It's Time To Start Saving: America Saves Week 2021
Where could you be saving more or spending less? This is the week to find out!
Since 2007, America Saves Week has been an annual celebration as well as a call to action for everyday Americans to commit to saving successfully. Through the support of thousands of participating organizations like Navicore, together we encourage our local communities to do a ‘gut-check' on their finances and saving behaviors. The America Saves pledge is the framework that allows savers to set a goal, and make a plan to achieve better financial stability.
You can learn more about America Saves Week here.
Each day of America Saves week, there is a focus on a different aspect of saving. It's a reminder to take a look at your finances and decide where you could be doing a better job or reevaluate your financial goals. Maybe you just need a tweak to your financial habits or a complete overhaul; either way, there is no better time than a snowy and cold February week to set the time aside for a financial checkup.
Monday, Save Automatically
Automatic saving is the easiest ‘set and forget' way to save. The idea is to have a portion of your paycheck automatically moved to a different account each payday. Bonus points for having that portion taken before tax and moved to your retirement account.
Beyond saving for retirement, have a separate account that you can access if you need to, and that you have money directly deposited into each payday. This can help you save for a vacation, new car, or even an emergency fund.
The most important part of saving automatically is to establish the direct transfer of funds to occur each month and enjoy the process as a small amount of money grows over time to become a substantial sum. Automatic saving is one of the easiest ways to “Pay Yourself First”!
Tuesday, Save for the Unexpected
Using the automatic savings method is a great way to establish an emergency fund. Try to have 3 to 6 months of income in your savings account. This might seem like a daunting goal at first, but start with a goal of one month of expenses and go on from there. Remember that a small amount of money put aside each month will slowly grow.
Having an emergency fund will help you to overcome the financial obstacles that can strike us all. It may be a pricey car repair or a new refrigerator that packs a punch to your savings. A startling 40% of Americans are unable to pay for a $400 unexpected bill. That number has most likely increased significantly as we saw unemployment skyrocket in the last 10 months in the wake of the pandemic. Building an emergency fund slowly, when you don't need it, is the key to sleeping soundly when an unexpected bill arrives. Just remember to replenish your emergency fund after you pay that bill.
Wednesday, Save to Retire
We all hope to retire at some point, but what will that retirement look like? The best way to have a comfortable retirement is to start saving as soon as possible. Let the magic of compound interest work for you over time by saving regularly and early for your retirement.
If you didn't get off to an early start with saving for your future, it's not too late! Take advantage of some of the tax breaks available to people over 50. For example, workers age 50 and older can save an additional $1,000 in an IRA for a total of $7,000 in 2020. Low- and moderate-income seniors who contribute to a retirement account may additionally qualify for the saver's credit. Stop procrastinating because you think it's too late, the sooner you take action the better.
Thursday, Save by Reducing Debt
Reducing your debt load is, believe it or not, a form of saving. The faster you pay off a debt, the greater the amount of interest saved. Start by identifying your debts and determining what the interest rates are. Either choose the debt with the smallest amount owed (snowball method) or the debt with the highest interest rate (avalanche method). Pay more than the minimum amount due for this debt until it's paid off. You must keep paying the minimum amount due on your other debts while you pay off the first one. Once a debt is paid off, select another debt and continue the process.
As you pay down your debt, your credit score will be positively affected. In the end, a better credit score means more favorable interest rates on future loans. That equals future savings too!
If you're overwhelmed with debt and are struggling to pay the minimum amount due, or you can't even think of saving because of your debts, you may benefit from a credit counseling session with a certified nonprofit credit counselor. Don't struggle with debt alone when there is help available.
Friday, Save as a Family
Teaching kids to be money savvy early will help them establish a solid financial base as young adults. Even if you were late to the game of financial education, take the opportunity to pass your knowledge on to your kids. Discuss financial decisions you make as a family in terms that kids can understand. Encourage their questions and if you don't know the answer look it up together.
Try setting a SMART goal as a family, perhaps a vacation or even a day out. How will you save for this goal? Involve your kids in the discussion of why you need to plan and save for desirable items and events. Explain that while you may have the money in your emergency account, that money is exclusively for emergencies. Discuss a simplified version of your budget together. Small conversations during their early lives will grow to a more substantial understanding of personal finance and the importance of being financially proactive.
How will you participate in America Saves Week? Even a small step in the right direction is progress. Use this week to get motivated and assess your finances. Where could you be saving more or spending less? This is the week to find out!
Lori Stratford is the Digital Marketing Manager at Navicore Solutions. She promotes the reach of Navicore's financial education to the public through social media and blog content.