By Lindsay Ferguson, America Saves Campaign Outreach Manager
A recent report from the FINRA Investor Education Foundation showed that 60 percent of Americans are spending all or more than their income, leaving them no money to save. While the idea of putting together a financial plan may cause anxiety and stress, the act of discovering where your money is going each month and creating a plan, that includes money to save, can make you feel proud and excited.
Even those on a tight budget can save. Here are our top ten tips for saving money when budgets are tight:
1: Find small savings that add up to big savings over time
- Keep a careful record of all of your spending for a month. You may be surprised to learn how much you are spending on such things as a daily latte or restaurant meals.
2: Comparison shop to find the lowest prices.
- When you compare prices at different stores before making a purchase, you can often find lower prices for necessary purchases — such as food, transportation, and insurance— leaving you more money to save. Bonus tip: Take a list with you to the grocery store and stick to it. This will help you from buying items you don’t need.
3: Build an emergency fund to avoid having to take out loans to pay for unexpected purchases.
- Emergency savings are usually best kept in a savings or share account, despite the low interest rates these accounts pay, because they are easy to access when you need it. Remember, keep a high enough balance in the account to avoid monthly fees. Here is more information on how to save for emergencies.
4: Open an ABLE account
- Created by the Achieving a Better Life Experience (ABLE) Act, ABLE accounts provide a savings opportunity for Americans with disabilities and their families. Individuals can save to these accounts without losing eligibility for critical benefits such as healthcare or Supplemental Security Income.
5: Ask your bank or credit union to automatically transfer funds each month from your checking to your savings account.
- Even as little as $10 or$15 a month helps. After all, that’s $120 or $180 a year.
6: Put all your loose change in a savings account.
- For many people, that could add up to well over $100 a year.
7: Avoid using high-interest credit card and payday loans.
- Payday loans typically charge interest rates of 500 percent, and the interest rate on credit card debts can run 25 percent. You can save hundreds, perhaps thousands, of dollars a year by paying off these high-cost debts. Learn more about how to get out of debt.
8: See if you qualify for an Earned Income Tax Credit.
- Many low- and moderate-income workers qualify, each year, for an Earned Income Tax Credit that can be over $1,000, and often more than $2,000. IRS Publication 596 explains how to apply, or you can contact your local tax payer assistance center for in-person help. Then pay down debt and save with at least half of the money you receive from this credit.
9: Participate in a local Investment Development Account (IDA) program.
- In return for attending financial education sessions and agreeing to save for a home, education, or business, you typically receive $2 for every $1 you save through an IDA program. So, saving $25 each month could end up as $900 at the end of a year. Find an IDA program near you.
10: Take advantage of any matches to retirement savings contributions that your employer offers.
- Some employers match up to 100 percent of your contributions.
America Saves, is a campaign managed by the nonprofit Consumer Federation of America. The campaign seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week.