The average American is notoriously bad about saving money. In fact, as of August 2017, the average household savings rate was 3.6% -- nowhere near enough to finance retirement, let alone save for more imminent expenses. However, a small group of people -- let's call them the super savers -- are successfully saving way more than that, month after month and year after year. Here are some of the qualities that distinguish these special savers.
Super savers are lifetime learners
Good savers are constantly looking for ways to up their financial game. They read books and articles about personal finance (such as this one), collecting information from multiple sources to ensure that they have access to people with different viewpoints. They also learn about investing, so that they can maximize their returns from their hard-won savings. And they keep on top of finance-related news that affects how they can best invest and save their money.
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Super savers are masters of "forced scarcity"
Forced scarcity is a fancy way of saying that you spend less money than you bring in. It means deliberately limiting yourself to a percentage of your actual income and tucking the rest of your money away in a separate account, preferably someplace where you don't have direct access to it.
Because of the way the human mind works, it's natural for us to spend what we have right away. By "hiding" some of our money from ourselves, we can make it much easier to save regularly. Take retirement savings accounts, for instance. Once you put money into such an account, you can't remove it until you reach retirement age without suffering a significant tax penalty. That makes it easier for us to resist the temptation to access that money early and use it for purposes other than retirement. And once you get used to living on a portion of your income, you probably won't even miss the money that you're saving.
Super savers minimize debt
Debt is expensive. Borrowing money gives you the ability to buy something that you can't pay for today, but there's a price: You'll have to pay interest and usually fees as well. There is such a thing as good debt, though experts don't agree on exactly which items fall into the category of good debt and which don't. Everyone does agree that debt that you use to buy something that will increase in value is definitely good debt. For example, real estate generally goes up in value over time, so using a loan to buy a house could qualify as good debt.
Another factor that tends to separate good debt from bad debt is interest rate. Credit products designed for good debt typically have very low interest rates – think mortgages and student loans. On the other end of the spectrum, credit cards encourage you to borrow money for frivolous purposes and charge you through the nose for that privilege. Even "low interest" credit cards have interest rates that are far higher than that of the typical mortgage.
Super savers take on reasonable levels of good debt, but shun bad debt as much as possible. If they use credit cards, it's to take advantage of cash back and rewards offers -- and they pay off their balances every month before interest can kick in. By reducing their interest payments to an absolute minimum, they're freeing up a substantial chunk of income that they can then spend on other things.
Super savers set goals
If you've got no destination, you're likely to go nowhere. That's why super savers have specific, measurable goals for how much money they save and the purposes they're saving for. Want to own your own home, but don't have enough for a down payment? Figure out roughly how much the house you want will cost, calculate 20% of that amount, and start talking money away every month into a special account until you have your down payment by a certain deadline. Instead of borrowing money to buy the giant TV you've always craved, figure out how much money you'd need to save every month to be able to buy it with cash six months from now, then start saving. And everyone should have a retirement plan that includes a monthly contribution goal.
Super savers find ways to make it easier
Since saving really is hard work, it just makes sense to take advantage of any tools and other options that can make it easier. I've already touched on how retirement savings accounts can be psychologically helpful; the fact that those accounts also let your money grow tax-free is another major benefit. After all, the faster the money you've already saved can grow, the less money you'll need to save in the future in order to hit your goals.
Perhaps the single most useful tool for savers is the humble automatic transfer. If your bank offers online banking, you can usually set up automatic transfers right on the bank website; if not, you may need to ask a banker to help you. By making your contributions to savings automatic, you save yourself the time and effort it takes to do those contributions. Plus, the "out of sight, out of mind" nature of automatic transfers can be extremely helpful for struggling savers.
If you've had trouble saving money in the past, take a moment to think about what made it so hard for you. Are you unable to resist the dreaded impulse purchase? Do you have no idea where your money goes each month? Or are you just so buried in debt that every penny goes to keeping yourself caught up on payments?
Whatever the biggest hindrance is, focus all your efforts on removing it. If debt is your problem, maybe you need to get a temporary part-time job so that you have enough money to pay down those debts instead of just keeping up. If money just seems to disappear every month, start keeping a basic budget so that you can figure out where it's going. And if you just can't keep yourself away from those credit card purchases, try hiding your cards for a month and limiting yourself to a cash only existence. Once you've beaten your biggest obstacle to saving, you'll have a chance to become a super saver yourself.
