1 in 5 Americans Struggled to Add to Their Savings in the Past Year. But This Simple Move Could Help Boost Yours

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Struggling to give your savings a lift? Read on for an easy move that might yield great results. [[{“value”:”

If it seems like no matter how hard you try, you just can’t seem to find money to add to your savings account these days, you’re not alone. In a recent survey by Zety, 20% of Americans say they’ve struggled to contribute money to their savings over the past 12 months. And a big reason boils down to lingering inflation.

Although inflation cooled off considerably in 2023 compared to the previous year, living costs have remained stubbornly high. These days, most people are spending more money on essentials like utilities, groceries, and home-related expenses. Unsurprisingly, it’s impacting their ability to save.

If you’ve been unable to add any money to your savings in the past year, that’s potentially problematic. First of all, if you’re trying to complete your emergency fund, the sooner you’re able to do so, the sooner you’re protected from unplanned expenses. Also, even though the economy is strong, you never know when your company may be forced to downsize. Having a complete emergency fund buys you financial protection in the event of a layoff.

Also, right now, savings accounts are paying generously thanks to the interest rate hikes the Federal Reserve implemented to help slow inflation. So if you haven’t added money to your savings in the past year, you’ve missed out on the chance to earn more interest while rates are high.

For these reasons, it’s important to try to break out of your current cycle. And one simple move could be your ticket to doing just that.

It pays to put the process on autopilot

Many people approach the process of saving money as follows: They spend what they need to during the month, and at the end of the month, whatever portion of their paycheck hasn’t been spent, goes into savings.

It’s not a bad system if you’re someone who manages to actually add money to savings regularly. But if you haven’t put so much as a dollar into your savings in the past year, then clearly, it’s a system that isn’t working well for you.

A better system may be to automate savings account contributions at the start of each month, before you’ve spent your entire paycheck. That way, you’re pretty much forcing yourself to add to your savings and make do with your remaining funds.

Let’s say your current paycheck after taxes and deductions comes to $2,500. You might end up spending it in its entirety month after month, thwarting your savings efforts. But if you set up an automatic transfer so $200 of that leaves your checking account at the start of the month and lands in your savings account, you’re forcing yourself to save $2,400 throughout the year.

You can start small and work your way up

Of course, if you’ve spent your entire paycheck month after month over the past year, you may not be in a position to part with $200 a month. But in that case, part with less.

Start off with an automatic transfer of $50 this month and see how that goes. If it goes well, increase that amount to $60 or $75 next month, and keep boosting that contribution amount until you’re really on track to meeting your goal.

It’s easy to see why saving money might be difficult these days. But it’s important to have those savings for when you need them. It’s also a really good time to have money in the bank, because today’s attractive interest rates won’t stick around forever. So if your current system hasn’t been allowing you to save money, try automating things and seeing if that helps.

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