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How to start a savings habit that lasts

Even after the great recession, the saving rate of Americans hasn’t really returned to the levels of previous generations.  Starting a savings habit isn’t easy.  It takes time and a desire to make it successful.  Fortunately there are a few ways you can increase your chances of building a successful savings habit and become a lifetime saver.
What the first secret in successfully starting a savings habit?
Pay yourself first and do it automatically like using payroll deduction is the best way to make savings a habit because you just have to set it up once and just goes on from there. Paying yourself first ensures that there is always money to save.
What else can help to make savings a habit?
Make it hard to access the funds you are saving. The harder it is to get to the money, the less emergencies you will tend to have in life and the more money that will build in your savings account.  If you are constantly dipping into your savings, you probably really are saving.  You are just putting money in a different account to use later.
Is it true that saving a portion of any extra money is a good idea?
Yes and it really helps reinforce your savings habit. For every tax refund, bonus, or extra pay one receives, save at least 20% in savings account.  It is surprising how that will really add up in a short period of time.  And you still have the other 80% to spend or use to pay down debt.
What if someone doesn’t feel they have the extra money right now to start?
Two options are available. First, wait until they get a raise and save all or most of your raise.  You didn’t have the money to begin with so it is less likely to be missed.
The other option is to look at their spending habits and find just $5 per week to save, maybe skipping the latte and saving that or something else that is tangible. The goal is to start saving some amount, no matter how small, so that you can build upon your good habits.

Posted: 8/26/2014 with 0 comments

Categories: Money Matters, Saving

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