Small Steps to Save Money

Cooperative Extension personal finance experts recently held a Twitter chat about saving money during America Saves Week 2018. Below are some key points that were shared by the chat participants:

 

• Make savings automatic by either having paychecks split between two accounts (checking and savings) or by setting up recurring bank transfers
   
• Young adults’ first jobs are a critical opportunity to save regularly and make saving a lifetime habit
   
• Studies by the America Saves program and others have shown that successful savers have a savings plan
   
• Some people react negatively to the word “saving” because it requires spending less; one participant (a financial educator) uses the word “future spending” instead of “saving” to motivate people to save
   
• Select growth-oriented investments (e.g., stocks and stock funds) for long-term goals and liquid savings products (e.g., money market funds) for short-term goals
   
• Make savings automatic. Pay yourself first and live off the rest while staying out of debt
   
• Budget, budget, budget. It’s a pain at first, but you will be able to save more than ever before by making savings an “expense” that has to be paid
   
• Try to save at least as much in a 401(k) retirement plan that your employer will match (e.g., 6% of pay)
   
• Don’t delay saving to repay debt. Do both. Compound interest is not retroactive!
   
• Learning to invest is a lifetime skill. Savings starts it all. Don’t let life get in the way of building wealth
   

People with fluctuating incomes may not be able to save automatically because they need flexibility to juggle expenses; savings should be done during “peak” months and with windfalls such as tax refunds