Start Saving with these 5 Approaches
Living paycheck-to-paycheck means...
...that at the end of the month, there is nothing left to put away for “a rainy day” after covering all the basic living expenses. Experts estimate that more than half of all Americans — some 56% — are living paycheck-to-paycheck. Across the board, saving money can be a struggle. Whether you are young, working a low paying job and struggling to get ahead, or wiser in years and earning a six-figure income, many people can find themselves stretched beyond their means if they are not as smart about spending and saving.
Nearly 70% of Americans say they have less than $1,000 set aside. However, that money could quickly disappear with a medical emergency, home repair, job loss, or other financial setback. Having funds saved up in your extra reserves is essential for staying financially healthy.
When living paycheck-to-paycheck, it can feel frustrating to know even where to begin to start saving. These five steps can help start the process of building up savings to get on the path towards financial wellness.
1. Spend Less Than You Earn
While it might seem obvious, spending less than you earn is the best place to start. Beginning to save can be as simple as acknowledging your situation and making it a priority to spend less than you bring home. Not quite sure where all your money goes? Creating a budget and sticking to is essential in figuring out where your high areas of spending are and then determining where you can make some cuts.
When you begin spending less than you earn, you leave more money on the table that can be set aside for emergencies or used to pay off debt or fund a vacation, a new vehicle, home improvements, or other long-term goals.
2. Model the Savings Habits You Admire.
Everywhere you look on social media, TV, etc. there are successful people. While in reality, it is unlikely that you will become just like the billionaires you admire, modeling the attributes of those who “have made it” can help you start living out your dreams. Those attributes can include asking others for financial advice, working hard, and prioritizing what you want your money to do for you.
Challenge yourself to see the world with more optimism, turn challenges into opportunities, and you might just begin to appreciate the power of creating a more stable, abundant, and sustainable financial life with savings.
3. Set Aside Money Monthly
Saving, like any other healthy habit, gets easier over time. Like regular exercise, the more you do it, the stronger and more powerful your savings habits become. Create a savings account and have money automatically transferred to it every time you deposit a paycheck. Start small if that’s all you can afford. Moving just $10 a week into a savings account, means $520 saved up in a year. In two years, that’s more than $1,000! The more you set aside, the faster it grows. And, there are amazing tools to help your hard earned money grow faster.
While savings accounts are the traditional tools for saving, high-yield checking accounts are another smart move. To learn more about Canopy’s options to help your money grow, log on to https://www.canopycu.com/high-dividend-kasasa-checking/.
4. Pay Down Debt
Paying down your credit card debt can help you start freeing up money to save. Interest on your debt will only continue to make your amount owed increase. Focus your finances on paying down debt. Then, when you pay off a credit card you can put the money you were using to pay down debt into savings.
5. Just Got a New Job or a Big Raise? Pretend You Didn’t.
Earning more money can feel liberating and the urge to splurge, celebrate, or upgrade your lifestyle can feel very compelling. But what if you didn’t? Once you’ve mastered living within your means, additional income can fuel your savings and help you set a sound financial foundation for your future. Sure, treat yourself to a celebration dinner, but maybe forego a luxury car or new home for a while and let the extra income work for you.
For help creating a plan to stop living paycheck-to-paycheck, sign up for a FREE financial coaching session at canopycu.com/coach/.