For all of those who participated in America Saves Week by taking a pledge to save more, pat yourself on the back! Well done!
For those who intended to but didn’t get around to it, it is not too late! Saving money is an initiative we can all get behind and Split to Save is an easy way to join in.
How Does it Work?
Split to Save is a campaign that involves employers who are looking out for their employees’ best interests. Employers provide the tools that make it easy for employees to save. Best of all, Split to Save is free for employers and employees. This on-line program helps motivate employees to set a portion of their pay aside. The amount selected relates to the employee’s financial goal. It could be saving for something specific or simply starting an emergency fund. Employers provide the Direct Deposit component and Split to Save teaches how to make the split. Additionally, they support the employee’s goal through motivational texts, emails and social media posts.
Split to Save reports that 82% of employees are paid through direct deposit but only 24% of them split that deposit into a non-retirement savings account. Do you think we can do better?
Why Should We Save?
Simply put, we need to save because we are not fortune tellers. Emergencies happen, usually without warning, and they usually cost money. Cars, equipment and appliances tend to let us down unexpectedly and it usually costs money to make them reliable again. Hopefully you are not one of the 44% of Americans that the Federal Reserve study found could not come up with $400 in an emergency situation. If you are, you can fix that with an emergency fund. That pool of money that provides us the ability to live after a job loss or costly auto collision becomes our saving grace (pun intended) when we plan for the unexpected.
Aside from emergencies, life can tend to be expensive. There are lots of things we need or want that can cost more than we might have at one time – things like cars, boats, computers, college tuition, and whatnot. Without advance saving for these things, how do we pay for them? Well, credit. While credit isn’t necessarily a bad thing, the use of it can be avoided a lot of times by saving in advance. It takes some thinking ahead, some planning and some self control but it is worth it. The goal really, is to earn interest, not to pay it. Ultimately, the interest we pay to use money we expect to have in the future is the fee for not planning ahead.
Then there is the ultimate savings goal -retirement. Most of us expect to stop working one day and enjoy our golden years. Without a concerted effort to set aside money for that goal, you may be working long after you intended. Starting to save early for retirement is the ideal plan. You have more time and can thus set aside less if necessary. The closer you are to retirement when you start, the more you’ll need to set aside regularly to reach your goal. For employers who don’t offer a retirement plan, perhaps the Split to Save campaign is a viable alternative.