Money

7 signs you're not saving enough money

Carrie Bradshaw, the protagonist of "Sex and the City," has an expensive shoe addiction
James Devaney | Getty Images
Carrie Bradshaw, the protagonist of "Sex and the City," has an expensive shoe addiction

When it comes to savings, Americans are falling short. Nearly 70 percent of adults have less than $1,000 in their savings accounts.

Are you on track?

To help you evaluate, we've rounded up seven warning signs that could indicate you need to start setting aside more.

You have no idea how much you spend

You probably have a good idea of how much money is coming in each month, but just how much is flowing out, towards coffee, Uber, subscriptions and delivery? It's likely more than you think, and, chances are, you could find ways to cut back.

To figure out exactly where you spend more of your money than you mean to, record your purchases for a couple of months. You could try writing expenses down in a notebook or using an app that will track your spending, such as Mint, Personal Capital or Level Money.

You don't have savings goals

You can't get to where you're going if you don't know exactly what you want. Think about what you want your future to look like and then come up precise savings goals. Do you want a vacation home? Kids? The ability to travel?

Next, calculate how much you need to save for these future purchases and for how long, and start setting aside a certain amount each week or month.

You're living paycheck to paycheck

If you can barely pay your bills each month, you're living paycheck to paycheck, which makes it nearly impossible to build up substantial savings.

You either need to increase your income or spend less. The simplest way to boost your earning potential is to ask for a raise. You can also find a part-time job, start a side hustle or establish passive income.

If you're aiming to spend less, start by reading up on money saving strategies from everyday people who bank half their income.

You're putting off saving for retirement

Retirement may seem too far off to start considering, but it'll be here sooner than you think. The longer you put off planning for it, the farther behind you'll fall.

The easiest way to start is to enroll in your employer's 401(k) plan and take full advantage of any company match, which is essentially free money.

If your employer doesn't offer a 401(k) plan, you have options, such as contributing to a Roth IRA or traditional IRA, which are both individual retirement accounts that offers tax breaks.

You haven't started investing

If you feel like you don't have enough money to start investing, you're not saving enough.

Investing is one of the most effective ways to build wealth, and contrary to popular belief, you don't need a lot of money to get started. In fact, thanks to micro-investing apps such as Acorns, you can start by investing your "spare change." The app will round up your purchases to the nearest dollar and automatically put your coins to work.

Other apps also aim to make investing simple and accessible, and automated investing services known as robo-advisors can help you out, no matter how much you have in the bank.

The key takeaway: Start investing sooner rather than later to take full advantage of compound interest, which is what causes wealth to snowball.

You can't pay your credit card balance in full

Not being able to pay more than the minimum month after month means you're spending more than you have. That's a path to credit card debt, which will make you fall even farther behind on your savings goals.

Analyze your spending habits and identify areas where you can cut back in order to free up your cash and pay your balance in full.

If you're already in the red, consider ditching your plastic all together and going cash only, which will force you to stay on budget.

You don't have an emergency fund

Life doesn't always go as planned. You could lose your job, have a medical emergency or deal with a car breaking down. It's important to build yourself a safety net.

If you're not prioritizing your emergency fund, you're not saving enough. In fact, personal-finance expert Dave Ramsey recommends starting an emergency fund before tackling debt. The idea is that if an emergency or unexpected big cost arises, you won't have to go into more debt to cover it.

Aim to save $1,000 right away, Ramsey says. Of course, $1,000 isn't an ideal amount to have in your emergency fund, but it acts as a sufficient temporary cushion until you're debt-free.

Once you've paid off your debt, you can start building a more complete rainy day fund to cover the expert-recommended three to six months of living expenses.

Don't miss: 8 signs you're on track to retire early