To Spend Or Not To Spend: An Analysis of American Savings and Budgeting
American savings are not as high as they should or could be, and there are expenses every day that are either a necessity or a want. As the graph shows, the general trend is that the older you get the more you have in savings. From my experience, as I got older and had more responsibility and bills I began to take a look at my spending and saving habits. At a younger age if I would want a candy bar or a toy I would buy on impulse without the concept that it takes an hour to earn the money it costs to pay for the item. This is a small scale example of each decision that must be made in order to balance living expenses with savings.
According to cnbc.com “60% of millennials don’t have enough money to cover a $1,000 emergency”
Being stuck without savings in an emergency situation leaves someone in a position where a financial situation becomes worse by having to take a loan, gain credit card debt, or go without other basic necessities. Ask yourself,
“What if my refrigerator dies, my car breaks down, or I need a new drain field… can I afford it?”
Now is the time to start planning for savings and improving budgeting techniques to be set up for financial success in the future. I realized I needed to take control of my financial situation, and began to budget.
Budgeting Tip: Don’t live outside your means! It might be the “ugly truth”, but be realistic with what your income is and what your expenses are. for example: if you make 100 per week live like you make 60
There are many resources out there to start budgeting money. The goal is to see the big picture on where your money is being spent on a monthly bases and assessing realistically where money can be reduced in order to increase your savings. One piece of advice given to me was start by saving even 1% of your paycheck and increase it as time goes on. Individual situations vary so finding the best fit for you is the key to being successful.
Ways to start budgeting:
Track or write down all expenses and profits.
Plan financial goals, big and small, with actual dollar amounts.
Have automatic transfers from checking to high yield savings account.
Any extra money or bonuses… add it to savings!
Tools available to help budgeting:
Apps & websites: Credit Karma, Mint, YNAB(You Need A Budget), and feedthepig.org
Spreadsheet Software for computer
Talk to bank or accountant
Hang labeled envelopes on the wall and put in money in set increments
Prior to the Great Depression, people lived similar to millennials in regards to low savings. During the Great Depression, Americans were forced to wait in line just for bread to eat. As the economy started to recover, Americans began to be more conservative about spending and saving. Lets not forget the lessons of our predecessors.
