In writing an article for an upcoming issue of Managing People at Work, I came across an interesting Gallup Poll on reasons for employee dissatisfaction. Not surprisingly, not making enough money is one of the top reasons that employees leave, or at the least, are unhappy, at their jobs. Interestingly, however, is that facts repeatedly show us that Americans do a very poor job of saving: One CNN Money article pinpoints the number of Americans who have no emergency savings at 28%. (Given the fact that you should have at least six months of your income stashed in order to even constitute an emergency savings fund, I’d argue the number is in truth, much higher). The question of course is why DON’T Americans have savings? Because they make too little money–or because they spend too much?
I recently wrote “7 Signs You Are Living Beyond Your Means” on Mint.com. It was wildly popular online, and though I’m thrilled for the reader interest, I’m concerned that much of it probably speaks all too truthfully to many readers. Therein lies the conundrum: When we’re constantly unhappy with our jobs because of low salaries, but living beyond our means, we create a self-fulfilling prophecy. We’ll never have enough money, because we’re not addressing the real problem of our own behavior. While I’m all for negotiating for more pay, it’s important to realize that a raise isn’t going to raise your bank account–unless you act like you never had a raise to being with. Here’s how to do it!
1. Set up an automatic transfer each paycheck for the very amount of your raise. Getting a 3% raise this year? Sweet! Figure out exactly what that amount of money is in your paycheck, and set up a transfer with your bank to shift that money right into savings.
2. Realize that even a little more interest goes a long way. When savings accounts pay about 1% in interest, it can be a bit disheartening. Until, that is, you recognize the power of even a tiny percent–especially when you begin to build that savings account that is worth at least six months of your salary. If you are not currently making 1% on your money, start. Where to look? Ally Bank, Smarty Pig, and ING, to name some of the major online banks with higher interest accounts. Additionally, check out a new tool called Kasasa. It partners with local banks and credit unions to offer savers high interest rates, which can be up to 4% based on the provider and where you live.
3. Address the real problem behind your money. Unless you are truly low income (meaning you make about $14,000 a year), you’re problem really isn’t that you don’t have money; it’s what you do with it. Budgeting tools like those offered at my client Mint.com are great–but they require you to self-regulate. For spenders, that’s no easy feat. Check out Planwise, which you can access right here on WellnessOnLess. Not only is it totally free, it provides bank level security without requiring you to input a load of personal banking information. Most importantly, it allows you see the impact of purchases–before you make the mistake of making them! For those who can’t or won’t stick to the budget they set, it can be an eye opening way to manage your money.
