A new survey by RetailMeNot revealed that nearly half of us don’t have enough savings to get us through a month…YIKES!
In reality, according to financial experts, you need 3 – 6 months worth of living expenses in savings, so you’ll be prepared for life’s emergencies.
Life happens…job loss, medical emergencies and major repairs will be devastating if you don’t have a savings account.
Where do you begin?
Establish a Written Budget
Put pen to paper and list all of your monthly income and expenses. I’ve made it easy for you to fill in the blanks with my free budget worksheet.
Now the fun part, subtract your expenses from your income and hope that you have a positive number. If so, this money can be designated to savings. If not, we have some work to do!
Analyze Your Budget
If you’re spending more than you’re earning each month, you have 2 choices: earn more or spend less.
Let’s focus on spending less. Look closely at every expense in your budget and ask yourself if it can be reduced. Can you reduce your cable bill by eliminating the movie channels? Could your teenage son mow the grass instead of paying a yard guy? How about opting for a brown bag lunch instead of eating out, and yes…Starbuck’s has to go! Get back to basics and ask yourself if it’s a need or a want.
Choose Automated Savings
Don’t allow for temptation! Opt for a certain dollar amount (10% of your income is ideal) to be automatically taken out of your paycheck and deposited into your savings account to avoid being tempted to spend it. It’s the painless way to save. If 10% isn’t realistic, remember that something is better than nothing.
For what it’s worth, here are a couple more jaw-dropping statistics from the survey:
- 1 in 5 (20%) people have no savings.
- Of those who have money put away, 1 in 4 (25%) do not know how much is in his or her savings account.
Let these statistics be a wake-up call or better yet…a really annoying alarm clock! Start your emergency savings account today, so when your luck runs out…your money won’t.
Please leave a comment to share your tips for establishing a savings account.