way to Spend
If you want to better manage your cash flow without worrying about overspending, your debit card can be a useful tool. Unless you keep all of your receipts, you can’t track cash easily. With a debit card, you simply need to log into your online account with your bank to quickly get a list of all of your recent transactions.
Not only can you pull up your statements and go through them, but if you spend on a debit card you have the option to link your bank account with a budgeting software or system. That may make it even easier to track and understand your spending, without worrying about the risk of overspending that can come with a credit card. With a debit card, you can’t spend more than you actually have.
Debit cards also provide much more security than cash. If cash is lost or stolen, there’s little to no recourse for you — that money is likely gone. On the other hand, if your debit card is lost or stolen, your bank offers levels of consumer protection that can help you recover those funds — even if someone fraudulently takes money from your account using your card. Plus, it’s easier than ever to lock or unlock your card if it gets lost or stolen by going online or using your smartphone.
Plastic provides other useful perks as well, such as account alerts and banking tools that can help you better manage your money so that you can meet your goals and build good spending habits. You also don’t need to worry about withdrawing from an ATM that isn’t associated with your bank, which often comes with fees. If you need cash, debit has you covered with the cash back option that allows you to take money from your account when you check out at most retailers. That way, you don’t have to make an extra stop at the ATM when you go out. Instead, you can just get cash back while getting groceries or stopping in at a convenience store.