NEW YORK (MainStreet)More Americans are embracing savings habits, according to a new survey. A Harris Poll found that 62% of Americans are decreasing spending on eating out at restaurants, and 59% are planning to reduce spending on entertainment in the next six months. Further 24% are cancelling or cutting back cable television service, 20% are cancelling landline phone service to only use a cell phone.
"Unless you discipline yourself to save something from every paycheck, you will never be able to accumulate money that can work for you," said Rick Rodgers, a CFP and author of The New Three-Legged Stool: A Tax Efficient Approach to Retirement Planning.
About 62% of Americans are willing to purchase more generic brands to save money while 44% will bring their lunch to work. Other ways consumers are cutting back include:
- 38% are switching to refillable water bottles instead of purchasing new bottles of water
- 22% are cutting back on dry cleaning
- 39% are going to the hairdresser/barber/stylist less often
- 29% report cancelling one or more magazine subscription
- 22% have stopped purchasing coffee in the morning
- 15% began carpooling or using mass transit
At the end of 2012, there were 8.99 million households in the United States with a net worth of at least $1 million, according to the Spectrem Group.
"Becoming a millionaire most likely doesn't just happen to you. Rather, it takes planning and perseverance," said Rodgers.
Rogers advises the following steps to save a million:
- 1. Live below your means. Most people never learn to spend less than they earn. The secret to living below your means is to have a budget and work your budget every month.
- 2. Save a minimum of 10% of earnings. Research has shown many of today's millionaires accumulated their wealth by saving and disciplining themselves to increase their savings every year.
- 3. Invest your savings in businesses. Your savings should be put into growth-oriented investments. Stock prices can be volatile but you can minimize the volatility by owning stocks through diversified mutual funds.
- 4. Engage in dollar cost averaging, which is the practice of buying a fixed dollar amount of a particular investment on a regular schedule so that shares are purchased when prices are low and fewer shares are acquired when prices are high. Investing on a regular basis allows you to take advantage of the stock market downturns through dollar cost averaging.
- 5. Don't follow the herd. In 2008, stock prices fell by more than 50% but have since recovered to move on to new highs. Unfortunately, many investors sold their stocks during this period instead of buying.
--Written by Juliette Fairley