Do You Have a Negative Savings Rate?

by Miriam Caldwell | More from this Blogger

03 Feb 2007 09:22 PM

Have you heard the news that the savings rate in the United States is actually negative? Basically this mean that not only did most people not save any money this year, they actually spent more than they earned. Did you help to contribute to this figure? Can we change this, at least individually? Here are some ways to help you save money this year.

1) Make saving a priority. You should put money into savings as soon as you get paid. This happens automatically with your retirement savings (if you have a 401K plan), but you should be saving for an emergency fund as well. Take the process out of your hands. Go to your bank and have an automatic draft set up so that the money is taken out without you thinking about it. If you never see the money, it is a lot easier to forget about it. Then you will not spend it.

2) If you are good about transferring money into your savings account each month, but you tend to transfer it back into checking just as quickly, then you need to make it more difficult to transfer back. You can do this by opening a savings account online. Many online savings accounts take three days to transfer money back to your account. This can help you curb your impulse purchases.

3) Choose one area in your discretionary spending that you are willing to cut back on. Then put that money directly in a savings account. You may choose to give up lunches out or that massage every month. It may be that you give up your expensive coffee every month. The little things really can add up.

4) Stop spending more money than you make each month. Switch to cash only and do not carry your debit or credit cards with you. Find the areas you consistently overspend and then find ways to cut back.

5) Promise yourself a splurge every time you hit a milestone marker in saving. You can go out to a nice restaurant once you have $1000.00 saved. You can get a new outfit once you hit $5000.00 and so on. This may provide the extra motivation that you need to focus on saving money.

Related Articles: Do You Have Trouble Saving Money?

Five Reasons to Save Money

Sinking Funds

Learn more about Miriam Caldwell

Miriam is a SAHM mom of three children. She has a daughter who is seven, and two sons, four and two. She loves being a parent and spending time with her children.

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