Not Enough Money for a Savings Plan? Think AgainPosted: February 19, 2020
Financial experts offer plenty of advice when it comes to effectively managing your money. A quick online search for money tips yields millions of results, each providing readers with unique perspectives about what is required to live a fiscally responsible life. Yet, if you take some time and peruse the top 10 articles, or the top 100, you’ll find one tip repeated again and again: save more money.
Whether contributing to a retirement plan, building an emergency fund or simply depositing a small percentage of your take-home pay into a savings account, growing a nest egg is one of the smartest actions you can take to improve your financial situation. Financial advisors all agree that resolving to set aside between 5% and 10% of your monthly salary for savings is a resolution that you will be happy you made.
Why So Few of Us Save
For many, increasing our savings is not new advice. Experts have been touting the importance of building our financial reserves for decades. Despite this well-established advice, few of us actually do it. According to a recent survey by Bankrate.com, over 20% of Americans fail to set aside any of their annual income for short or long-term goals. And of those who do save, another 20% save 5% or less of what they earn. Financial advisors contend that we are in the midst of a savings crisis and these statistics support their claim.
If savings are the key to financial success, why do so few of us actually make an effort to save more? The answer lies in a common excuse. “I don’t have enough money to save,” is the number one reason survey respondents commonly cite as to why they do not have a savings plan. Although it’s true that we are increasingly finding ourselves under more and more financial pressure as the cost of living continues to rise around the globe, this excuse reveals something important about the act of setting aside money, namely, you’ll never feel like you have enough of it to save.
Developing a Savings Mindset
It’s a common misconception that savings plans require you to set aside large sums of money each month. The first goal of any savings plan is to get you into the habit of saving. Starting with as little as 10 dollars a week can be a great way to boost your savings mindset. Once setting money aside has become a habit, you can adjust your weekly or monthly targets as your circumstances change. For example, if in the future you receive a pay raise at work, your savings mindset will encourage you to reflect on your long-term savings goals and set aside a proportion of your promotion towards achieving them.
Grow Your Savings with Micro Investments
Developing a savings habit is important. No matter how much money you are able to set aside each month. And thanks to technology, there’s another way to amplify your savings and get your money working for you. I’d like to introduce you to Micro Investing. Micro investing applications are eliminating barriers to traditional investing. With micro-investing, you’re purchasing fractional shares, which means you can reap the benefits of economic growth without requiring a large outlay of cash. Thanks to interfaces that guide your investment decisions based on your unique financial situation and goals, these apps make it easy to invest your money.
Popular micro-investing platforms include Betterment, Stash, Acorns and Robinhood. The majority of micro-investing apps allow users to purchase small shares of ETFs or exchange-traded funds. ETFs are inherently diverse because they track a broader set of assets instead of a single stock. Diversification is ideal for cautious investors, and it’s something micro-investing apps help you achieve with carefully curated portfolios that match your risk tolerance and financial goals.
If you’re new to the complex world of investing or simply lack the funds required to purchase complete shares, micro-investing apps can offer you a way to grow your savings with limited risk. Although micro-investing will not yield explosive financial growth, it can be an excellent way to learn more about investing and your personal risk tolerance.
SolidTrust Pay is not an investment advisor or fiduciary and this content is provided for educational purposes only. Before purchasing any investment, please evaluate your financial situation and personal risk tolerance.