I read a recent report that said Americans are saving much less these days.
According to this article, the average personal savings rate of Americans has been 8.9% of gross income for decades.
In 2023, the average dipped to 4.6%.
You may be well above the average, or far below it.
Shit, with current inflation rates, you may not be saving anything nowadays.
But if you want to form a better savings habit, I have a simple trick for you (but make sure to read the cautionary note at the end of this email!).
As with most habits, you can stick to them best when you start small.
Here’s the trick:
Just start saving 1% of your income.
If you make $10,000 per month, that’s only $100.
If you make $2,000 per month, that’s only $20.
Assuming you at least have a job, even with debt and bills and all the other financial constraints in your life, you can likely find some way to save just 1% of your income this month.
Then, next month, you bump it to 2%.
Then, the following month, you bump it 1% more, up to 3%.
And each month, you keep increasing your savings rate, just by 1%, until you slowly reach your ultimate savings goal.
Doing it incrementally like this will help you in two important ways:
1) It’ll help you begin a savings habit by making it so ridiculously easy to do, that it’d be really hard to say no to doing it.
2) With one month between each percentage bump, you have plenty of time to come up with creative ideas and ways to save money.
Caution: do not increase your savings by more than 1% each month!
Often when people begin this exercise, they realize they can save way more money than they initially thought, and want to jump straight up to a 10%, 15%, or 20% savings rate.
But regardless of your end goal, you must start small, and increase it very slowly.
This will foster consistency and sustainability.
And it will ensure you don’t get too radical at first, become remorseful about your own zeal, then abandon your savings habit altogether.
Paul Denni
P.S. If you want to make more wise decisions with your money through creating an estate plan, you can book a consultation with me to get started.
My consultation isn’t free, but if you hire me for services, I will discount my service by the amount of the consultation fee.
Here’s the link to book a consultation:
https://calendly.com/talktopauldenni/15mincall