Stop Saying No To Your Bank Account


The personal savings rate of Americans has continued to hover around a mere 4-5% according to the Economic Research Federal Reserve Bank of St Louis.

This is a disturbingly low number considering many financial advisers recommend saving a minimum of 10% or more! A 5% savings rate means Americans are spending a whopping 95% of their total income.

What’s Your Personal Savings Rate?

Want to know where you stand? Calculate your personal savings rate by first adding up all your income for the month (for our purposes income is defined as after taxes but before voluntary deductions). Then add up everything you DID NOT spend–deposits into savings accounts, retirement accounts, cash on hand.

Divide your unspent funds by your total income and you will have your personal savings rate

Ex.: Monthly Unspent $250 ÷ Monthly Income $5000 = 0.05 or 5% Personal Savings Rate

Why it matters

Undersaving will leave you ill prepared for an unexpected financial emergency and your financial future. The issue here is many of us are more willing to say yes to spending more than we say yes to our bank accounts. Consumer spending reached an all-time high of $11330.70 billion in the fourth quarter of 2015  according to U.S. Bureau of Economic Analysis

Ways to say yes to your bank account

Continually saying yes to spending will make your financial goals next to impossible to achieve. To start saving more, the first place to look is in your monthly budget and start saying YES to your bank account in ways listed below.

  • Find a line item in your budget worthy of reduction and add the additional funds to your personal savings. Scrimping to save every penny may not sound as exciting as Sunday brunch, but your future rainy days will thank you.
  • Consider getting a part-time job or sell some of your stuff to increase your income and put the proceeds in your savings.
  • Another great idea is to increase your retirement savings incrementally by 1% every six months.
  • Set up automatic savings and commit to it as if it were a bill.
  • When you get a raise, allocate the full amount toward savings.

In our example above, your total income was $5,000 per month and you had a 5% personal savings rate. If you will now bring home $5,500 a month and you allocate the entire raise to your savings you will have tripled your personal savings rate from 5% to 15% with no change to your current lifestyle.

You can afford that!

Ready to increase your personal savings rate? Which saving strategies will you take on to achieve it?


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