During the recent government shutdown, thousands of federal workers filed for unemployment. While the 35-day shutdown wasn’t the employees’ fault, it did reveal their precarious financial situations.
“It is concerning that government workers with stable employment can’t make ends meet when their next paycheck is late,” says Pauline Paquin, owner of Frugaling.
“Being financially resilient is important because charging your card or resorting to payday loans is very expensive.”
The thing is: These public servants are the rule, rather than the exception. Only 39% of Americans could cover a $1,000 emergency with money from their savings. And, 19% would have to finance an emergency on a credit card, while 17% would have to borrow the money and 13% would have to reduce spending on other things.
Here’s more on the dire state of savings in America — and how you can fight back with better financial habits and a bank that has your back.
The United States of Spending
Wondering how the U.S. is doing when it comes to saving? The numbers should tell you everything you need to know:
- The median American household has only $11,700 saved across bank and retirement accounts.
- More than one-third (35%) of millennials say not saving enough is their biggest source of stress.
- One-third of baby boomers have less than $25,000 saved for retirement; 31% of all Americans have less than $5,000.
- The average American has $38,000 of debt, excluding home mortgages.
“We live in a society where immediate gratification is something most of us think we deserve,” explains Paquin.
“We work hard, we should treat ourselves. But we fail to see the long term effect of having everything we want right now.”
Those long-term effects can include a minor emergency causing you to lose your car, then your job, then your apartment. Or they can include never being able to retire, and forcing your children to support you in old age.
“Americans struggle to save because we aren’t taught to think about money as a tool to reach our goals,” says certified financial educational instructor Galit Tsadik.
“We think of it as only something to satisfy our immediate needs. There is also this misguided notion that you need to have a lot of money to start saving or that you need to put big chunks away in order for it to be worth it,” says Tsadik.
Three Ways to Save More Money
The truth is: You can start saving money any time, with any amount. Although it may be difficult at first, making saving a habit will pay off in the end.
Here are three expert tips to get you on the right track.
1. Change your mindset
“Keep your internal money dialogue positive, otherwise you’ve already lost,” says Tsadik.
She suggests replacing negative money thoughts like “I can’t save because I don’t make enough” with positive ones like “I’m putting this extra $5 toward my future.”
“As with anything in life, your attitude matters,” she adds.
Paquin says gamifying money can lead to mindset shifts, too.
“I like saving challenges, such as saving 1% of your income this month, then 2%, etc. — or saving all the $5 bills you come across,” she explains. “Money can be fun when you make it work for you.”
2. Track your spending
“You can’t change what you can’t see,” money saving expert Andrea Woroch points out.
“By writing down all your purchases and expenses, or inputting them into an app, you can visualize your spending habits and start the process of changing those that keep you from saving… i.e. impulse buys at Target or excessive entertainment spending.”
To do this, she suggests using an app like Mint, which tracks your purchases and alerts you when you’re overspending in a certain category. She also recommends tracking your debt repayment goals through Debt Free.
Speaking of goals, write them down.
“This gives you a sense of purpose. It allows you to set parameters, such as how much you want to save and by when, instead of trying to save with nothing to guide you. That’s when a lot of people get lost and give up,” says Woroch.
3. Start small — and automate
For Tsadik, the financial educator, successful saving is “all about paying yourself first.” She advises setting up a small weekly transfer — maybe just $10 — from your checking account to your savings account.
Wait a few weeks to see if you feel the pain. If you don’t (which I’m betting you won’t!), increase the amount. Wait a few weeks, then rinse and repeat.
“Before you know it, you will have a nice little savings cushion. And you will have gradually trained yourself to live on less and save more without feeling like you are depriving yourself of anything,” says Tsadik.
How Chime Can Help You Save
Ready to kick your savings journey into high gear? You need a bank you can trust — a bank like Chime.
Chime saves you money by, first and foremost, charging zero fees. Given that the average American pays $329 in bank fees each year, that’s a huge perk.
Beyond that, Chime also helps you save money automatically. As a Chime customer, you’ll have two accounts: one for spending and one for saving. Every time you make a purchase with your debit card, we round up the transaction to the nearest dollar — and transfer that amount from your spending to your savings account.
You can also set up automatic savings from your direct deposits, funneling up to 10% of every paycheck into your savings account. If your biweekly paycheck is $2,000, that means you’d save $5,200 in a single year. Imagine what you could use that for: an emergency cushion, a Roth IRA, or a seed fund for a house.
As Tsadik says: “Money should never be the end goal — it is what we use to get us to our end goal. When you save, you are building a financial foundation so that you can accomplish your dreams and live the life you desire!”