How Much Should You Save Each Week
How much should you save? As much as possible.
While the government says we're out of the recession, it sure feels different for those of us who live on
Here, according to the
It's hard to save money even if you have your full income to work with. But if your family income has declined, finding places in your budget to save will be tough.
Nonetheless, you can do it. In fact, the national savings rate is higher now that it's been in some time. Americans are actually spending less than they earn and saving the rest.
If you want to save money each week, you've got to look at all of your expenses, both big and small, and make meaningful cutbacks.
Start with the small stuff you spend every day, including gourmet coffees, vices (cigarettes and alcohol), newspapers, meals out, dog-walking, baby-sitting services and other child-related expenses, packs of gum or candy or other items you purchase more than once a week.
Add up the total. For every
Are you even aware that you make these purchases? You might find that picking up a newspaper on the way to work has become so much a habit that you're hardly aware you're making the purchase.
Try to make substitutes that will give you the same pleasure and enjoyment that you get from these daily purchases, but cost less. For example, instead of picking up a newspaper in the morning, try reading the headlines online. Set up a
Make coffee and bring it along, or buy a small one-cup coffee pot to keep at your desk. Cook more, eat out less, and make sure you bring your lunch to work as often as possible.
With all the saving you're doing, it's important to step back and look at how much money you've set aside and how well the pot is growing.
I've kept a big glass jar (it was an old jar that belonged to my grandmother) in my home office for at least 20 years. Every time I have some loose change in my pocket or wallet, I empty it out into the jar. Over the years, the jar has held at least hundreds of dollars worth of change that I dumped in there just because I didn't feel like carrying it around.
Each day, simply take the change out of your pocket and put it in a jar. If you don't have any change from the day, then take your lowest denomination bill and stick it in the jar.
If you save
This is truly the beauty of what I call "found savings" -- it adds up each week and you'll never miss spending it.
How much should you save each week? That depends on what goals you're saving for. If you're trying to save up for a down payment on a home, you'll need at least 3.5 percent of the purchase price in cash (for an FHA home, and more if you're using conventional financing), plus cash reserves and cash for closing costs. You'll also need cash for your move. These days, if you are planning on buying a home, the more cash you have on hand, the easier time you'll have obtaining a loan.
Let's say you need a total of 10 percent cash to pay for all of these things, and you're interested in buying a house for
Over three years, you'll want to try to save at least
Write down everything you spend each day, each week and each month for two months. Then, add in annual expenses, like a vacation or a big car repair.
Start "trending down" -- i.e., start avoiding more expensive items and choose those that cost less. Instead of eating out six to 10 times per month, eat out only once or twice a month. Offer to exchange babysitting services with friends instead of hiring a babysitter. Instead of going out to the movies, watch free movies on cable or exchange DVDs with your friends. Instead of paying for concerts, try attending free concerts and events put on in your local community.
If you want to save big dollars, concentrate on the little expenses you have each week and soon your savings jar will be filled to the brim.
On a final note, I've received some letters from readers who tell me that now is the wrong time to save money. These folks believe that now is the time to spend money and help the economy.
While that advice might be reasonable for those that have the money to spend, a large number of American families need to have cash in hand to buy homes, to reduce their debt to raise their credit scores, to be ready in case they lose their jobs, and to prepare for future expenses, kids' college educations and retirement.
I wonder if those people that believe that more Americans should be spending money now are the same people that think the U.S. government should control its spending. Post a comment on this story at www.ThinkGlink.com and share your opinion.
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Personal Finance - How Much Should You Save Each Week
(c) 2010 Ilyce Glink