7 helpful habits to boost savings
Recent events have amplified just how unprepared many Americans are to weather a financial storm.
According to the Kaiser Family Foundation, over half of the Americans who had jobs in February 2020 have either lost their jobs, had hours reduced, taken a pay cut or been furloughed.1
At the same time, research has shown that over half of Americans have less than $1,000 in savings.2 Yet financial experts recommend that most people should have three to six months of savings sacked away in an emergency fund.3
Building up savings can be challenging—especially if you’re starting from scratch. You may have an ambitious goal of how much money you’d like to have in your account, but getting there won’t happen overnight. And being overly ambitious can quickly burn you out. However, by adopting simple, money-saving habits, you may help your money grow steadily over time.
Here are 7 helpful habits to boost your savings:
1. Automatically transfer money into savings.
Set it and forget it! Scheduling automatic transfers is a simple, effective way to boost your savings.
One way to achieve this is to break your direct deposit up into multiple accounts. This allows you to automatically send a specific amount to your checking account and a second amount to your savings account. With this method, you’re essentially paying yourself first—and then living off the rest. Most direct deposit programs allow you to split your deposit several ways; talk to your company’s human resources or payroll department to learn more.
Another possible way to automatically send money into your savings account is directly through your bank. Many banks will allow you to set up automatic transfers between accounts on a weekly, biweekly or monthly basis. If you transfer $20 a week into savings, you’ll have $1,040 saved in a year!
2. Save extra cash.
Have you gotten a bonus at work, taken on a side gig, received a tax refund, or gotten some amount of unexpected windfall? Awesome! Be sure to enjoy some of your extra money (because while saving is important, enjoying the present is important as well!) Then, allocate the rest toward your savings goal.
3. Be intentional with spare change.
Do you have spare change jangling at the bottom of your purse, in your pocket and in the cupholder of your car? It isn’t worth anything hanging around these spots. Combine it all, dump it in a jar and continue to place your spare change here. Earmark your spare change savings for a specific goal, or take full jars to the bank to deposit directly into your account. (Be sure to first call your bank and ask if the change needs to be rolled.) You may be surprised how quickly these coins add up!
4. Find ways to cut spending.
And stash away what you save! Do you grab fast food a few days a week during work? Brown bag it instead. Do you have several subscription streaming services? Cancel the ones you don’t use as frequently. Go ahead and transfer what you’ve saved into your savings account, whether it’s $20 a week for fast food or $10 a month for a streaming service. You were already spending the money, so you shouldn’t miss it.
5. Take a no-buy challenge.
Trying to build savings by depriving yourself of all the things you enjoy can quickly spread you thin. Instead, commit to cutting spending in one specific area. For example, if you have plenty of clothes, commit to not buying anymore clothes for an amount of time—whether it’s several months or a year. This can help free you from a pattern of overspending, boost your savings, and help you appreciate what you have.
Make sure the money you have saved during your no-buy challenge goes toward your savings. For example, if you usually spend $500 a year on clothes, but cut that out for a year, directly transfer that $500 into your savings account. Boom—you’re $500 closer to your goal!
6. Implement the 24-hour rule.
Impulse buys can take a big bite out of your budget. When you come across an item that you “have to have,” stop! Rather than purchasing impulsively right away, give yourself 24 hours to cool off and think it over. You may find that after a day, the item isn’t as appealing. Go ahead and put the amount you’ve saved into your savings account. Think of it as an “impulse save.”
7. Protect it all with supplemental insurance.
You’ve worked hard to build up your savings. Don’t let an unexpected illness, injury or loss of life deplete it in one fell swoop. Help protect it all with Washington National supplemental insurance. Our policies are different than major medical insurance because they pay cash benefits directly to you or someone you designate, not doctors or hospitals. This means you can use your benefits for any purpose, whether it’s to pay medical bills or everyday expenses when you’re recovering and unable to work. Supplemental insurance can help safeguard your savings from the unexpected. Learn more by contacting us here, and we’ll pair you with a local Washington National agent!
LIMITED-BENEFIT POLICIES. Supplemental insurance has limitations and exclusions. For costs and complete details of coverage, contact an agent. Policies are underwritten by Washington National Insurance Company, home office Carmel, IN. Subject to state availability.
1Kaiser Family Foundation, KFF Health Tracking Poll—Late April 2020: Coronavirus, Social Distancing, and Contact Tracing, https://www.kff.org/report-section/kff-health-tracking-poll-late-april-2020-economic-and-mental-health-impacts-of-coronavirus/, April 2020.
2Yahoo! finance, 58% of Americans have less than $1,000 in savings, survey finds, https://finance.yahoo.com/news/58-americans-less-1-000-090000503.html, May 15, 2019.
3Dave Ramsey, A Quick Guide to Your Emergency Fund, https://www.daveramsey.com/blog/quick-guide-to-your-emergency-fund, 2020.