If you’re not saving money, here’s why you should start right now.

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As the famous quote goes, ‘life is what happens to you when you’re busy making other plans.’ And yes, there will always be surprises in life, but if you’re never prepared for the unexpected, making your dreams come true can be pretty difficult. There’s nothing wrong with encountering a few bumps in the road – as long as they don’t knock you completely off course.

With life’s challenging coming at us from every turn these days – student loan debt, credit card debt, the high cost of living, etc. – it can be tempting to just live for the moment and put off thinking about the future for ‘later.’ And a lot of Americans do this very thing. 7 in 10 people have less than $1,000 in savings.

The best way to save money is to just start.

Don’t wait to save more until you make more. Start saving as much as you can right now.

Saving money is a decision. It’s a decision you make to help you achieve your long-term goals while making sure that the impact of any financial surprises – a car repair, a hospital stay – is minor and temporary.

The problem with this is that a great deal of Americans – 69% actually – have less than $1,000 saved. Too many of us either live paycheck to paycheck or beyond our means. Living within one’s means often means making a decision to not do things we want to do right then in order to plan for a better future.

So what’s the best way to achieve both your short and long term goals? Focus instead on thinking of the great things you’ll do when you have enough money in the bank to do all the things you want to do. Don’t waste money on things you don’t need.

Here are some tips for putting a savings plan into motion:

A budget sounds boring but think of it as a blueprint for living.
You can’t build a house without a blueprint from an architect or builder. The same goes for saving money. You can’t begin without a solid plan that’s written down. And if you haven’t created a budget yet – that’s OK, a lot of people haven’t. A Gallup poll from just four years ago found that about 60% of Americans don’t even keep the simplest of budgets.

To get started, write it all down.
Keep this in mind: follow the simple 50/30/20 guideline favored by many financial experts. This setup divides your money into three pots – 50 percent of the total reserved for essentials (housing and food), 30 percent for lifestyle choices (entertainment, gym memberships, etc) and 20 percent for financial priorities, like paying off debt and savings.
Even without immediate changes to where your money goes, you’ll get a quick snapshot of how your spending profile could be tweaked to start building smarter priorities.

Start at 10% (with an eventual goal of 25%).
After examining your spending profile, try to put aside between 10 and 20 percent of your gross income – the amount of your paycheck before everything is taken out. Even the low end of that adds up quickly – if you can put aside 10 percent of each paycheck, you’ll have saved more than a month’s salary in your first year.
If 10 percent is impossible right now – don’t worry! Use that as a goal you can work toward. With the 50/30/20 rule, determine which parts of your spending should change given how much money you have coming in. Cutting out a few, infrequent luxuries may not change much, but perhaps bigger costs like housing and transportation can be trimmed.

Be prepared for an emergency.
Long-term financial goals are great, until they’re undermined by a significant expense that you never saw coming. You may have been lucky so far, but you can almost count on a huge, unexpected cost at some point in your life. That’s why an emergency fund should be one of the first priorities of your budget. Instead of draining funds meant for other wants and needs, you’ll have an accessible pot to patch immediate problems.
How much should be in your emergency fund? Consider shooting for three months of expenses – that’s three months of absolutely non-moveable living expenses, like your rent, utilities and grocery bills. That will give you sufficient breathing room in case you lose a job or get hit with a big unforeseen bill.

Pay down your debt.
Building an emergency fund is important – but not necessarily more important than aggressively attacking the debt burden you might have. Think about it: it doesn’t make sense to have several thousands of dollars in a savings account if you’re still paying hundreds of dollars a year in credit card finance charges because you’re not paying off all of your debt.
That doesn’t mean you can’t save for emergencies until your debt is zero, but you might consider the best balance to both save and reduce your debt.

Make room for some rewarding fun.
All of your dollars headed for savings doesn’t have to be a formal set-aside for serious matters like retirement and the roof (literally) caving in. You can save for fun stuff, too – like a vacation or a down payment on a new car. The idea is to make all of your saving purposeful and efficient so that every dollar you have coming in is being used for maximum leverage to help meet your goals.

Do it automatically so you don’t think about it.
One of the easiest ways to set – and keep — a savings plan into motion is by staying out of your own way. For most people who earn a traditional paycheck, you can set up an automatic savings plan with your bank that directly deposits a preset amount. In addition, many banks and credit unions allow customers to set up sub-accounts for different savings buckets like “emergencies,” “vacation,” or “taxes.”

Want a truly aggressive savings strategy?
As Kimmie Green, a consumer money expert at Intuit advises, you should shoot for saving 25% of your overall gross pay with the goal of having saved 1x your annual salary by the age of 30 and continuing to increase that multiple every five years. So, by the age of 40, you should have saved 4x your annual salary. It’s certainly a big task but the younger you start doing it, the easier it can be to achieve.


Your overall financial profile and age will determine how much you should set aside right now for retirement savings. There’s more on that here but try to at least start by saving the minimum amount to get any matching funds offered by your employer.

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