Want to be a better saver? As the saying goes, “Saving saves lives.” Having an “emergency” fund comes in handy when the unexpected happens: home expenses, car mishaps, health changes, or job loss, to name a few. Money in reserves can help you avoid debt and stay afloat financially in those instances. However, it’s equally important to have money in the bank for reasons BEYOND emergencies, too. Savings can also be for opportunities, like the classic car you’ve always dreamed of fixing up, or a rental property that’s too good to pass by. That’s why we call savings your emergency fund AND opportunity fund.
Yet, however critical saving money is to our success and well-being, there’s often room for improvement. A typical savings recommendation is to have 3 to 6 months of your income saved in an account. This benchmark is a good start since it can help you stay afloat for a short time. However, it’s a good idea to have as much as you possibly can, because you can’t truly guess what you’ll “need”… or want.
The Average Savings by Age Demographic
While it’s hard to put a number on savings—since everyone has different lifestyles, desires, and incomes—there are some clear patterns of saving among age demographics. For example, the Fed shares that those younger than 35 have an average savings balance of $11,200, while those 65 and older have an average of $60,400 socked away.
Those between 35-44 have an average of $27,900; age 45-54 have $48,200; and 55-64 have an average of $57,800.
There are many ways to interpret these numbers. For example, you can chalk it up to time, which would be true: the older you are, the more time you’ve had to save money. Still, there are dozens of variables at any age that may affect one’s ability to save money, including using the account for its purpose: an emergency or opportunity. If you want to break the statistics and be a better saver and save more money, you’ll have to think outside the box.
5 Tips to Be a Better Saver
1. Start Now
We know, this much is obvious. Part of what the above information conveys is that savings are built over time. This means being diligent and patient, and having the discipline to save with the intention of saving… not spending.
Time is the variable that makes your savings grow and earn interest. Alternately, every dollar you’re not saving is a moment you’re losing interest on those dollars. If you want your dollars to have the most impact, start now and with discipline!
2. Have a Multi-Purpose Account
We love thinking of savings as an emergency/opportunity fund because this gives your dollars multiple purposes. Too many people consider their savings objectives as separate things. They want to save for emergencies in a separate account from their opportunities and have another account altogether for retirement. Yet these single-use accounts are highly inefficient. That’s because when you pull money from a typical savings account, you rarely think to replace it. When you pull the money, it’s gone. It can’t earn interest, and your account starts from the bottom again.
By using whole life insurance to store your cash, you can save for everything at once. A policy loan allows you to borrow money against your cash value. This means that you can use your money without pulling it from your account. It continues to earn interest and dividends, which is invaluable growth. Then, you pay back the loan, which removes your cash value as collateral and allows you to use it all over again on something else. One account, many purposes.
3. Save More and More
It’s a good idea to save a percentage of your paycheck. Many people aim for 20% as a good rule of thumb. We think wherever you can start is perfect. If you can only save 2% of your paycheck, that’s leagues better than 0%. As you become more able, you can inch that percentage forward. Moving from 2% to 4% savings is already a 100% increase.
This is even better than waiting until the “right time,” after you’ve paid down your credit card or gotten a raise, etc. That’s because even doing the minimum helps you create the habit so that it becomes like second nature. So by the time you actually feel “ready,” you’re more likely to save that excess. And in the meantime, you have something rather than nothing.
4. Save Like You’re Paying Bills
Did you know you can be a better saver just by acting as though you’re paying a bill? Having your savings show up like a “bill” is a blessing in disguise, because then you prioritize your savings above other spending. After all, everyone pays bills first. If you save like you’re paying a bill, you ensure it gets done. Too many people have trained themselves to save LAST, and incidentally forget to save at the end of the month. That, or they have nothing left to save.
When you pay a whole life insurance premium, your cash value increases. Therefore, we consider it “saving.” So although paying your life insurance premium feels like another bill, you can rest assured that you’re getting direct living benefits from those premiums as cash value you can leverage.
5. Save automatically
The next piece of the puzzle, as you may have guessed, is to automate your savings. Even the best of habits can fall to the wayside. However, if you automate your savings, you don’t even have to think about it…it simply happens.
In the world of finance, this basically means setting up an “auto-pay.” If you use mobile banking for your credit cards, you know you can set up a scheduled monthly transfer, so your payment is always on time. You can actually do the same thing with your savings! If you use whole life insurance, you can create an automatic premium payment to go straight from your account.
Ready to Be a Better Saver?
If you’re ready to make savings a habit, we’re ready to help! Connect with us here or email firstname.lastname@example.org to start the discussion about whole life insurance, and how much you’re entitled to, today. For more resources on creating a Prosperous life, sign up for our Prosperity Action Pack.