By John Rosenfeld, Executive Vice President and Head of Everyday Banking, Citizens Bank
Imagine foregoing that $4.65 special coffee everyday on your way to work. Did you know you would save $1,209.00 each year? Over time, you would have built a healthy savings account that could go beyond an activity for a rainy day. Instead, it could translate to the down payment on a home or college tuition or even a family vacation abroad.
Since 2012, the overall savings rate for American consumers has dropped by half. According to the U.S. Bureau of Economic Analysis, the amount Americans saved of their pre-tax income hit an all-time high at 10.5 percent in December 2012. As of March 2015, that rate is now only at 5.3 percent. So why are people saving less? Often times, it’s because consumers believe they can’t afford to save. This is one of the top money misconceptions Citizens Bank often hears from our customers.
Starting a savings account can sometimes make consumers feel like they are losing money, but it’s really a matter of redirecting your income. Establishing automatic savings habits can help ease the pain. Setting up an automatic deposit from your paycheck into your new savings account each month for a set amount – even $25 a month – will add up over time. Beyond saving to purchase a home, pay for college or a vacation abroad, it is also important to save to build up an emergency savings fund for any potential unforeseeable circumstances.
The following tips can help consumers debunk the myth that it’s “too expensive to save” and achieve their money goals:
By implementing these strategies and shifting perceptions, consumers can start achieving optimal savings. It doesn’t have to be difficult – or expensive – as long as you have the right mindset and realistic goals.