Would you consider yourself a good saver? Chances are the answer is "no," and if isn't, I'd have to question whether you're being truthful.

According to recently released data from the St. Louis Federal Reserve, the average personal saving rate came in at 5.5% in May 2017, representing an eight-month high. In simple terms, it means people are putting away $0.055 (5.5 cents) of every dollar they earn. Comparatively, Americans were saving just 4.5% as recently as December, and just 1.9% as of July 2005.

A confused young adult holding a piggy bank.

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Though it may look as if we're on the right track as a country in terms of saving, a 5.5% personal saving rate is nothing to be proud of. Most financial advisors recommend that working Americans save between 10% and 15% of each paycheck. This savings goes to cover an emergency fund, as well as your retirement nest egg. The last time Americans met this advice and consistently socked away more than 10% of their income for longer than a month was 1984. That's right, folks, 33 years ago! In fact, over the past 50 years, the amount that working Americans are saving as a percentage of their annual income has been more than halved. That's not something to celebrate.

Why Americans have such a tough time saving money

We have such poor saving habits relative to other developed countries. Why are we so bad at saving money?

Part of the problem might relate to our lack of understanding when it comes to cash flow. Back in 2013, Gallup conducted a survey that found only a third of American households kept a detailed monthly budget. It really didn't matter whether you were rich, poor, had a college degree or just a high school diploma, or which political party you preferred. Gallup's survey found that every category received a failing grade when it came to keeping a detailed monthly budget, which essentially means that most people probably have very little understanding of their cash flow.

A young woman staring at falling dollar bills.

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Another reason people aren't saving much is that they're probably living beyond their means. Aggregate credit card debt recently topped $1 trillion, joining auto loan debt above the $1 trillion mark.  With Americans seemingly carrying more debt, they're not able to put as much into savings as they'd like to, or should be.

Inflationary expenses that have grown well above and beyond wage growth may also be to blame. For example, college tuition costs grew by 1,120% between 1978 and 2008. Sure, you could forgo the costs of attending college, but you'd also potentially be shortchanging your socioeconomic potential without a college degree. Rising housing, medical, and college expenses are a big reason consumers simply can't seem to save money.

Lastly, we can probably place some blame on the Federal Reserve. The Fed kept interest rates near historic lows for roughly seven years, which pushed bond and CD yields way down. The incentive to save and invest in nearly guaranteed interest-bearing assets just hasn't been there.

How to fix your poor saving habits and retire comfortably

If working Americans continue saving roughly 5% of their paycheck, there's a really good chance they won't have enough of a nest egg to retire comfortably, especially with life expectancies steadily increasing over the past couple of decades. It means people need to be proactive, not reactive, if they hope to live comfortably during their golden years. Here are a few suggestions to make that happen.

A budget laid out on a table next to a calculator.

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1. Budget, budget, budget!

As should come as no surprise, the first solution to saving more money is getting a workable budget in place. If you don't have a budget, you probably have little chance of optimizing your ability to save.

Budgeting today is so much easier than it used to be even 10 years ago. Budgeting software can be found online, and in many cases it's free. All you'll need to do is take about 30 minutes a month to input your income and expenses, and the software may even be able to help with formulating a savings plan.

The real challenge with a budget is simply sticking to it. One of the easiest ways to keep yourself honest is to set up an automatic withdrawal system to an investment account or emergency savings account. If you know you'll have a certain amount of money withdrawn from your paycheck or checking account on a weekly, bi-weekly, or monthly basis, it'll give you more incentive not to overspend.

Using cash instead of credit is another smart way to reduce impulse buying and make you think twice about purchases. While using a credit card does making logging your transactions easy, credit isn't tangible, which makes it easy to spend. Dollar bills are tangible, meaning handing them over to a cashier for products or services creates an immediate loss of value. Thus, using cash could help you improve your saving rate.  

Scissors cutting through a hundred dollar bill.

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2. Eliminate credit card debt and unnecessary bills

Another big issue is credit card debt and unnecessary bills. Your budget should help with paying down high levels of credit card debt, but you may need to consider other forms of action.

For example, opening a balance-transfer card, once you have a budget firmly in place, might be a smart idea. Though balance-transfer cards typically tack on a 3% to 5% fee based on the amount you transfer, the 0% introductory APR they offer for 12 months, 15 months, or possibly even longer could allow you to make a sizable dent in what you owe. Reducing your credit card debt can get a big monkey off your back and allow you to save more for emergencies and retirement.

Also, take a good look at the bills you're paying around your house. Do you really need a household landline phone, or is your cell phone sufficient? Is cable a necessity, or would an online content-streaming service that's a fraction of the cost work? Asking these questions could result in hundreds of dollars saved monthly.

A woman holding a financial newspaper and thinking about the long term.

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3. Invest what you've saved wisely

Working Americans also need to be more prudent with the money they've managed to save.

According to a 2016 Gallup poll, just 52% are invested in the stock market, which has historically been one of the greatest creators of wealth over the long term. Sure, people may remember the dot-com bubble and Great Recession, when the S&P 500 fell by roughly 50% and 57%, respectively, and sent shivers down investors' spines. However, what many overlook is that all three major U.S. stock indexes have erased their stock market corrections and bear-market drops 100% of the time. Whether it takes weeks, months, or years, high-quality stocks tend to increase in value over time. That means stuffing your cash under the mattress, or in a CD yielding 0.5%, isn't going to cut it, since inflation will devalue your money over time.

A 5.5% personal saving rate simply won't do. The good news is, you have the tools needed to improve your saving habits and boost your chances of a comfortable retirement.

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