56% of Americans say they wouldn’t have enough money in savings to cover a $1,000 expense, according to a survey conducted by Bankrate. And, another survey by GOBankingRates found that 40% of Americans have less than $300 in savings. Yikes! That’s not very much.
The takeaway from these statistics is a good-news/bad-news story. Good news: If you’re light on savings, you’ve got a lot of company, so don’t be disappointed in yourself. Bad news: While building an emergency fund is important, it’s clearly not easy or more people would be doing it! And, rising prices are making it even harder to keep up with your saving goals this year.
What can you do about it? The key, experts say, is careful and disciplined budgeting.
Before talking about how to increase your savings, let’s figure out how much you should strive to accumulate.
A good rule of thumb is three to six months of living expenses. How much is that? You can estimate your savings goal by adding up a month of your essential expenses and multiplying by three for a minimum target, or by six for a more comfortable cushion. Your monthly expenses should include:
Once you add that up and multiply by three or six, don’t be discouraged if it feels like a daunting number to achieve. Remember: Any savings is better than no savings, so start small and watch it build up over time.
Unless you win the lottery or receive another unexpected windfall, the way to build savings is to cut spending. And that’s a bummer because spending money is fun! To help you make the shift from spending to saving, keep these two critical concepts in mind:
Here are some other ideas that may help you boost your savings:
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