Just got paid, it’s Friday night. . . Most people are pretty excited about payday. Usually a few portions of the check already are spent, whether it be monthly bills or entertainment. Rarely, however, will you hear someone say, “I’m so excited to save some money.”
Everyone knows that saving money is crucial to your future and to your quality of life. In the African American community, 67 percent of households do not have three months of savings (Money.com). And, according to a study by the Federal Reserve, many African Americans will have to sell an item or turn to family and friends in the case of emergency.
As you take the Michigan Chronicle/Bank of America Financial Fitness challenge, start making changes that will help solidify your financial future. Although the future can seem far away, and sometimes dense, start saving now, before it becomes crystal clear that you don’t have any savings. Keep reading for five important steps to help you start saving.
- Think one percent at a time
Resolve to put just one percent of your income into savings over the next month. By doing so, you’ll flip an important mental switch: Before, you were someone who wasn’t saving for the long term, but now you are. That’s a key difference, because it’s much easier to ramp up your savings if you’ve already formed the habit. So however modest, take the first step.
- Get analytical about your budget
You may think you have no breathing room, but take a hard look at the money you shelled out over the past month. Divide every cost into two categories: “need” and “want.” Then go through your “wants.” Are you getting manicures when you could touch up at home? Friday night takeout pizza when frozen would do? Reduce those extra expenses to create space in your budget for regular saving.
“Saving money, even if it’s in small increments, when done consistently, can eventually add up to a substantial amount,” said Tiffany Douglas, Senior Vice President, Market Manager with Bank of America (BOA). “Staying focused and asking yourself what kind of future you want to have, really helps keep the eye on the ball.”
- Prioritize your future self
Each month, you pay regular bills: your cell phone, your student loan, your rent. Add someone else to that list: your future self. When you treat savings as mandatory, you make it that much easier to stay serious about staying on track.
- Make it automatic
Once you’ve figured out how much you want to save each month, and you’re confident you’ll pull in enough income to meet that goal, you can set up automatic transfers between your checking and savings accounts. By automating deposits, you can eliminate the temptation to redirect your extra money to other things.
- Go slow and steady
Saving for a down payment on a house, an emergency fund or a hard-earned vacation might seem an impossible hurdle. But remember that you can achieve your most ambitious savings goals if you work toward them gradually and in small increments. By forming the basic habit of saving and by sticking to specific, attainable goals, you’ll lay the groundwork for a lifetime of financial progress.