It's no surprise that Americans are struggling when it comes to saving for retirement. In fact, 42% of baby boomers don't have anything at all saved for retirement, according to a report from the Insured Retirement Institute, and only 28% think they're doing a good job of preparing for retirement.
When you're behind on your savings, it's easy to get discouraged and feel like there's no way to get back on track. And the closer you get to retirement, the harder it may seem to get caught up. However, it's easier than you may think to jump-start your savings -- and it involves maintaining a positive outlook in life.
Positivity is the key to success
It may seem like something you'd read on a motivational poster, but it's backed by science. People who are optimistic about their financial future are seven times more likely to be more financially healthy, according to a report from Frost Bank in partnership with a positive psychology researcher.
The researchers found that, essentially, whether or not you find financial success depends on your mindset. For optimists, their positive outlook overpowered their circumstances, while the opposite was true for pessimists. In other words, if you believe that the future is bleak and that you're going to struggle in retirement, that's likely what will happen. But if you stay positive, you're more likely to work toward a solution so that your optimistic vision comes true.
Those with a bright outlook are also more likely to save for the future, according to the report. A whopping 90% of optimists say they've saved up for a major purchase, compared to just 70% of pessimists. And 61% of optimists have started an emergency fund, while only 43% of pessimists have done the same. Optimists are also more likely to find ways to save even when money is tight, with 75% saying they've gotten creative when it comes to saving money, compared to 60% of pessimists who have done so.
So what, exactly, defines a financial optimist? Researchers found that they share three common traits: They're comfortable talking about money; they search for progress, not perfection; and they constantly expect the unexpected. This means they're more likely to seek out (and follow) financial advice, they know that taking small strides toward a goal is better than doing nothing, and they learn from their setbacks rather than getting defeated by them.
If you're struggling to get by financially, being optimistic about the future can be tough. But taking baby steps is better than standing still, and making small, consistent changes can amount to significant savings over time.
Making progress one step at a time
Even if you don't have much to save right now, saving anything at all is better than throwing in the towel and assuming you can't do anything. The key to saving for retirement is to start as early as possible, because when compound interest is on your side, it's much easier to save a little now than a lot later.
The first step to saving more is to establish a thorough budget and take a good look at where all your money is going. You may find you're still paying for that monthly subscription service you never use, you it could come as a shock to see just how much you spend on dining out every month. When you see all the numbers laid out in front of you, it's easier to see where you can potentially make cuts.
You don't need to take a machete to your budget, either. If you can't live without your morning latte, maybe just cut it down to three or four a week rather than buying one every day. If you save, say, $15 per week doing that, there's an extra $60 per month right there that can go toward retirement. Switching to a credit card that offers cash back and other rewards can also help you save more money by buying things you were already going to buy.
As you comb through your budget, try to make at least a small cut in each category. For example, to save money on groceries, try signing up for customer rewards programs to take advantage of extra coupons and deals. If you want to save on gas each month, try carpooling with a nearby coworker a couple times a week.
No matter how you choose to save money, it's often easiest to make several small changes. That way, you don't feel like you're missing out on anything, but saving a few dollars in every category of your budget can add up to hundreds of dollars each month.
That money can make a big difference, too. Say you're 40 years old, and you've just started saving $200 per month. Assuming you're earning a 7% annual rate of return on your investments, you'd have roughly a quarter of a million dollars saved by age 70. As a bonus, if your employer offers matching 401(k) contributions, you could potentially double your savings with zero effort.
Saving money isn't always easy, but it's not quite so bad when you stay positive and think on the bright side. By being optimistic and thinking about all the great financial accomplishments you can make, you're more likely to make those retirement dreams come true.