Everyone needs a savings account to cover emergencies, but sadly, about 25% of Americans have less than $1000 set aside. Some people may feel that saving money is an unattainable goal, especially if they have a low or inconsistent income. However, there are some simple strategies that anyone can use to build savings, regardless of their income level. The following are some tips on saving money for a rainy day.
1. Start Small
The best way to start saving is to set aside a small amount of money each week. Even if the amount is only a few dollars, it can add up over time. Moreover, the act of saving even a little money helps to build a lifetime habit of saving.
2. Save Automatically
One of the best ways to get into a savings habit is to make the process automatic. One way to do this is to set up a weekly or monthly automatic transfer from a checking to a savings account. Employees who receive their paychecks through direct deposit can also set up the deposit so that a portion goes into a savings account.
3. Save On Spending
Another way to build savings is to find ways to spend less. Eating out less is good for any budget, and using grocery store coupons can make it even cheaper to eat at home. Other lifestyle changes that can help save money include taking public transportation instead of driving, dropping subscription services, and using public Wi-Fi rather than paying for internet service at home.
4. Track Spending
It is easy to spend money thoughtlessly, especially when using plastic. One of the best ways to control spending is simply to track it. There are various apps that allow users to track spending, but pencil and paper work just as well. Keeping a record of every penny spent helps people to see their spending habits objectively, and many people find the practice motivating.
By reducing spending and making savings automatic, anyone can start building an emergency fund. As a savings account keeps growing, it can become not just a safety net but a means to make dreams come true.