A Federal Reserve survey showed that nearly half of all Americans could not cover a $400 emergency without borrowing from someone, selling something, or putting the expense on a credit card.
That means that nearly half of all Americans aren’t saving any money.
Why aren’t Americans saving?
There are two primary reasons:
- They aren’t earning enough to do more than cover basic needs.
- Saving isn’t as important to them as instant gratification. It simply isn’t a priority.
It’s true that some folks barely earn enough to put a roof over their heads and food on the table. Some of them are getting by through careful spending and some are going farther into debt on credit cards each month.
Far more Americans do earn enough to save, but it isn’t a priority. They’d rather go out to dinner and a movie, buy new clothes, own the latest iPhone, or drive a new car.
It really isn’t safe to live that way, because those $400 – or $4,000 – emergencies do come along. When you have no money set aside, you are forced to borrow, usually on high-interest credit cards. And then the spiral into crippling debt begins.
And what about those future expenditures? Your savings can have any purpose you wish – retirement, college for the kids, a down payment on a home – or a bigger home, a new car, or a dream vacation.
You know you need to save, but how?
You might think you don’t earn enough money to begin saving, but the odds are – you do. The secret to finding that money is budgeting.
Have you heard of zero-based budgeting?
A zero-based budget is one in which your income minus your outgo equals zero. You plan how you will spend every last dollar.
Begin with those fixed expenses such as housing, insurance, and the power bill. Then include a figure for necessary spending, such as food and gasoline. Next assign an amount to savings before you decide how the remainder will be spent. And do decide. Assign a purpose to every one of those dollars.
That doesn’t mean you must spend it all – if your budget allows $200 for new clothes and you decide you don’t really need them, you have more to add to savings – perhaps for some more enticing purchase in the future.
Making a budget sounds intimidating, but it really isn’t. Money-guru Dave Ramsey says his favorite budget app is Every Dollar. The Every Dollar program prompts you to remember all of those miscellaneous expenditures, so you don’t forget a thing. With it you can set up your money plan in about 10 minutes. The basic program is free, so there’s no reason not to get started today.
You can also take advantage of a free trial that connects to your bank account and uploads your transactions. It also lets you track your expenditures on the go, so you won’t be tempted to exceed your budget in any category.
It’s never too late to take control of your money – and the sooner you do take control, the sooner you’ll have more money to control.
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