If You Only Make One Financial Goal This Year, Make It This One

woman and piggy bank

I don’t mean to pry, but how’s that emergency savings account coming along?

I ask because a recent survey seems to strongly suggest that it’s not coming along very well at all.

Per GoBankingRates.com, 69 percent of Americans had less than $1,000 in savings in 2019. Meanwhile, the percentage of Americans with absolutely no savings has risen from 28 percent in 2015 to 45 percent in 2019. That’s a huge problem.

Why is saving money so important?

Generally speaking, most people don’t save money because they don’t think they can. We have a limited amount of income and a sometimes seemingly unlimited number of expenses. Finding room for regular savings can be incredibly difficult.

Of course, having money available in reserve can be a life-saver in the event of an unexpected setback. But even if you never experience a single mishap in all your natural life, saving money can help you save even more money. Think about it.

When you save money, you can invest it. Even a simple savings account with a miniscule interest rate (which is unfortunately most savings accounts) can earn you money on your money. But if you work with a qualified professional and make wise investments, you can really grow your savings into a helpful nest egg.

By saving money you can also avoid buying things on credit. And while it’s important to use credit to help build your credit history, using credit to pay for things you can’t afford outright is going to cost you in interest. The bigger the purchase and the higher the percentage rate, the more you’ll end up paying. By saving money and making purchases in full, you can save a lot of money in future interest payments.

When you have money in hand, you’re less likely to overpay. Having money in savings always puts you in a more favorable position. By having money available, you’re more likely to be able to negotiate a better deal on a large purchase. It’s also much easier to avoid the kind of overly expensive purchases and loans consumers are often stuck with when they’re caught in an emergency and don’t have the necessary funds on hand.

Don’t overthink saving

If you haven’t been saving, don’t stress over it. Just start. Even a tiny amount every now and again can add up over time. To make it easier, you can automate the process. Most experts suggest saving 10 percent of every paycheck. If that sounds horribly unreasonable, try saving just one percent.

If you’re the sort that responds well to goals, set a savings goal for the year. If that makes it too easy to ignore, set a weekly savings goal. It takes less than $20 a week to reach $1,000 for the year.

Experiment with different methods. Experiment with different amounts. Whatever you do, just don’t put it off any longer. The sooner you start sooner, the easier it gets. And once you’ve gotten a taste for saving money, you won’t want to stop.

Updated January 2020

Tagged in Goal setting, Budget tips, Savings accounts

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.