Recently, there was an article that discussed people saving money other than using bank accounts. In the article, it stated that only about 40% of the American people had savings to cover an emergency expense over $400.
Additionally, the article stated that 65% of the respondents of a survey indicated that while they were saving that they expected to spend their savings within the first twelve months and the 80% of those responding to the survey indicated that they had plan to spend their savings within three years.
It’s not easy saving when you’re making minimum wage but it can be done. The article focused on an individual making $11 an hour which translates to about $23k a year. Depending on where you live, it’s not a lot of money especially if you’re living in New York City or another major city where the housing supply is in short supply which drives up the cost of housing.
According to the article, individuals and families are saving but they’re not saving for their long-term goals like retirement. The individual mentioned in the article, Robert Hill, is saving $25 a month for retirement which is not a lot but it is something which is better than not saving at all. At $25 a month, that’s $300 a year which is far less than the $5,500 that you can deduct from your taxable income.
When to setting goals, these are the steps.
1. State your goal(s)
What is your goal or goals? Perhaps your goal is retirement, vacation, purchasing a home, college, or another goal.
2. How much do you need to save?
3. When will you need the money?
4. How can you set aside for your goal? How often can you set money aside?
5. Review and revisit your goals periodically and make adjustments as necessary
I know that it’s easier said then done with the amount of combined debt the average American has with student, mortgages, car, and other debt. Recently, the amount of car loans hit $1 Trillion for the first time. Other recent stories has the debt for the average family returning to pre-2008 levels before the great recession.
Even with debt, the goal is to save something so that the you don’t go further into debt. To do so, you have to begin saying no to additional debt and begin saving–even if it’s $25 a month.