by Jeff Cody

If you go to the Federal Reserve of St. Louis' website and search for the average savings rate in the US, you'll see that the average savings rate hovers around 4 percent. That means no matter the income level you experience and enjoy, we as a country are spending 96 percent of our income.

We need to be saving 15 percent or more to keep pace with the most common eroding factors that erode our wealth, taxes and inflation being chief among them. So what can we do about it? Save money. But what if you can't save money or save more money? We have a solution to add hundreds of thousands of dollars to your life that costs you $0 additional out of pocket, it involves no risk, and it is painless. Come to our workshop and you will be on the threshold of new understanding. So, let's get into the first step of having a new understanding, which is discovering where losses may be occuring. One of the most common areas we search first for this is HOW one is saving money. So let's dig into this further.

Many people rely on two common methods to automate their savings: Saving a set percentage of their income through payroll deductions or by a fixed dollar amount. While these strategies seem practical, they may actually be holding you back and costing you dearly.

Here’s why:

Many people automate their savings in two main ways: by saving a percentage of their income or by saving a fixed dollar amount. While these methods might seem smart, they can actually cost you money without you even realizing it. Here’s why:

The Percentage Method: Spending More Without Awareness

Let’s say you're goal is to save 10 percent of your income and spend 90 percent. If you get a raise of 3 percent, you’re now saving more money. But you'll automatically be spending more. You’ve just let your spending grow right alongside your savings. In the end, you haven't really gotten ahead. You've actually set yourself up to not just save more, but spend more money as well.

The Fixed Dollar Method: Constantly Playing Catch-Up

Now, consider saving a fixed dollar amount. Every time you get a raise or your Social Security contributions change, you have to remember to adjust your savings. This isn’t something to just think about once a year. You need to recalculate every time your income changes, which can feel exhausting.

This means you’re always chasing after your money, and many don’t even realize it. They think they're being responsible because they've automated their savings, but without a better plan, they’re just being efficient at not getting anywhere.

There’s a Smarter Way

What if you could painlessly save between 20 and 30 percent of your income with a process that focusing on saving rather than spending? The difference would mean hundreds of thousands of dollars difference to you in time.

 Register for and attend our free educational workshop on college affordability!  Just go to https://collegeplusretirement.com/workshops to learn more and register.