Ever wondered what's really going on behind the eyeballs of super savers?
Principal Financial Group released a super saver survey (try saying that five times fast!) and it's worth the read, not just because it identifies broad, sweeping trends about people who save a lot of money, but because it can help and encourage anyone who wants to become a super saver themselves.
The company identified seven key budget trends of super savers, and among about 1,400 individuals between the ages of 19 to 56, "super savers" have a few distinguishing characteristics. They:
- Put away at least $17,550 in their 401(k) account.
- Contribute at least 15% of their pay to their savings.
- Their salaries range from under $35,000 to more than $250,000.
It's easy to identify some major takeaways from this survey, which offers inspiration and insight into what's possible. Who knows — it could make you head straight for your company's retirement plan or put together a new mindset (and that's what we hope you do!).
Tip 1: They don't let their income become a deterrent to savings.
What does this mean? It means that super savers can make any amount of money — even under $35,000 — and still be considered super savers. Super savers do not let their perceived "lack of income" stop them from pumping money into savings. They put at least 10% to 15% of their pay toward their savings goals even as they increase the amount they earn per year.
Half of all super savers in the survey make less than $100,000 per year. Talk about inspiring!
Tip 2: They focus on long-term commitments.
According to the research, super savers focus on the long-term ramifications of continuing to save. They realize a few major benefits by saving early and for the long term: They benefit from compound interest, which means that interest builds on interest the longer you save, you weather unexpected market events and you allow yourself more than a comfortable nest egg in retirement — you have a better chance of having an extraordinary nest egg in retirement.
The bottom line (and in line with the research study) reveals a preparedness and longing for financial security, retirement planning, early retirement, and unexpected events.
They defer enough of their salary to receive the maximum employer match. Often, they defer even more than that — 10% or 15% of their salary may go to employer-sponsored retirement plans.
Tip 3: They really believe in committing to savings.
Guess what super savers did during the pandemic? They saved even more, according to the survey. American households saved more — up to more than three times that in April 2020. In the first few months of the coronavirus pandemic, the checking-account balances of Americans went up.
Even during times of uncertainty, super savers commit in a big way and prioritize saving and investing over day-to-day expenses (even if that might mean wearing holey socks).
They pay attention to the amount they save as well. A TD Ameritrade poll shows that the average super saver squirrels away 29% of earnings compared to the general public, which saves only 6% of income.
They may increase their retirement deferral rate each year they receive a raise.
Tip 4: They love determining new ways to invest.
Stocks, bonds, mutual funds — super savers know about it and learn more about it as much as they can. They don't shy away from diversifying their investments, whether they plunge money into retirement funds (401(k)s, 403(b)s, Roth IRAs, traditional IRAs, etc., ETFs or digital assets, such as cryptocurrencies and NFTs.
In addition, they consider their tax benefits, including putting money into post-tax Roth IRAs. They consider saving taxes today and potentially have more later down the road.
Bottom line: They don't shrink away from saving in all the places.
Tip 5: They avoid high-interest debt.
Most credit cards charge up to 18% or more, according to investor.gov. What do super savers do? They steer clear of high-interest debt, including credit cards. They pay off their credit card balance each month or stay away from credit cards altogether by using cash or debit cards to avoid charges on a credit card.
Tip 6: They live within or below their means.
Super savers curb their spending and spend less than what they make (and don't always use a budget to get there).
What does living below your means actually look like in real life? It means you have money left over at the end of the month instead of living paycheck to paycheck. If you want a new furniture set or a new car, you can buy it outright instead of having to finance it.
Super Savers Have Clear Financial Goals
Do super savers have all the answers? No, not necessarily, but they do know the general direction they want to take their money. They also have a general plan to know what they have to do to get there. When you live within or below your means, pay off your credit card balance each month, defer your salary to save as much as possible in a retirement fund (including enough to get the match), increase your retirement fund each year and finally, create an emergency fund, you might wonder what you have left to do.
Super savers keep learning each and every day so they understand about new ways to use technology to their investing advantage and more.
Oh, and did we talk about how super savers pay attention to how much they're wasting in fees? No? That's a great topic for another day.
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