Every December, I pledge to do a better job at saving money once the new year rolls around. But as we all know, sometimes our best-laid money-saving plans can crumble to pieces in the face of life's mounting expenses. If you really want to save more money in 2017, you'll need to approach that goal from a place of commitment and discipline. Here are five relatively easy ways to get started.
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1. Pay yourself first
It's hard to spend money you never actually get your hands on. One of the most effective ways to save more cash is to ensure that it never hits your checking account in the first place. There are several options for accomplishing this goal. First, you can set up a portion of your paycheck to filter automatically into a savings account. If you're behind on emergency savings, this is the best place to stick the money you're committing not to touch. Otherwise, sign up for your employer's 401(k) plan. Part of your paycheck will go directly toward retirement savings, and if your company provides a match, you'll get to sock away even more cash. Best of all, the money you contribute to a 401(k) goes in tax-free, which means you'll save on taxes.
2. Follow a budget
Sticking to a budget is one of the most effective ways to keep your spending in track, yet over 40% of Americans fail to employ this simple tactic. Whether you use online software or a basic spreadsheet to create your budget, start by listing out your various monthly expense categories (such as housing, electricity, transportation, and the like) and estimating what you spend on each. Next, think of annual expenses you typically incur (like professional certification or warehouse club fees) and break out those costs in 12 even increments. If, after running the numbers, you see that there's money left over to save, you're in pretty good shape. If not, you'll need to examine your spending and decide which expenses you're willing to minimize.
3. Live someplace more affordable
Housing is typically the average American's single largest expense, but some of us are spending way more than we should be. In 2015, almost 12 million households spent more than half of their income on housing. Additional data reveals that between 2011 and 2014, 52% of Americans had to make at least one major financial sacrifice, like taking on credit card debt or delaying retirement savings, to cover their rent or mortgage payments. If you're really looking to save more money in 2017, try tackling your greatest monthly cost and seeing what a difference it makes. You may find that downsizing or moving to a less trendy neighborhood frees up hundreds of dollars each month that can go directly into the bank.
4. Use tax-free dollars for the things you're already paying for
Many of us spend money to take care of our health and commute to work. If you sign up for a flexible spending account (FSA), you can allocate up to $2,600 next year in pre-tax dollars to use for medical expenses like in-office copayments and prescriptions. The only catch is that you'll need to use up your entire FSA balance within your plan year; otherwise, you risk forfeiting it, which is essentially throwing money away. Along these lines, if you sign up for commuter benefits through your employer, you can set aside up to $255 per month for transit and $255 for parking for a combined monthly total of $510 in pre-tax dollars. With either option, the amount you save will depend on your effective tax rate. So if you put $100 a month toward commuter benefits and $1,200 a year into your FSA and your effective tax rate is 25%, you'll save $600 for the year.
5. Ask for discounts
One of the easiest ways to save money in 2017 is to simply pay less for things than what you're currently spending. Whether you're looking for a lower interest rate on your credit card or a discount on your internet service, sometimes all it takes is a phone call to snag a discount. Case in point: When my cable bill went up last month after my promotional package ran out, I called and asked for a lower rate. Though my provider couldn't extend the same discount I'd previously had, I was offered a deal that's going to take $15 off my bill every month for the upcoming year. In my situation, a 20-minute phone call was well worth $180 in savings.
If you really want 2017 to be the year you ramp up your savings, be prepared to make a few sacrifices and hold yourself accountable for every purchase you make. It may take work, but you'll be happy when you see your savings balance climb by year's end.
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FAQs
Average Savings by Age 30
According to the latest Survey of Consumer Finances, the average savings in transaction accounts for this group was $11,250, and the median was $3,240, in 2019. If you have more than this in your savings account at 30, you have more than many of your peers.
Is 30k in savings good at 25? ›
20k is the ideal savings amount for a 25 year old
According to Ryze, this amount is achievable for young adults save a minimum of 15% of the average annual salary of early 20s workers in the U.S. “The median salary for this age group is around $38,500 per year.” Ryze says.
How much money should you have by age? ›
Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement. If you're behind, don't fret. There are ways to catch up.
How many Americans have 100K saved? ›
How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.
How much money do you need to retire with $100,000 a year income? ›
To cut to the chase, if you want your interest to earn $50,000, $70,000 or $100,000 per year, you'll need to have approximately $1.25 million to $2.5 million in savings or retirement accounts. If you're aiming for somewhere in the middle, like $70,000, you'd want to have $1.75 million saved.
What is the 50 30 20 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
How much does the average middle class person have in savings? ›
According to data from the Federal Reserve's 2022 Survey of Consumer Finances, the average American family has $62,410 in savings, across savings accounts, checking accounts, money market accounts, call deposit accounts, and prepaid cards.
Is saving $1000 a month good? ›
Saving $1,000 per month can be a good sign, as it means you're setting aside money for emergencies and long-term goals. However, if you're ignoring high-interest debt to meet your savings goals, you might want to switch gears and focus on paying off debt first.
Can I retire at 60 with 500k? ›
Can I retire on 500k plus Social Security? As we have established, retiring on $500k is entirely feasible. With the addition of Social Security benefits, this becomes even more of a possibility. In retirement, Social Security benefits can provide an additional $1,900 per month, on average.
How much money do most people retire with? ›
The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
Yes, you can.
Let's say, for example, you have £300k in a pension after taking your tax-free cash, you have no outstanding debts or mortgage to pay off, and you're entitled to the full state pension at age 67 (or 68 from 2044). For this example, let's say you take £1,500 from your pension per month.
What strategy is most effective for saving money? ›
Whatever your goals, here are 10 strategies to help you grow your savings and keep at it.
- Pay installments to yourself. ...
- Collect loose change. ...
- Manage credit wisely. ...
- Track your spending. ...
- Consider ways to cut costs. ...
- Make a plan for lump sums. ...
- Don't leave money on the table. ...
- Maintain you lifestyle.
The ideal number of bank accounts depends on your financial habits and needs. You might be happy with just two accounts – checking and savings – or you may want multiple accounts to separate business and personal expenses, share a bank account with a partner or maintain separate accounts for various financial goals.
What is the fastest way to save money? ›
Canceling unnecessary subscriptions and automating your savings are a couple of simple ways to save money quickly. Switching banks, opening a short-term CD, and signing up for rewards programs can also help you save money. Making a budget and eliminating a spending habit each day can help lead to long-term savings.
How much money should be in your savings account in your 30s? ›
Fast answer: Rule of thumb: Have 1x your annual income saved by age 30, 3x by 40, and so on. See chart below. The sooner you start saving for retirement, the longer you have to take advantage of the power of compound interest.
Is 100K savings at 30 good? ›
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
Is $50,000 in savings good? ›
If you're nearing retirement with just $50,000 in savings, the reality is that you're frankly not in the best shape. The average 60-something has a retirement savings balance of $112,500, according to Northwestern Mutual. Even that, frankly, isn't a ton of money.
Is 40k in savings good? ›
While $40,000 is a good start on the road to building a nest egg, you probably want to retire with a lot more money than that. But it may be more than possible if you commit to saving and investing in a brokerage account consistently for the remainder of your career.
