Association of Military Banks of America

Stop Living Paycheck to Paycheck and Start Saving with These 3 Steps

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Military Saves Week is once again upon us, and I’ve got to say I love it!

For those unfamiliar with this annual event, it’s essentially an opportunity for installations and organizations to promote good money-saving behaviors for military members and their families. And since I work for USAA as a personal finance spokesperson, of course I’m going to participate.

But I know not everyone will share my enthusiasm. You could be thinking, “Woo-hoo, great event! But we’re living paycheck to paycheck. Maybe next year we’ll sign up.”

If that’s what you’re thinking, hold that thought.

The truth is, I hear similar statements quite often in my role here at USAA. And I get it: Sometimes saving money seems virtually impossible. But please believe me when I say that you can change things. You’ve just got to be committed and get started.

Here are three things you can do right now to get out of the paycheck-to-paycheck rut and on the road to savings:

  1. Track expenses like a paranoid accountant.  One of the big reasons many people end up with more month than money is that they don’t pay attention to where their money goes. They have; therefore, they spend. A great step toward fixing this is to begin closely tracking every way you spend money. Do it each day, then summarize it weekly and monthly. You want to cut expenses to save money each month. How will you know what you can cut if you don’t know what you spend? The first step is to know where your money goes. (USAA’s Money Manager tool might be able to help!)
  2. Understand needs vs. wants.  It’s time to weigh what you need to survive versus what you want to have. As you begin tracking your expenses in Step 1, I encourage you to put them into one of these two categories. Why? Because the “wants” list is often the best place to start cutting. But those cuts will be tough to find if you don’t have a list of them to consider. Please check out this Needs vs. Wants blog post I wrote for some additional ideas.
  3. Save first and save separately.  Once you’ve identified some money to set aside, make sure it actually gets saved. To increase your odds of success, open a separate savings account and have the money automatically deposited there before you have a chance to spend it. This could be an allotment, a direct deposit or an automatic transfer you set up with your bank. The method isn’t as important as the fact that the saving is done automatically, without any effort on your part other than setting it up.

The good news is that none of this is rocket science. It’s pretty simple. But just because it’s simple doesn’t mean it’s easy. And guess what? It’s not going to get easier next year.

But if you use Military Saves Week 2014 to change your habits, when Military Saves Week 2015 rolls around, you can really mean it when you say, “Woo-hoo, great event!”

USAA Community Manager, Scott Halliwell