5 easy savings habits

Whether you want to put money aside for emergencies, college or retirement -  saving is one of the most basic pieces of financial advice. Despite the importance of saving, some of us are falling short. Bankrate.com surveyed more than a thousand working Americans and found that 21 percent are not saving any money for retirement, emergencies or other financial goals. 

“In general, there’s a lot of anxiety around money,” says Nicholas Holeman, a certified financial planner at Betterment for Business. “Most of that anxiety stems from people not having a clear understanding of where they are currently and where they are trying to get to. Don’t get analysis paralysis and try to debate between this or that fund, Roth IRA versus 401(k), paying down debt versus investing.  The most important thing is to start saving as early and as often as you can.”

He recommends starting with these five tips:

Use goal-based investing

Do you know what goal-based investing is? Holeman compares it to a doctor's visit. You wouldn’t ask the doctor what medicine is best for you without first telling him or her what is wrong with you. Do you have the flu? Do you have a broken bone? Only after the doctor determines what is wrong with you can he or she diagnose the right course of action.

Holeman says your first step should be defining your goals. He says that is often more difficult than it sounds. When Holeman asks new clients to state their goals, he says they often say they have a desire to be rich or to have a million dollars. Holeman says those are milestones, not goals. Are you saving for a down payment on a house in three years? Do you want to retire at age 60 and live on $75,000 a year? He says those are better examples of goals.

“Those goals might change, so you need to build flexibility into the plan. But setting specific goals for yourself makes them feel more tangible and real."

401(k) automatic enrollment and automatic increase

We all are busy. Holeman says 401(k) auto-enrollment can help you make better financial decisions by making them a little easier.

“When you start a new job, you will be auto-enrolled in your 401(k), meaning that it’s defaulted that you are going to save a certain percentage of your paycheck,” he says. “You can certainly opt out if you don’t want to. But it’s changing the default from 0 to 3 or 4 percent. If you do nothing, you are still saving for retirement."

Automatic nudges and reminders

Are you saving for an emergency fund or your child’s college education? Is it your goal to rebalance your portfolio once a year? Holeman recommends setting up automatic nudges and reminders to keep your savings on track.

“Any time you can make those things easier, you are reducing the mental load that it takes to make good decisions,” he says. “There are things that technology does a lot better than us. Automatic savings, automatic rebalancing and adjusting risk level over time – those are all examples of things that if you can automate. We strongly encourage you to do so.”

Save half of your raise or bonus

When you get a raise or a bonus, what do you do with the extra money? Holeman says it is very easy for many of us to get used to the additional income and inflate our lifestyle. 

“Consciously tell yourself - whenever you get a raise, promotion or bonus - that you are going to save a certain percentage of that,” he says. “There is a two-sided benefit. One, you are saving more. And two, you are preventing your expenses from going up. When you do retire, you don’t need as much to continue your lifestyle. That’s why it’s a really powerful strategy.”

Talk to friends and family about money

Money and politics are topics often avoided at the dinner table. Holeman says healthy money habits are contagious. He recommends talking with friends and family about money often.

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“You don't need to give explicit details, like sharing your paystub or checking account balance,” Holeman says. “But when you talk to other people about those things, it makes it feel less scary. You realize that everyone else is feeling the same thing that you are feeling about credit card or student loan debt. That can build a sense of bonding and a sense of encouragement."

Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content.  You can follow her on Twitter @lindanbell