Are you saving enough money? If not, here's how to change that

Experts say you should have enough money saved to cover at least three to six months of your living expenses in case of an emergency.  In reality, close to half of Americans have less savings or NO savings compared to a year ago and one third of Americans have more credit card debt than emergency savings. 

Even though there are thousands of resources teaching us how to save our money, the truth is that saving can be unglamorous and boring.  Worse, it prevents us from doing what we want to today as we work toward distant dreams that may or may not come true.  

Personal finance experts know saving isn’t easy. So they try to soften the blow by giving us simple rules to follow. 

There's the 40-30-20-10 rule, the 50/15/5 rule, and the 80/20 rule. These rules are intended to help us be realistic about how much we need to spend and how much we can strive to save. 

For example, with the commonly touted 80/20 rule, you save 20 percent of your earnings and spend the other 80 percent on your monthly expenses. 

Sounds easy enough, right? 

Except that if you’re living at or beyond your means, it’s much harder than it seems on paper. 

If you’ve ever cringed seeing your savings account balance fall under $50, $25, or even $5, this article is for you. 

Search “reasons to save” and you’ll find hundreds of blog posts from financial companies telling you why you should save your money. 

There are many reasons to save money, from having enough to cover emergencies and live comfortably while temporarily out of work to saving for a car, a home down payment, a vacation, a wedding, college, or retirement. 

Whatever you’re saving for, the answer to the question “why save” comes down to one word: freedom. 

Like it or not, more money saved means more freedom down the road to live the life you want, whatever that looks like. 

Sounds great, right?  

Sure. Except there’s that tricky issue of self care and enjoying the life you have now. This means striking a balance between work and play, spending and saving, so you can achieve the goal of financial freedom without too much suffering and sacrifice in the meantime. 

But how do you do that? 

Regardless of your income level, the most important thing is to live thoughtfully within your means. Here are some tips for how to do that so you can come out ahead:

Treat yourself to the honesty you deserve. To do this, start by looking at all your existing expenses (the required ones like bills and those “extra” things like lattes, new shoes, and splurgy nights out). Being honest about where your money is going by looking at everything you spend via cash, Venmo, and credit cards can give you a picture of where things stand and help you adjust to what you must keep, what you can keep, and what you need to let go. 

Indulge yourself with a vision. If you don’t have dreams, you can’t make them come true. Start your saving journey with your vision fully in focus and defined. That might be something distant like early retirement or it might be getting a decent car or house without ruining your finances. Whatever your vision, keep it front of mind and return to it when you’re feeling an urge to be spendy. One way to do this is by establishing a name your own saving account (e.g. “wedding savings” or “Tesla savings”). 

Believe in yourself by having a plan. What can you realistically afford to save? Make a commitment to yourself to not only skim some money off your regular income through automation (see below) but also saving part or all of any windfalls you get (holiday and birthday gifts, inheritances, work bonuses, tax refunds, etc.). Then, make a plan – either through a more elaborate budget in a spreadsheet or something simpler, like a basic spend/save ratio you follow. Most importantly, stick to it. 

Use digital tools to put saving on autopilot. The are countless options. Some – like automating with your bank or credit union – are legitimate. Others, like round up tools, can skim off some of what you save for their own profit, so proceed with caution. If you are a CAFCU member, you can easily automate savings by contacting our Member Center to help you allocate your direct deposit or payroll deduction to multiple accounts. Then, designate how much from each paycheck will go into your savings account. Even something small like $25 per paycheck will add up. You can also do this yourself by setting up an automatic, recurring transfer into your preferred savings account using our mobile banking app. 

Have fun saving your money. Most of us are more inclined to do something hard when there’s a bit of fun involved. Thankfully, saving can be more fun when you make the act of working toward goals more visual and interactive (for example, try using our Saving Challenge worksheet to channel your creativity as you track your saving). Gamifying your efforts can make the hard work of saving money more fun. 

Take baby steps. Don’t go whole hog and cut out everything splurgy all at once. Just like quitting any bad habit, going cold turkey can come back to haunt you in a moment of weakness. Instead, take one small, sustainable step at a time. Cut out one small thing you can easily replace with something free. When you discover how easy that can be, take another small step. Let them build up until you’ve transitioned to a more balanced, money-smart lifestyle. 

As you go along, remember to check your progress. Watching your accounts grow will provide you with the motivation you need to keep going.  

When you have set backs, don’t beat yourself up. Surprise expenses like car repairs, tax bills, and other unpleasantries will slow you down, but they don’t have to stop you from working toward realizing your vision.  

Stay calm and focus on positive thoughts and you will eventually reach the goal of financial freedom if you make a commitment to not stop until you get there.  

As a financial wellness advocate, CAFCU doesn’t just support our existing members. We offer free financial coaching to everyone! Schedule a free financial coaching session with one of our certified financial wellness representatives.   

You can also learn more about our saving products, services, and tools by contacting our Member Center at 1-800-359-1939 Monday-Friday from 7 a.m. - 7 p.m. CST.