How You Can Start Saving Today

How You Can Start Saving Today

Saving money. It’s something we all know we should do, but how many of us are actually doing it? Whether it’s for an emergency fund, a future purchase or trip, or financial security, we all should be saving. So why aren’t we and how do we start?

The Federal Reserve Reports that 39% of Americans don’t have enough money on hand to cover a $400 emergency. That’s a pretty big deal if your furnace breaks in the dead of winter and you need to purchase a new one or pay to get it fixed. You could pay for it on a credit card, but remember that you’ll be charged interest on the payment until it is paid off, adding even more cost than the original amount. The best bet? Pay with cash. But to do so, you’ll need to have money saved up.

The standard recommendation is that every adult have enough money saved to cover a minimum of three months of essential living expenses. Ideally, it should be six months, but let’s not overwhelm ourselves. That’s electricity, food, water, gas—everything you need to survive. Without savings available, this could be devastating.

What’s an easy way to start saving money?

The solution to getting started saving can be found jingling in your pocket, lost between couch cushions, or on top of a bedside table: spare change. If you rounded up to the nearest dollar with every purchase you made and stashed the change away in savings, you could be on your way to meeting that standard recommendation of three months expenses faster than you think.

Let’s say you make an average of 5 purchases in a typical day.

  • Coffee: $3.05
  • Lunch: $14.24
  • Snack: $4.15
  • Gas: $40.62
  • Groceries: $60.20

By rounding up to the nearest dollar, the change leftover from those purchases is:

  • Change from coffee: $.95
  • Change from lunch: $.76
  • Change from snack: $.85
  • Change from gas: $.38
  • Change from groceries: $.80

The total of which is $3.74. Now, if you rounded up to the nearest dollar on those five purchases every day, you’re walking away with:

  • $26.18 a week
  • $112.20 a month
  • $1,365.10 a year!

And that’s just on five everyday, mundane purchases. Imagine if you did that on all your purchases, including monthly bills, big online purchases, daycare?

But let’s be honest, not many of us pay in cash and get change in return. So, although the idea of a change jar is a great idea for collecting those few and far between cash purchases, it’s not going to work for the 80% of Americans that prefer card payments over cash. Most of us need a digital coin jar.

How can I save without using cash?

Here’s where a “round up” account, like Auburn Savings new Simple Change Savings, comes into play. With a round up account, you can have the “spare change” from purchases made with your debit card be automatically deposited into a savings or checking account. So that $3.74 a day? It builds up without you even having to think about it! You can check your daily round ups online or on your monthly statement and watch as it grows without ever having to lift a finger (except to enter your PIN on the card reader).

The biggest obstacle most people have to saving is simply getting started. The truth is, once you realize an easy way to incorporate it into your financial routine the easier it becomes, and watching that money build up over time is great incentive to continue.

 

Click here for more information on our Simple Plan Savings account and how it could help you start saving today.

 

Sources: Federal Reserve

Fundera