The last week of February is America Saves Week– a great time to take a hard look at your finances. This week, organizations across the nation and military installations around the world join together to promote the importance of saving. Organizations are embracing this year’s theme, “Make Saving Automatic,” by encouraging the use of direct deposit to savings, automatic transfers from checking to savings accounts, and automatic contributions to retirement accounts.
“The research clearly demonstrates that those with a plan are nearly two times as likely to spend less than they earn and save the difference,” said Nancy Register, director of America Saves. “America Saves Week is the perfect opportunity for everyone to set a savings goal, make a savings plan, and save automatically.”
Make 2016 your year for financial action! Even with a sluggish economy, you can make changes to improve your financial future. Start small but think big with these suggestions from America Saves and the Consumer Federation of America:
• Start (or add to) an emergency fund. An emergency fund is your protection against unexpected expenses. Having an emergency savings fund may be the most important difference between those who manage to stay afloat and those who are sinking financially. That’s because maintaining emergency savings of $500 to $1,000 allows you to more easily meet unexpected financial challenges such as car repair or a medical bill and avoid high interest, short-term loans.
• Track your spending. If you’re looking for ways to cut back, your first course of action should be to know where your money is currently going. Knowing how you and your family spend money can help identify areas to reduce your spending. Keep track of every penny you spend for a month and see if you discover any surprises. Then use your spending record to make a plan for next month, and for the rest of the year.
• Let go of bad habits and bank your savings. A simple behavior change, like bringing your lunch to work rather than eating out, can add up to big savings over time. Find one or two regular habits– such as regular vending machine purchases, eating out or recreational shopping– to reduce and bank the difference.
• Go automatic! Treat savings like another bill and pay yourself first. Set up automatic monthly transfers at your financial institution from your checking to savings account or have a portion of your paycheck directly deposited into your savings. Savers who save automatically are more likely to be successful long-term.
• Save all or part of your tax refund. With IRS Form 8888, you can choose to have all or part of your tax refund directly deposited to a savings or investment account, and even divide the savings among up to three different direct-deposit accounts if you wish. Ask your tax preparer or go to https://www.irs.gov/uac/About-Form-8888.
• Take advantage of free money at work. Many employees turn down free money from their employer by not signing up for a work-related retirement program such as a 401(k) plan. http://www.americasaves.org/strategies/work/save.asp. As a result, in a recent America Saves survey, only about half of non-retired persons (52%) said they were saving enough for a retirement in which they would have a desirable standard of living.
This year America Saves is incentivizing savings through the #imsavingfor contest. Individuals can submit a photo of themselves and their savings goal on the social media platform of their choice using the #imsavingfor hashtag. They can then enter to win $500 by completing the form at AmericaSavesWeek.org/imsavingfor.
Although America Saves Week focuses attention on saving and spending in February, the America Saves and Kansas Saves websites (www.americasaves.org and www.kansassaves.org) are available year-round to provide saving tips and support. Savers can also use these websites to make a savings pledge and sign up to get savings tips by email and text messages.
Linda K. Beech is Ellis County Extension Agent for Family and Consumer Sciences.