Setting aside money for savings can be a challenge for a lot of reasons.
Setting aside money for savings can be a challenge for a lot of reasons. Even when you start with the best intentions, unexpected bills, home repairs and impulse shopping can easily get in your way. The fact is, nearly half of Americans don’t have $400 saved for an emergency* – let alone a catastrophic medical condition or job loss.
But even when most of your paycheck seems accounted for—with mortgage payments, credit card debt and the expenses of daily life—it’s still possible to start saving now and invest in your future. Here are some ideas for how to get started.
- Start now. It’s never too soon—or too late—to start saving. Start saving any amount, no matter how small, to get the ball rolling. The sooner you start, the more you’ll earn over time.
- Automate deposits. Use automatic transfers and direct deposit to “pay yourself first” by depositing part of each paycheck into a high interest savings account —before you have a chance to spend it.
- Set goals. It’s easier to save when you can envision what you’re saving for. Write down your goals and remind yourself of them often.
- Make a budget. Track your expenses for a few months, and then create a realistic budget you can live with. Include saving as one of your regular monthly expenses, just like any other bill that must be paid.
- Avoid temptation. Consider opening an online savings account at a different bank than the one that holds your checking account. Keeping your savings “out of sight, out of mind” can help avoid the temptation to dip in to savings for nonessentials.
- Shop around. Use the Internet to research savings accounts and certificates of deposit with high interest rates. Find out which accounts have the best rates and no or low fees and determine what is best for you.
- Get rid of debt. Every dollar you spend on credit card interest is a dollar you could be saving for your future. The sooner you pay off your debt, the more you can pay yourself.
- Save your raise. If you earn a raise or bonus at work, or get an unexpected windfall, put the money directly into your savings account. Since you didn’t have the money before, you won’t miss it in your checking account.
- Use technology. Set up alerts or reminders, check your account balance online, and compare prices online before making purchases. The more you know about where your money goes, the more likely you are to save.
- Get a side gig. Do you have a talent or hobby you can use to earn additional income? Even just a few hours of month can earn you enough to give your savings a boost.
- Simplify. Consider cutting your cable TV service, making fewer visits to coffee shops or even downsizing your living space to free up money for your savings.
Saving is hard for just about everyone. But if you start with small steps, you’ll find it gets easier as you watch your savings grow and get closer to achieving your goals.
*Report on the Economic Well-Being of U.S. Households in 2015, May 2016, by the Board of Governors of the Federal Reserve System
This article is provided for informational purposes only and should not be considered and is not a substitute for individualized professional advice, which you are encouraged to seek. The views in this article may not necessarily reflect the institutional opinions of Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions and none of the foregoing, unless prohibited by law, assume any liability for loss or damages resulting from reliance on the material provided.