Overspending to blame for missed savings goals
"It's a little disturbing that even in tough economic times, so many people were unable to rein in spending," MoneyRates.com spokesman Richard Barrington said in a press release. I have to agree with him, even if I fall into the majority myself.
The survey found that more than half of the participants (54%) did not meet their savings goals for 2009 and 64% blamed overspending while 34% placed the their missed savings target on the recession.
It's easy to pick up bad spending habits from our parents or friends and incredibly hard to break out of a habit that has been the norm for most of our adult lives. Like kicking a smoking habit, if you decide to quit spending cold turkey as a New Year's resolution you're simply setting yourself up for failure.
If you want to successfully kick the overspending habit like J.D. Roth, founder of Get Rich Slowly, did than you need to make a realistic plan, which for some people will include setting a savings goal for the first time.
How to set a savings goal:
"There's no one right savings rate for everyone.", Roth told WalletPop via e-mail, "You should save as much as you can. One popular trick is to pay yourself first. Treat your savings like the most important bill in your budget. If you decide you want to save $100 every paycheck, pull that $100 out first and live on the rest. To make this painless, make it automatic: Set up a second savings account at someplace like ING Direct and have them pull $100 from your regular account every time you get paid. Once you're used to paying $100 (or whatever), work up from there!"
Finding a good savings rate and bank is an important part of making the "pay yourself first" strategy work. The great part about automating your savings is that eventually you won't miss the money and 10 months later you'll be shocked at how much you have saved and by the interest you earned.
To find a good savings rate and online bank check out MoneyRates' highest savings rates and use a tool like BankFox that shows user reviews and bank health to make the decision easier.
Viola, you've just set a savings goal of $1,200 for 2010! The next step is to stay on track with a budget.
Making a budget doesn't need to be an all night production involving programs and Web 2.0 tools. In fact you can create a budget in 15 minutes with the guide at My Next Buck. Just make sure you do the two optional steps at the end so that you meet your savings goals and account for your need to buy stuff.