It is much easier and more enjoyable to take the income, the money we have earned and worked hard to receive, and spend all of it every month—purchasing whatever we want and not thinking about the future. The problem, when it comes to money, is that we just aren't planning and putting away enough. According to Northwestern Mutual’s 2019 Planning & Progress Study, 22% of Americans have $5,000 or less saved for retirement; another 5% have less than $25,000 put away, and 15% have no retirement savings at all.

That's a pity, because there are so many reasons to save for the future. The future doesn't just have to be retirement—the future is tomorrow. Saving means allowing a break from the paycheck-to-paycheck cycle or allowing for a big purchase down the road, like a vehicle, vacation or house. Living paycheck-to-paycheck cycle, surprisingly, isn't just something that happens to those earning lower incomes, but to anyone unable to create a budget and follow it, and to make savings goals and reach them.

Between today and the conclusion of our income-earning days, a lot can and will happen. We might lose our job(s), take a pay increase or decrease, move or become disabled and unable to work. Strategizing about the income we make now to make plans for the future is one of the best things we can do with our hard-earned money.

key takeaways

  • Saving sufficiently for the future—defined as either tomorrow or three decades from now—is crucial.
  • Key steps for saving include making a budget (with a live-in partner if you have one), reviewing your expenses, and understanding your household's cash flow.
  • Other key steps include automating your savings, looking for ways to economize by distinguishing between wants and needs, and setting an example for kids.
  • Do remember to build in the occasional splurge.
  • The best time to start saving? Right now.

Specific Steps for Saving

Once you realize the importance of saving and the role that it plays in your life, creating goals is the next step to stay on track. Part of setting financial goals is making sure you can meet them. You can use an online savings calculator, for example, to make sure your needs align with your plan.

Armed with the education and tools to create realistic goals for your money, it is time to find and dedicate the money to reach your goals. 

1. Make a Budget

The first thing you need to do is have a budget and stick to it. This includes being realistic about your household financial situation and setting honest and attainable numbers corresponding to your spending so that you can save. Saying you will save and thinking about savings is not enough. You will have to be intentional about what you do with your money.

2. Understand the Concept of Cash Flow

You need to understand cash flow: What it is, how it works and what your personal household outgo looks like. Review your income and expenses and see where your spending habits lay. Be intentional about making changes to things you can, to have money available to save. 

3. Work With Your Partner

If you are married or live with someone, communication and teamwork concerning your household finances are crucial. To save, you both need to be on board with your desires, plans, and resources. The best-laid plans without everyone on board will meet turmoil. 

4. Distinguish Between "Want" and "Need"

Understand the differences between needs and wants and identify yours. Be able to say no when something doesn't align with your financial goals, today and in the future. 

5. Make It Automatic

Automate savings so the money stays. If you wait until the end of the month to save, the likelihood will be that there is not much left to save. Make it automatic and have money deposited straight out of your paycheck, or have a portion go into a savings account whenever you make a deposit. If you have a few savings objectives, you can track the money you put into each account and put it through one account or use a few different savings accounts open for various goals. When you see your savings' growth, you are more likely to keep it there.

6. Do a Review

Sometimes we do not even realize what we are spending each month until we examine it. Review everything you pay for. What are you buying that you might not need? If you do need it, is there a way to get it for less?

7. Look for Places to Cut

What expenses or items can you cut to enhance your savings goals? There are five key areas to review for opportunities, including energy and utilities, food and groceries, banking and credit card fees, taxes, and auto expenses (gas and insurance).

8. Think of the Children

Also, take into consideration your children. It is incredibly important to teach them about savings and spending. And to set an example: They mirror your behaviors and will take your lead on the role of money in their lives. Some essential lessons include waiting to purchase something you want, saving, identifying specific ways for children to save such as using jars or envelopes, making wise choices and understanding that when money is spent, it can not be spent somewhere else.

9. Start Now

Remember whatever your goal is, start now. Something will always come up and compete for your resources. Saving for the future should stay in the forefront of your mind (and your finances!) regardless of whatever else comes around.

10. Enjoy Life

Yes, we've been preaching the virtues of discipline, belt-tightening, and resisting instant gratification. But everyone is only human. Recognizing the importance of savings doesn't mean you can't now and again spend on things for fun, relaxation, celebrations, or just for the hell of it. But be sure to build the occasional splurge into your budget.

The Bottom Line

The above strategies will help you to stick to a budget and save for your goals all while allowing for some budgeted fun. Remember, a goal without a plan is just a wish. Write it down, create the time and opportunity and make it happen.