In 2018, the US government shut down for 35 days, the longest stint in the country’s history. During the shutdown, thousands of federal workers filed for unemployment. While the government 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.”
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, while, 19% would have to finance an emergency expense on a credit card. In the same study, an additional 17% said they would have to borrow the money, and 13% would have to reduce spending on other things.
While those statistics aren’t encouraging, there are steps you can take to prepare yourself in the face of an emergency expense. Follow our tips so you can fight back with better financial habits and with a bank that has your back.
Resist the Feeling of Instant Gratification & Think of Your Future Comforts
Poor money savings habits seem to affect Americans in every age group. 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.
3 Ways Americans Can Save More Money
The great thing about saving money is that you can start doing it any time, with any amount, and there are lots of resources to help you grow your money as you save it. 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. Automate Your Savings
For Tsadik, the financial educator, successful saving is “all about paying yourself first.” She advises setting up a small weekly transfer from your checking account to your savings account, even if you start as small as $10 per savings deposit.
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.
Chime also helps you save money automatically. As a Chime member, you’ll have two accounts, a spending account, and a savings account.
There are three ways to save money with your Chime savings account. First, you can manually save money on your schedule. We also offer a round up option. Every time you make a purchase with your debit card, we round up the transaction to the nearest dollar — and transfer the difference 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!”
2. Track Your Spending to Help Create Savings Goals and Curb 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.
With Chime’s mobile app you can track all your spends and received daily bank account balance notifications and instant transactions alerts anytime you use your debit card.
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. Remind Yourself That You Can Save Money
“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.”
Ready to kick your savings journey into high gear? You need a bank you can trust — a bank like Chime.