Americans no longer save for a rainy day the way they did years ago. Long-established websites such as the Motley Fool have tracked savings rates within the United States over extended periods of time. Generally speaking, historical statistics reveal that savings rates remained above 8.75% between 1960 and the mid-1980s. Since the mid-1990s, the rate has rarely exceeded that level. The general trend over the past two decades has been to spend much and spend often, regardless of income.
Living paycheck-to-paycheck is not only a problem for the poorest Americans. Despite upticks in savings levels immediately after the Great Recession a decade ago, saving rates have fallen across many income levels. Working-age families risk the possibility of jeopardizing their retirement if they do not strengthen their financial awareness and learn how to keep track of their expenses. Many basic financial websites, such as The Simple Dollar, encourage consumers to track their spending as a basic money management principle.
Here are six helpful ideas to consider:
1. Make a Commitment to Track What You Spend.
By examining your spending patterns, you can assess if they match your short- and long-term priorities. Learning where your money is going makes it easier to understand your economic habits and decide which ones need to be changed. Make this a commitment that extends over a period of time rather than a brief one- or two-week experiment.
2. Develop a Realistic Budget and Do Your Best to Stick to It.
Prioritize “needs” over “wants.” Having dinner out four or five times a week and attending frequent entertainment events may be nice, but these decisions have financial costs. A little sacrifice now reaps dividends later.
3. Track Your Expenses in a Practical Manner.
Some people use old-time handwritten ledgers, while others may prefer spreadsheets. However, you keep track of your funds, do so in a consistent manner.
4. Consider Using Software or an App.
Even those uncomfortable with using computers will be surprised with recent improvements in the software available on computers and mobile devices. Put away the abacus or calculator. Let easy-to-use software solutions chart and graph your spending habits.
5. Make It a Family Affair.
If you share expenses with a partner or spouse, have conversations about working together to track your expenses. Have open conversations about spending priorities, even if they may seem more like diplomatic negotiations. Consider the needs of younger family members, too. Childcare and college expenses add up.
6. Accept that You Will Overspend Occasionally.
Life happens. Sometimes, we have unanticipated expenses. Other times, we may reward ourselves with a night on the town. When you do overspend, it is important that you keep tracking and not abandon your efforts. Remember also that budgets do evolve as priorities change.
By devoting a little time to track your expenses, you will gain valuable information that will allow you to make important financial decisions. Short-term sacrifices and small changes in your spending habits today will put more money in your pocket tomorrow. Take advantage of some of the excellent resources available through IT companies, including high-quality software that allows businesses and individuals to track time and expenses.
David Brown is a geek at heart. He’s worked and consulted on some major online projects over the years. David has a passion for helping people learn the benefits of steam lining their business through computer technology, thereby saving them time and money. His expertise in the computer world has helped companies time and time again, manage their businesses, employees, and clientele more efficiently.