Here's One Thing 60% of Americans Are Doing Right

When we read about consumer spending and saving habits, the news tends to lean toward the negative. Case in point: Earlier this year, I had to report that 57% of Americans have less than $1,000 in savings, while 39% have no savings at all.

It's therefore encouraging to get a piece of good news for a change: Apparently, 60% of Americans are making a conscious decision to limit their monthly spending. The reason? They're looking to increase their savings. That's the latest from a Bankrate study, which also found that 74% of younger workers aged 18 to 26 are acknowledging that they need to start putting more money away.

The latter is particularly positive for one simple reason: Starting early offers workers the best chance to ensure that they have enough money to pay the bills in retirement. The Center for Retirement Research at Boston College estimates that almost half of working households don't have large enough nest eggs to cover their living costs once they stop working. The fact that a growing number of adults are making an effort to save is therefore a welcome change from the seemingly blase attitude we're all used to reading about.

We all need emergency savings

While saving for retirement should be a priority for workers of all ages, let's be clear: Before you start funding that nest egg, make sure you have an adequate amount of short-term savings to work with. Ideally, you should have anywhere from three to six months' worth of living expenses set aside for emergencies. This way, you'll have options should you lose your job or encounter a major unplanned expense.

If your emergency fund is lacking or nonexistent, work on completing it before you save for retirement. But once that fund is fully loaded, it's time to start thinking long term. And the sooner you do, the better.

Starting early: The key to retirement savings

You know those people who retire early and are constantly jetting off on cruises or frequenting the theater? Many of them didn't start out rich or inherit large sums of money from wealthy families. Rather, they made the same wise decision a good 60% of Americans are making today -- to spend less and save more.

The fact that younger workers are making a conscious effort to curb their spending is an added plus, because those are the folks who have the best chance of accumulating the most savings. Though younger workers may not earn quite as much as their older counterparts, they have one key weapon in their arsenal: time. And that's something you can't get back once you lose it.

Just how much do younger savers have to gain by limiting their spending and saving money early on? The following table should give you a pretty good idea:

Now, to be fair, these calculations do assume a 7% average yearly return on investment -- but that's more than doable with a stock-heavy portfolio. And as you can see, we're not talking about setting aside a ton of money to arrive at these figures. Rather, we're looking at giving up a few luxuries to free up $300 a month to save and invest. You can do that by skipping one restaurant meal per week, cutting cable, and walking in favor of paying for taxis. Or, you can pick another combination that better suits your lifestyle. The point is that if you commit to spending less, you stand to benefit big time -- especially if you're young.

Of course, you can't help but notice that as the savings window in the above table shrinks, the total amount accumulated goes down as well. This means that if you're older and are only now first starting to save, you may need to do better than $300 a month. But if you're willing to spend less and live well below your means, you'd be surprised at how much cash you might free up. You might even consider doing something drastic, like downsizing your living space, once you realize the financial freedom it'll buy you down the line.

Like all things in life, saving money boils down to making choices. A good 60% of Americans are now choosing to spend less so they have the option to save more and enjoy the financial security that buys them. The question is: Will you be one of them?

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