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How to Make Savings a Habit

Six tips for building 'rainy day' and other funds

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When the Federal Reserve Board reported last year that 4 in 10 adults would have trouble covering an unexpected expense of $400, it raised questions about America’s savings habits — for both long-term retirement and more liquid emergency or rainy day funds.  

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This week AARP joins 1,500 other nonprofits, banks, credit unions  and other institutions in an effort to improve the financial health of low- to moderate-income Americans by motivating them to save automatically for both scenarios.

“We recognized the importance of saving and getting into the savings habit — long term for retirement and short term for financial emergencies,” says David C. John, a senior strategic policy adviser at the AARP Public Policy Institute. “Individuals need to have both types of savings.”

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During America Saves Week, the coalition suggests six ways to start saving more:

  • Set up a plan. Those with a savings plan are twice as likely to be successful. Save a certain amount each month toward a specific goal, such as college tuition or a vacation.
  • Make it automatic. Set up automatic transfers from your checking account into your savings account or have part of your paycheck automatically deposited into a savings account through your bank or credit union.
  • Save for the unexpected. Establish a rainy day account for emergencies such as a car repair, a leaky roof or a busted boiler. Rather than turn to a credit card, use liquid savings when those expenses occur.
  • Save to retire. If you are working but are not enrolled in an employer retirement plan automatically, ask a human resources representative how to deduct a certain amount from each paycheck and transfer it into a retirement or savings account.
  • Save the extras, such as bonuses, raises and tax refunds. Earmark any tax refunds and any raises in pay or year-end and other bonuses for some type of savings account such as an interest-bearing account linked to your checking account.
  • Save as a family. Demonstrate good financial habits for your children. Teach your children good savings habits by helping them to open their own savings accounts.


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