A recent survey from Forbes found that 1 in 4 Americans across all age ranges have less than $1,000 in savings. Sound familiar? If you’re in the same boat, you’re not alone. Between rising home prices, inflation, and stagnant wages, getting ahead can feel impossible.
Not everyone can afford to save hundreds of dollars every month or max out their IRA. But there are steps you can take if your savings account is feeling light.
Set aside at least $500 for unexpected expenses
What happens if your tire pops, your electricity bill is higher than you expect, or you have to visit the emergency room? Those little unplanned bills can become a rolling pile of debt if you don’t have at least a small emergency fund. While having a three-month cushion is a great idea, it’s not feasible for many of us.
Start by opening a high-yield savings account and saving until you have at least $500. That will cover many small emergencies and give you some peace of mind.
Why a high-yield savings account? They offer higher interest rates than traditional banks. Say you put $500 in a savings account at a traditional bank that only offers .01% interest. If you leave it for two years, you’ll earn a whopping $0.10 in interest — not even enough to hit up a vending machine.
Put that same $500 in a high-yield savings account that earns 4.20%, and you’ll earn $42.88 over two years. That means your savings will continue to grow even if you can’t contribute more.
Automate your savings
If saving is a challenge, automating the process can make it easier. If the money isn’t in your checking account (or your hands), you can’t spend it. Look at how much you can save each month and set up an automatic withdrawal to move that money from your checking account to your savings high-yield savings account.
Choose a day that works for you — that might be the day after you get paid or the week after your rent or mortgage payment is due. Even if you can only save $20 a month, putting your savings on autopilot makes it easier to save.
Let’s say you opened up that high-yield savings account and got it to $500. Then, you automate moving $20 a month to savings. After two years, your savings would hit $1,042.33. You’d no longer be one of the 1 in 4 Americans who don’t have $1,000 in savings!
Find ways to increase your income
For many of us, saving is hard, not because we lack willpower or because we spend too much on items we don’t need. Saving is tricky because sometimes, at the end of the month, there’s just nothing left.
If you’ve already cut your streaming services, switched phone carriers, and followed all the other well-meaning budgeting advice, then the solution is to earn more money. Which, of course, is easier said than done.
How you increase your income will depend on your lifestyle, skills, and how much you need to earn. If you have kids, getting a part-time job might not be possible. Passive sources of income, like doing surveys, aren’t always super passive but can help you earn a bit extra.
Secret shopping apps like Field Agent or gig work through Uber may fit into your schedule. Other options might include pet sitting, offering after-school care for neighborhood kids, cleaning houses, or offering tutoring services.
The important thing to remember is that you’re not alone. Taking small, steady steps will help you reach your goals.
