Have No Savings? Simple Steps You Should be Taking Now

have No savings

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Having savings set aside is very important. It can be very worrying if you have no savings. You’ll be surprised how many Americans have no savings at all.

If you have no savings it is never too late to get started.

With this easy and simple plan, you can go from having no money saved to have an emergency fund and retirement savings.

Your savings will allow you to sleep better at night and take away your worries if an emergency or any unexpected expenses arrises.

Now is the time to start making changes.

Stop beating yourself over the fact that you should have started long ago.

I want you to stay focus on the now and on your future and start making positive changes to start building and making your financial future a stable one.

So, if you are ready to start making changes now and take control of your money and finances then keep reading.

No savings

1. Assess Your Financial Situation

The first step is to find out your net worth.

Net worth is calculated by calculating all your assets and subtracting your liabilities.

Net Worth = Assets – Debt

Make a List of All Your Assets and Their Value

Make a list of all your assets.

These include:

  1. Savings accounts
  2. Checking accounts
  3. Retirement accounts
  4. House
  5. Car
  6. Etc

Make a List of All Your Liabilities

Make a list of your liabilities also known as debt.

This will include:

  1. Credit Card balances
  2. Student loan
  3. Personal loan
  4. Mortgage loan
  5. Car loan
  6. Etc

2. Put Yourself on a Budget if You Have No Savings

make a budget

You need to create a budget. Find out how much income you have coming in every month. As well as all your necessary expenses.

Think of a budget as a spending plan.

Once you know how much after-tax income you are receiving every month and your expenses.

Set aside the basic expenses necessary to live, such as rent/mortgage, utilities, and food.

If you are spending more than what you are making, then it is time you start cutting all the unnecessary expenses, such as eating out, Netflix, etc.

Start cooking at home and bringing lunch to work.

As time goes by it will become easier to budget.

You might have to make adjustments to your budget depending on where you live and the seasons.

Learn to live frugally. Find simple ways to reduce your electric bill for example.

The key here is to identify your spending habits and make changes and/or substitutions.

Remember the longer you do this (stay on a budget) and be conscious of your expending, the more financial freedom you will be able to achieve.

Saving money

3. No Savings? Start an Emergency Fund

An emergency fund is money set aside in a savings account or a CD (certificate of deposit) for emergency purposes.

In other words, just money stash away for those crazy events that life throws our way.

Imagine if you lose your job and you have no savings.

Do you have enough money set aside to pay rent/mortgage and utilities until you find your next job?

That is the purpose of an emergency fund to keep you afloat until you get your bearings.

After you have come up with a successful budget, now you know where the money is coming from and where the money is going to.

Tweak that budget and add an emergency fund expense every month.

Make sure you stick to your budget plan until you have reached your emergency fund goal.

As the money starts accumulating every month you will see how good it feels and these small successes are the little stepping stones that give you the motivation to stay in this savings path.

4. Pay Off Your Debt

payoff debt

It does not matter which type of debt you need to pay off. Car loan, home loan, student loan or personal loans.

The most important thing is to start by paying off more than the monthly minimum.

Set small goals to pay off your debt.

Mark it on a calendar and keep track of it.

There are times when we get discouraged but stay the course, stay motivated.

Create a vision board about paying off debt and stay focused.

Meditate and practice mindfulness to stay positive and release some stress. Every little thing helps.

5. Make Savings Automatic

This is the part where you just set it and forget it.

Make all your savings automated, emergency fund, retirement savings, savings accounts.

Most banks offer automated transfers between accounts.

Set up all your accounts to automatically transfer from your checking account to any allocated amount of your choice every month.

Get control of your money. Manage when, how much and where is the money going.

This way you avoid the temptation of spending the money, allowing you to save it and a very easy and efficient way.

Investment

6. Take Advantage of 401k Employer’s Match

A 401k plan is a great vehicle to save money for retirement.

Especially if your employer offers any matching.

With a 401k not only are you setting money aside and saving for retirement but at the same time, you are reducing your taxes by making contributions into a 401k.

The money grows tax-deferred until you take a distribution.

Which then will be tax at your current tax break in retirement.

On my complete retirement guide to 401k for beginners, I go more in-depth about how to open a 401k and the benefits.

7. Invest in an IRA to Start Saving Now

Invest savings

If your employer does not offer a 401(k), you have the option to invest personally in a Traditional IRA or Roth IRA.

IRA is more flexible when it comes to investing because they offer a very big array of mutual funds and ETF and at lower fees.

Many times 401k’s have fewer investment options and also higher fees.

Both types of IRA accounts offer tax benefits to you and the money grows tax-free.

8. Start Tax Planning and Pay less Taxes and Save More

tax planning

By tax planning ahead, you will save money by paying less taxes.

Contributing to retirement savings accounts reduces your taxable income. Therefore you pay fewer taxes.

There are a few simple things you should be doing to pay less taxes.

Like participating in a flexible spending account (FSA) or contributing to a health savings account (HSA) for example.

Think about it, you need to pay copayments for doctor’s visits and prescriptions.

Why not make these copayments with pre-tax money and at the same time reduce your taxable income.

This is what I call a win-win situation and “double-dipping”

how to save money

Remember this is a marathon, not a sprint.

Pace yourself, slow and steady.

There will be months when you step off the tracks. Do not beat yourself over it.

Just get back on the budgeting wagon and you will see the savings start growing and your debt getting smaller.

Having no savings is not the end of the world.

This is the perfect opportunity for you to recharge your life, savings and build a solid financial foundation.

Get everyone on board, the kids, your spouse to take part in this savings journey adventure.

Remember to take control of your money, start saving and enjoying your new-found financial freedom.

Related Posts:

New Redesigned W-4 Form for 2020: Complete Guide

What is an Emergency Fund? Easy Tips to Start One

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