This week is America Saves Week. America Saves focuses on encouraging United States citizens to save money, reduce debt, and build wealth. My goal is to help you build wealth. One of the key precursors to building wealth through investing is properly saving money. Without savings, there can be no investing. Therefore, I challenge you to take some time during America Saves Week to set a savings goal for yourself. Challenge yourself to save more than you are doing now.
America Saves Week – Savings Pledge
Successful saving requires consistent action over long periods of time. This is difficult for many people. In order to increase your odds for success, I encourage you to go to and take the savings pledge. Set a goal for yourself that stretches your current savings rate. Push yourself to achieve more than you are doing now. Your future self will thank you.
Much of what you are told by the mainstream media is not helpful towards actually achieving financial independence. It is not sufficient to simply save five or ten percent of your income each month, and hope to be financially independent one day. The math simply doesn’t allow for that savings rate to lead to success. Aim for a high savings rate, such as 50% of your monthly after-tax income. By saving 50% of your income you can achieve financial independence in 17 years instead of the 51 years it would take with a 10% rate.
I encourage you to set 20% as your absolute minimum threshold. 20% of your net income should be set aside at the beginning of each month towards debt reduction or retirement. Anything less will require you to work longer than the average American before you can achieve financial independence.
Quick Savings Goal Ideas
Here are some quick savings goal ideas to get you started on your pledge this week
- Emergency Fund – Target saving 6 months to 1 year of your expenses in a interest paying savings account.
- New Car – Save up money to buy your next car with cash. Only buying cars when you can pay for them in cash will lead to a better financial outcome in your life.
- House Down payment – Saving up a house down payment can be critical to building long-term wealth as you lock in a mortgage which will eventually be cheaper then rent