The Biggest Signs that You Need to Save More Money

by Gina DiMasi on June 10, 2019 · 1 comment

Empty Wallet

According to the Federal Reserve’s most recent Survey on Consumer Finance, the median savings account for Americans contains $4,500. When looking at the survey results, you can see that younger Americans tend to have less in savings. However, their accounts grow as they age. But how do we know if $4,500 is enough? Well, unless you can make $4,500 last for 3-6 months as your emergency fund then odds are, you need to save more money.

It is a well-known fact that American’s as an aggregate have trouble saving more than they spend. But that doesn’t mean you have to fall into that bucket! Break the habit of not having enough saved by recognizing some of the biggest telltale signs of inadequate savings and using the remedy below to get ahead with your savings rate.

Sign 1: Are you living paycheck to paycheck?

Living paycheck to paycheck is dangerous. What if you lose your job? Or what if a major expense comes up? When living paycheck to paycheck, it is hard even to imagine putting any money away for savings, but it must be done to break this cycle.

Take a deep dive into your paycheck to see where every dollar is going. Understanding where your spending your money is the first step into realizing what you may be able to cut back on or live without entirely.

Sign 2: Could one unexpected expense knock out your entire savings?

Stuff happens. It’s life. But if something happens that you aren’t prepared for, would you be able to pay for it? If you can pay for it, would it wipe out your entire savings? Let’s say, for example, you need a new transmission for your car so you can drive to work. According to Transmission Repair Cost Guide, a transmission repair can cost anywhere from $1,800 to $3,400. Would even the low end of that cost really impact your savings account? If so, it’s time to ramp up your savings rate!

The quickest way to see a major change in your savings rate is to get rid of any unnecessary expenses in your budget. Then you can put that money toward savings to help build a larger emergency fund.

Sign 3: When someone brings up money, do you instantly get anxious or stressed?

Changing the topic every time someone brings up money isn’t a long-term strategy. You need to face the facts. If something is causing you anxiety or stress, then that means you categorize it as a negative experience. Money doesn’t have to be that way. It is up to you to make the change!

When you start saving more money, you will naturally start to feel more confident and capable in any conversation around the topic. The stress and anxiety that it once caused will no longer be present.

The Remedy: Create a budget!

The three signs listed above can all be solved by doing one simple thing … creating a budget!

Budgets come in all shapes and sizes; there is no one-size-fits-all budget. Everyone has different preferences and completely different situations. However, if you have never budgeted before then, I would recommend starting with a zero-based budget to see where every single penny is going. This isn’t necessary every single month, but just the first month so you can see exactly how much money you could be saving instead of spending.

By creating a budget, you will be able to set goals for how much money you would like to save and have in your emergency fund by certain dates. Any and all unnecessary expenses will be much easier to find and eradicate from your regular monthly spending. It is also worth noting that most financial planners recommend having at least 3 to 6 months worth of living expenses saved in an emergency fund.

Once you have a budget created and stick to it, you will be able to quit living paycheck to paycheck. Watching your savings rate increase and your accounts grow will give you the peace of mind needed to conquer any unexpected expenses and the confidence to talk about money again.

Do you have a budget? If so, let us know in the comment section!

For more great reads, check out these articles!

{ 1 comment… read it below or add one }

1 James June 11, 2019 at 3:52 pm

Its easy, just do something like the 52 week money challenge or the 365 day money challenge.

If anyone cares…a solid description of this kind of challenge is here:

https://www.savingadvice.com/articles/2014/01/01/1019727_365-day-money-challenge.html

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