McLEAN, Va. (9/3/14)--If you want to boost savings, create a smart spending plan--and stick to it. It sounds easy, but, according to a recent survey by the National Foundation for Credit Counseling, Washington D.C., about 71% of people have financial worries, and 31% of them say not having enough savings is their biggest concern. Thirty-four percent say they have nothing saved for retirement (USAToday.com
On a brighter note, millennials are on top of their retirement savings game. A recent survey from San Francisco-based Transamerica found that 3 of 4 young adults born between 1979 and 1996 already are discussing saving and investing and planning for retirement with family and friends (July 15). The survey found that 18% of millennials frequently discuss retirement savings, compared with 9% of baby boomers. Seventy percent of millennials already are saving for retirement either through an employer-sponsored plan such as a 401(k) or through anther savings vehicle such as an IRA (individual retirement account).
To get a handle on spending--and saving--or to amplify what you're already doing:
Save for retirement: Aim to save 10% to 13% of your gross pay. This includes your employer match if you get one. If you're already saving enough in your employer's retirement plan to get the company match, consider opening a traditional or Roth IRA at your credit union as well.
Review housing costs: If you own a home or are thinking about buying one, principal, interest, taxes, insurance, and homeowners association dues shouldn't exceed 28%-36% of your gross pay. And don't forget about home repairs and lawn maintenance costs, even though these expenses aren't included in the housing debt percentage.
Save for major expenses: Expenses might include, but aren't limited to, a down payment for a house, children's college education, a different car, home remodeling project and emergency fund savings in case you lose your job or become ill. According to a recent study by the Federal Reserve Board, 39% of respondents reported having a rainy day fund that could cover three months of expenses.
Control living expenses: Check with TV, Internet and phone providers to make sure you're getting the lowest rates. Find out if bundling services can help you save. Compare insurance policies and check the National Association of Insurance Commissioners website for price comparisons and the Insurance Information Institute for advice about picking reputable companies. Cut back on going out to eat and picking up take-out meals.
For related information, read "Everybody's Money Matters: Deciding How Much to Save" in the Home & Family Finance Resource Center