Are you saving anything?

Whatís your contribution? With the average savings rate in the United States at zero now (yup thatís nothing, zilch, nada) are you bringing the average up or down? Iím doing my part to keep the average up. By the time I wrote these words, the savings rate dipped into negative territory. The July figure was Ė0.6% meaning Americans took money from their savings rather than adding to them.

If youíve read this site then itís no secret that my household income is quite high and so when I tell you that so far this year I saved $41,000 you might think, ďwell I could save that much too if I had Richís income.Ē But when I tell you thatís a savings rate of 25.7% you might not think itís so easy after all.

If you canít figure out your own savings rate in a few seconds then you arenít doing enough to keep records. Youíve got to stay on top of your finances, be able to find out the answer to any question I might ask.

How much did you spend eating out last year? I spent $3,355 in restaurants last year and all I had to do to find out was click a few buttons on my mouse.

Saving money doesnít have to be difficult but people need all kinds of tricks and cute sayings to help them. We hear the phrase ďpay yourself firstĒ which is supposed to make you save by treating savings as another bill you need to pay. But why trick yourself? Be honest with yourself and say Iím going to save X% of my money Ė then just do it, to steal Nikeís slogan.

The key to saving money, however, is knowing where your money is going. If you donít keep track of your spending then youíll never know where you should cut back or what the true cost of all those lattes are.

Once you have a track record, say three months of spending, then you can start to see that maybe you spend too much on eating out or buying DVDs or who knows what. Then you can get down to business and start saving. Maybe a good place to start is by testing yourself. I was forced into what I call my three month test due to a job loss of sorts but I learned a lot from the experience and I bet you could too.

But maybe you arenít ready to commit to building real wealth but you still want to save money. Well then look at your spending habits and cut back. Thereís two ways to look at saving. The active approach is much like the pay yourself first method I ridiculed above. What I call the passive approach to saving is to simply spend less. If you cut back a little in a bunch of places or even in just a few high cost areas, youíll notice thereís more in the bank every month and you didnít really have to do anything.

Once in a while I find myself in a state of mind I call cheap mode. As if someone flipped a switch I suddenly find myself averse to spending any money. This is usually precipitated by a large purchase or just runaway spending on my part. I take this opportunity to pull back, pause and assess my spending habits.

Donít be one those people dragging the average savings rate down for the rest of us. Join me in lifting the average by saving more. If youíre like the average person then there really isnít any place to go but up.