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Money Move #4: Money in the Long Run

In this article

  1. Net worth vs. Income
  2. Drum up a spending plan
  3. Make it easy
  4. Start small
  5. Automate, not procrastinate
  6. Small, everyday moves > intention

For most of the country, saving money is hard. In fact, nearly 25% of Americans have zero savings. There are plenty of things you can do to start saving money, read on to learn how!

saving money in a piggy bank illustration

Jackie Lam • April 26, 2021

For most of the country, saving money is hard. In fact, nearly 25% of Americans—yup, that’s 1 in 4 people—have zero savings. And according to the Federal Reserve, 61% of adults say they would have trouble covering a $400 emergency. 

We can chalk it up to circumstance, or the topsy-turvy year brought on by COVID-19. But, sometimes, the reality can be that we don’t worry about our finances until things go south.

Well, worry not: there are plenty of things you can do to start saving money. Not just for today, but for years to come. Read on to learn how to grow your cash for the long run: 

Net worth vs. Income

Net worth: The assets—like savings, the value of your home or car, or your retirement account—that are left after you subtract your debt.

Income: Your take-home pay. This can be money earned from your day job, side gigs, unemployment, or disability benefits.

Bottom line: You’ll need to have a spending plan, which we’ll get into next.

Drum up a spending plan

Do you ever find yourself feeling there are more days in the month than money in your bank account? Does money seem to magically appear into your account, but also vanish mysteriously? Those are telltale signs that it’s time to keep careful watch of what goes in, and what goes out. By having a budget, you can make sure you “pay yourself” first and put some money away into a savings account while living off the remainder.

Just like healthy eating habits require watching what you eat, and making sure you catch enough zzzs, healthy financial habits mean you have a budget that you’re working with. That’s where it all starts.

You can go the old school route and track your income and expenses with a pen and pad of paper. Or you sync up a spreadsheet to a money management app. There’s no one-size-fits-all solution, so it’s best to explore different methods and tools. Here are a few places to start:

  1. The 50/30/20 budget: A classic budgeting approach where 50% of your take-home pay goes toward your needs, 30% goes toward your wants, and the remaining 20% goes toward your savings.  
  2. The guilt-free budget: Also known as the pay yourself first budget, you tuck away funds into your savings and other money goals, then spend the remainder “guilt free.” 
  3.  The zero-sum budget: This is where every dollar gets assigned a job, and no dollar gets spent frivolously. 

Make it easy

This might be a big “duh.” But, when it comes to habit-building, you want to make it hard to do the “wrong” thing, and easy to do the “right thing.”

Instead of relying on daily motivation, try putting up little barriers so it’s easy to save, and harder to spend. Here’s an example:

Let’s say you’re trying to tuck away money for an emergency fund. 

  1. Set aside the amount you’ll need for just that week or month for day-to-day living expenses in your checking account.
  2. If you have a separate account just for discretionary expenses such as food, gas, household items, and miscellaneous shopping, it’s far easier to keep track of how much you’re spending on the regular. 
  3. Next, put your emergency fund into an entirely separate savings account. Why go through the trouble? If your e-fund is a little harder to get to, and might take a few days to transfer funds from one account to the other, you might be less tempted to spend money from it.

Start small

A lot of us feel as if we need to start big. In fact, the opposite rings true. While it would surely be nice to randomly find a fat chunk of change, or land a new job that offers twice as much as what we’re making before, those are unicorn occurrences. And do you want to wait for a one-in-a-million event to get good with your money?

It would be far more realistic—and manageable—to start small. 

For example: You want to have $5,000. It might not descend from a magical force, but it does begin with saving $5. 

  1. Set up automatic savings. There is beauty in the “set it and forget it” approach. 
  2.  If you can, swing auto-saving $1 a day, that’s $365 by the end of the year.
  3. Try bumping it up to $5 a day. After one year, you’ll have a sweet emergency savings stash of $1,825 in your pocket.
Pro Tip:
If you’re a Chime member, you can set up automatic savings

Automate, not procrastinate

We often put something on the backburner not because we’re lazy or don’t care. Digging deeper, it might be because we’re worried about doing the wrong thing.

The power of automation is multi-pronged: it’s easy, it does the work for you, and you don’t have to stress out over whether you can afford to save. And chances are, if you make it a priority to get more serious about paying off your debt, guess what? The world usually has a way of making it happen.

1. Pick your debt payoff method. 

The debt snowball approach: You pay the debt with the smallest amount first. Once that’s paid off, you tackle the debt that’s the next largest amount.

The debt avalanche approach: you tackle debt based on the interest rate. You start with the debt that has the highest interest rate, then work your way down. 

2. Automate that extra debt payment.

Log into your account, then choose to pay off an extra “X” amount. (As for the payment date, it can be in step with your regular payment, or fall on another day each month.)

3. Keep tabs.

Worst-case scenario: If you end up not being able to afford to save X amount, you can bump it down or bump down the frequency. So, instead of putting an extra $100 a month toward your debt, try an extra $50, or $25.

Small, everyday moves > intention

Growing your money for the long run doesn’t require a lump sum of money. But it does require a bit of thought, planning, and simple steps to propel you forward. You can get your financial life together by taking small steps, which can lead to larger, long-term gains. Ready? You got this! 💪 And have fun!

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