If saving were as easy as spending, we’d all be sitting on nest eggs the size of mountains. Unfortunately, most Americans struggle to save, and many carry more than $10,000 in debt on their credit cards.
Turns out we’re not sitting on mountains of money. We’re perched on the edges of debt pits.
That’s a precarious place to be. And depending on how deep of a pit you’re peering into, it can seem almost impossible to find a way out. But there’s no need to panic—yet. There are many small, easy steps you can take to pull yourself back from the danger zone.
First, understand the difference between saving—such as cutting back on expenses—and getting extra cash into a savings account. The five steps that follow might seem insignificant. But if you take them and put the resulting savings into an actual account, the money adds up.
- Save Automatically. It doesn’t matter how much: $5 a month, $10 a month, $20 a month. Just do it. If you bank online, set up an automatic, periodic transfer from your checking account to your savings account. If you don’t bank online, go to the bank and have a teller set it up for you.
- Pay With Cash. Even if you earn rewards on a credit card, even if you use a debit card, pay with cash—especially if you’re trying to stick to a budget. Incidental purchases add up fast. Think coffee, bagels, movie tickets, ice cream cones… the list of things we purchase without a lot of deep thought is a long one. If you pay cash for every one of them—and find yourself constantly trekking to the ATM—it’s a near guarantee that your rate of spending will decline.
- Collect Loose Change. Pay with bills and save all the change—all of it! Dump it all into a jar for six months. Then go to the bank and use the cool change counting machine to sort your coins and put the balance into your savings account. Repeat every six months. Will you become a millionaire? No. But you will have chunks of money tucked away that you wouldn’t otherwise.
- Save Your Windfalls. Whether it’s a $2,500 tax refund or a $25 cash gift, put it in your savings account. You won’t have to do this forever. But until you build up an emergency fund and pay off the credit cards, you need to do it.
- Turn Splurges into Savings Opportunities. If you need the Iced Cinnamon Almond Milk Macchiato or that new TV—and you’ve got the cash to pay for it—that’s fine. But however much you hand over to the barista has to go into your savings account, too. As with pocketing your windfalls, you won’t have to do this forever. But it’s a great habit to get into—at least until you’re no longer hanging over the edge of a debt pit.