Savings gains start with scrutiny of spending
by: Amaia Kirtland
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 July 29).
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.