As of 2019, around 32% of Americans reported having nothing in the way of savings. This means that during emergencies or other unprecedented situations like today’s current pandemic, at least a third of the population has nothing to fall back on finance-wise leading to dire circumstances across the country.
That brings us to the all-important question: Have you started saving yet?
Whether by choice (like you’ve decided to put off saving) or due to circumstance (maybe you are struggling financially), it’s okay if the answer is no. However, getting a head start now should be the next thing on your to-do list.
Why Now is the Time
The Denver Channel gives a compelling reason as to why you need to save now, even amidst a worldwide pandemic. Having cash at this time is extremely important given the uncertainties of both the present and the future. Consequently, having more cash on hand now will lend some much-needed stability. For example, savings in the $250–$750 range is enough to make a difference in terms of paying rent to avoid eviction or paying utilities to avoid service interruptions. In other words, the few hundred dollars you can save starting now could help you through potentially difficult situations later on. Moreover, saving money now gives you more time to save up for the long term.
So, suppose someone starts saving now at the age of, say, 22, with a goal of saving $3,000 every year. In 10 years that person will be 32 and will have saved $30,000. Perhaps not life-changing money, but enough to maybe set up a small business or start investing.
Saving also accelerates the learning of good money habits. The Balance explains that establishing the habit of saving first will likely be followed by other good habits. These good habits include budgeting, identifying ways to save more, and being judicious in every purchase. In other words, saving now will get you on your way to becoming money-wise sooner rather than later.
How to Start Saving
The best way to start saving is by making some lifestyle changes. Finance writer Courtney Jespersen suggests simple tips like collecting all your loose change and making a list to help plan major purchases. You’ll also need to track all your expenses, then cut back on unnecessary ones, like that cable subscription you aren’t using.
Next, you can put your savings in a bank, traditionally in a savings account. Be sure to evaluate different types of savings accounts, as some can let your deposit grow through compound interest. An option in this case is a high-yield savings account. A Marcus article on high-yield savings accounts notes how they let your overall balance, earn interest multiple times over a year as long as the funds are not withdrawn. This way you can start to create a passive income using the funds you already have. However, you’ll need to check the minimum opening deposit and maintaining balance that banks are offering so you can prepare accordingly. You must also check if there are accompanying fees, which can eat away at the interest your money is earning.
You can then start to grow your savings even more by looking for other revenue streams. One way to do this, as we discussed in our ‘Money and The Economy’ post, is to barter your skills in exchange for something. In addition, you can even start investing in areas like the stock market or forex. By growing your money, not only will you have savings to cover emergencies, but also funds to fulfill your short and long-term financial goals.
It is never too late to start saving as long as you take the view that the best time to start is now. We hope this article has given you the push to start.
Why the Time to Build Your Savings is Now