I recently read that 47% of Americans would have to borrow or sell something to cover a $400 emergency – or, they would not be able to come up with $400 at all. This is according to the latest Federal Reserve consumer survey. (You can check out numbered page one of the report here to see the statistic for yourself.)

Now, I haven’t checked their methods to collect and analyze the survey data so maybe you want to completely discount what I’m about to say. BUT, I don’t think the actual number – the 47% – is what matters to each of us, individually. Remember, we all have different goals, values, and circumstances when it comes to money.

What I DO think should matter to YOU is where YOU stand today and where you want to be. And then, once you have acknowledged this to yourself, what really matters is what you DO about it.

When it comes to building your savings and paying down debt, tracking your goals and progress seems to make a BIG difference. And, I have a few suggestions to help you do so.

First, I would use high-yield savings accounts. You might as well earn around 1% interest on this money since you can. Ally Bank, Capital One 360, and American Express are all great options here, while many other savings accounts offer little more than 0% interest.

Second, I would create SEPARATE savings accounts for SEPARATE goals. For example, I currently have four different high-yield savings accounts. One is for my emergency fund. Once I built this up to the level I felt appropriate for my situation, I could then build up other savings accounts. I have started to add all my bonus money to a savings account specifically for travel (because travel is something I value). I realize it falls in the same pot of my money, but it feels so much better to pay for a trip with “hard-earned bonus money” (as opposed to adding bonus money to my main checking account and, without really realizing it, using it to pay for food and bills).

Additionally, as my emergency fund earns interest at 1% each year, I can then move that interest to another savings account and use it to help fund my other goals.

A note on emergency funds: If you don’t have one at all, do not stress out. Do not tell yourself you’re already behind so you can’t start now. Do not give yourself a bunch of excuses as to why you can’t save $400. Instead, open a high-yield savings account. Call it “Emergency Fund.” Skip going out to lunch tomorrow and add $10 to your emergency fund instead. Continue to build this account up until you reach $400. Then, add a little bit more and a little bit more. As you watch this money accumulate you will INCREASE your motivation to save and DECREASE your levels of stress.

Third, you may find tracking tools on www.mint.com (or another similar site) to be very valuable. Mint has a tool that allows you to track your progress toward achieving your goals, such as paying down student debt or saving to buy a house. It keeps track of what percentage you’ve already paid off, how much money you’ve saved, etc. It can be highly motivating to see the finish line, progress, and savings all in one place! (This comes directly from a friend who has successfully used this tool.)

Find what works for you. Remember, slow and steady progress adds up over time. In fact, a friend was just telling me how she wanted to take a trip but felt it wasn’t in her budget. She looked at where she could cut expenses over the next month. She took ACTION and at the end of the month had the money she needed. Now that’s Letting Luc!

What helps you track your progress toward your different financial goals? Thanks, as always, for sharing!

Lucy


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