Millennials save more money than other generations
Bank of America says 40% of American households do not have enough in savings to cover a $400 emergency.
"America Saves Week" is an initiative by the Consumer Federation of America to educate Americans on ways to pay back debt and put more money into savings.
Rob McGregor at Bank of America says if you don't have a plan to save more, it won't happen.
Our money comes and goes fast with direct deposit and automatic payments. If you have your credit card information saved on your computer and phone, you can make purchases instantly and impulsively. Before you buy something, take five minutes to think about if you really need it. It's also helpful to pull out your budget sheet or open your budgeting app to see if the money is there. You may talk yourself out of it simply be seeing the numbers.
"Whether it be saving that cup of coffee that you go out and you're purchasing. You're saving by just doing that cup of coffee at home. That's the difference of several dollars versus when you do it at home, 19 cents. So that could be huge savings there by cutting out one item every day on your commute to work," McGregor says.
According to Better Money Habits, 50% of millennials say they're regularly putting money into savings. That's more than previous generations. McGregor says that's partially because millennials are comfortable using mobile banking apps and its features such as automatic transfers.
Most employers deposit paychecks directly into bank accounts. Without even thinking about it, you can spend your whole paycheck every month. McGregor recommends keeping a separate savings account. That way your savings is not accessible by your debit card. Savings accounts typically have higher interest rates as well.
By using automatic transfers from checking to savings, it's a mindless way to put money back every month.
"If it's coming out maybe every day on payday, it's not going to be money that you're going to miss. It's just already built into that routine and that budget," McGregor says.
The federal government has a limit on monthly withdrawals from savings accounts. You're only allowed six per month before you're penalized. Don't make a habit of taking money out of savings if you don't absolutely need it. You need transactions available for when an emergency does happen and you need to withdraw money.
to see Bank of America's Better Money Habits.