Do you cringe every time you check the balance of your savings account?
If the answer is yes, you're not alone. According to Bankrate's June 2013 Financial Security Index, 27% of Americans have no emergency savings fund, and just 24% of Americans have a savings cushion to cover at least six months' expenses.
"The majority of Americans have some work to do when it comes to saving," says Greg McBride, CFA, Bankrate's senior financial analyst.
However, that work is not as hard as you might think. Here are five easy steps toward a savings awakening.
Assess where your money is going
Whether you're looking to build up an emergency savings fund or contribute more to your retirement plan, saving more money starts with self-awareness.
"You have to give yourself an honest assessment of where your money is going," says Erin Constantine, a senior vice president at Wells Fargo. "If you're putting money away but withdrawing it to spend at the end of the month, you're not really saving."
That assessment can be a rude wake-up call to start setting a monthly budget, a move that is difficult at first with the need to get spending under control.
"Budgeting can feel very intimidating," Constantine says.
However, the era of mobile apps and online banking alerts can help you overcome those initial fears. McBride says 24/7 online and mobile access and a range of different mobile applications make tracking your spending easy.
"There's no excuse not to have a good read on where your money is going," McBride says.
Eliminate unnecessary spending
Once you have a budget in place, it's time to look for opportunities to reduce your overhead costs.
"It's a lot easier to cut spending than to increase your income," McBride says. "That's how you'll carve out the ability to save on a consistent basis."
Cutting that spending can rely on small steps, too. The Bankrate lunch savings calculator shows that even something as simple as taking your afternoon meal to work each day rather than eating out can add up to big savings over time. Consider recurring charges such as your cable or phone bill to determine if there are alternative plans that can trim your expected monthly expenses.
Another way to shrink spending is to alter the way you pay for purchases on your shopping trips. Research conducted by Promothesh Chatterjee, assistant professor of marketing at the University of Kansas School of Business, and Randall Rose, professor of marketing at the University of South Carolina's Moore School of Business, found that consumers spend less when they use cash rather than credit cards.
Set your saving goals
You can't get somewhere if you don't know where you're going. "Set a goal," Constantine says. "The feeling of saving toward something can feel very motivating."
However, your savings goal does not have to be huge. Constantine compares taking the first steps of a savings plan to beginning an exercise program.
"You're not going to immediately wake up every morning at 5 a.m. and run 5 miles," Constantine says. "Find a realistic amount that you can easily adjust into your budgeting pattern, and then increase that amount over time."
Constantine says the initial amount can be as small as an automated $1 daily transfer from a checking account into a savings account.
Jump-start your savings with extra cash
As soon as your paycheck arrives, it's time to save.
"You have to automate your savings," McBride says. "If you wait until the end of the month and try to save what's left, there's typically nothing left over."
"That automatic payment toward your retirement or your emergency savings is just like any other bill," McBride says. "You're getting it taken care of right off the bat when you receive your paycheck."
You can also pay yourself first when unexpected cash flows into your savings account. Constantine recommends looking for opportunities to jump-start a savings plan with tax refunds or year-end bonuses.
"Look for a time when you have a little bit more money coming in, and put a portion of that cash toward your savings goal," Constantine says.
Give yourself regular checkups
Having a healthy savings account is just like maintaining your physical health.
"You need that regular scorecard that keeps track of your spending and helps you reconcile that to your net pay," McBride says. "That's how you'll really determine if you're living within your means."
Many Americans are failing to keep that scorecard. According to a 2012 survey conducted by the American Institute of CPAs, just 17% of young adults monitor their bank accounts on a daily basis, and 4 out of 10 adults never check their retirement account balances.
"You've got to hold yourself accountable," McBride says. "If you overspend one month, that impacts your progress toward your goal. The accountability factor forces you to find a way to correct yourself if you're going off course."