Most Americans have a serious problem with savings.
In fact, a 2022 study found that 56 percent of Americans had less than $1,000 saved up. More specifically, 30 percent of Americans had no savings at all.
Because you’re reading these words, chances are that you’re in the percent of Americans who have enough cash saved up to absorb an expense—and probably a good deal more.
Still, as you look to the future—traveling with your family, supporting your favorite causes, paying for your children’s education and their weddings, and saving for your own retirement—your savings account may be a cause for concern.
Money has wings, after all. And if you’re like most people, you could always use at least a little bit more in your account. If your goal is building a solid savings account so you can cover all the major expenses you expect to incur over the rest of your life, consider putting together a plan that helps you meet your long-term financial goals.
How to Develop a Weekly Savings Plan
First and foremost, saving should come only after you put together a financial plan. That way, you will know where you are going, whether you are on track to meet your goals, and how much spending you need to cut.
When it comes to saving money—and spending it—everyone has different priorities.
Whereas some families are most interested in stockpiling cash to send their kids to college without debt, others might be more concerned with saving money so that they can go on unforgettable vacations. At the same time, some families like spending money freely, whereas others might be more reserved in their spending habits.
You know your circumstances better than anyone else. As such, only you can decide what your weekly savings plan should look like (i.e., how much money you should set aside and where that money should come from).
Once you’ve figured out what your goals are and how much money you’ll need to attain them, you can then begin to work backward to figure out how to get there.
For example, you might decide to route something like 10 percent of your paycheck to a savings account to start stockpiling cash automatically. You might also choose to put big windfalls—such as tax returns and bonuses—directly into your savings account to build a bigger cushion.
Although your long-term financial plan is a critical component of your weekly savings plan, it is not the only thing you need to include.
Up next, let’s explore some of the other things you may want to do to increase the chances that your plan works for you.
1. Monitor your cash outflows
Just because you’ve put together an incredible plan doesn’t mean that it’s going to meet all of your needs on its own. Consider monitoring your spending on a weekly, or at least monthly, basis and track it over time to make sure you’re not spending your money recklessly.
Keeping tabs on your spending might take some time, but take comfort in the fact that it would have taken a lot longer just a few years ago. Virtually all banks and credit card providers let you easily monitor your spending online, and new services such as Mint and EP Wealth’s Financial Health Assessment consolidate all of that data in one place, streamlining the process.
2. Improve your spending habits over time
No matter how much you’re spending these days, odds are that you could probably cut your expenses at least a bit. For example, a $5 cup of coffee every day adds up to more than $1,500 over the course of a year, and you could probably get a top-notch espresso machine for less than half of that.
As you analyze your spending and compare it over time, you’ll likely identify areas for improvement. The more you focus on optimizing your spending, the easier you may find it to afford those trips to Bali, tuition bills, and philanthropic endeavors.
3. Leave some wiggle room—and learn from your mistakes
You’re not a robot (unless you actually are some kind of AI-powered bot!).
Even if you are the steadiest spender, you’ll probably splurge every now and again. Maybe your daughter turns 16, and you want to get her something really special. Or maybe your favorite team makes the Super Bowl, and all of a sudden, you’ve decided to take your family to see the big game.
On one hand, there’s no point in pinching pennies for decades and having no fun, so you may want to consider building some extra room in your weekly savings plan. On the other hand, you can also learn from your mistakes. If the brand-new iPhone comes out and you immediately shell out $1,000 even though your current model meets your needs perfectly, you might want to consider waiting to upgrade next time.
A weekly savings plan is a critical part of a healthy financial future, but it is only one part. To learn more about what you can do to secure a healthier financial future, check out our new e-book: The Retirement Planning Guide for People Who Don’t Want to Work Forever.
DISCLOSURES
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this article. EPWA has used its best efforts to verify the information presented. However, EPWA cannot guarantee the accuracy or completeness of the information included. All expressions of opinion are subject to change without notice.
- This savings article should be used as a general tool that could assist you in considering your expenses and savings. It, however, should not be viewed as a comprehensive analysis of budgeting techniques, a definite savings formula, nor is it uniquely tailored to your situation.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. Always consult a professional Financial Advisor before applying any of the approaches or strategies made referenced directly or indirectly herein.
- The need or type of savings plan or strategy required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the analysis offered, or the strategies referenced here will satisfy your savings requirements. Other saving strategies not referenced in this article may align more to your specific needs.
- Nothing referenced here should be viewed as indicative of actual or expected results. There is no guarantee or assurance that any results, positive or negative, will be achieved or sustained. Actual results may be better or worse than the projections or analysis offered or referenced herein.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. The risk of loss can never be eliminated even if working with a professional.