Americans are so financially out of shape these days, they pull a muscle just thinking about saving money. Two in three Americans don’t have enough money in savings to afford a $500 financial emergency. Nearly one-third of households making $75,000 or more a year occasionally live paycheck-to-paycheck. Some workers believe they’ll work until they drop dead or become too sick. It’s an epidemic.
Much like working out, a variety of excuses keep millions of people from saving money. Perhaps you think you’re too busy to budget, too young to worry about the future, or too broke to save anything. But, in the end, nobody cares about your finances as much as you. Let’s take a look at the three best money exercises to help build your bank account.
1. Automatically pay yourself first
Paying yourself first is a golden rule in personal finance. The concept is simple: Everyone is collecting money from your paycheck, why shouldn’t you be the first person in line? Instead of trying to save what money is left over at the end of the month, which always seems to be less than predicted, place money aside before spending money on anything else. This doesn’t mean you should stop paying monthly bills in order to save, but rather adjust your spending habits so you find a healthy balance between savings, necessities, and wants.
After paying everyone else first for so many years, it can be difficult to break the bad habit. Make your savings automatic so you don’t face temptations. Having your contributions pulled directly from your paycheck or bank account significantly improves your chances of building up your bank account. A report from HSBC finds regular savers accumulated an average of $168,099 in retirement savings and investments, compared to only $86,529 by those who only saved from time to time.