During unstable economic times, many American consumers find saving difficult. While the lackluster economy has caused more Americans to save more and spend less, the consumer savings rate is still relatively low. The U.S. Bureau of Economic Analysis reported that personal savings dropped from 6.2 percent in May 2009 to 4.7 percent in November 2009. In an effort to promote personal savings, America Saves Week was created as a national campaign to help individuals and families build wealth through saving. This year, America Saves Week is February 21 through 28.
According to America Saves, most Americans do not have adequate savings to meet major emergencies, let alone accumulate enough savings for retirement. The typical American household has less than $100,000 in net wealth, including home equity and 401k accumulations, and only about $10,000 in net financial assets. This picture is even worse for lower income families. According to a recent survey, the typical amount Americans spent last year on unexpected expenditures was $2,000. Lower-income households in the survey cited the same amount which represents a much larger percentage of their overall income.
Fortunately, saving money is a skill that anyone can learn. During America Saves Week, consumers have the opportunity to learn how to get out of debt, stop living paycheck-paycheck, and build a healthy savings cushion for future expenditures. In conjunction with the America Saves movement, the financial experts at Money Management International (MMI) offer the following advice to jumpstart your savings potential.
Get out of debt. Debt and lack of savings go hand in hand. You’ll be in much better position to save and build wealth once you eliminate existing debt.
Make it automatic. Having money automatically deducted from your checking account into a savings account helps to ensure that you meet your savings’ goal. Even better, if your employer has the capability to automatically deposit your paycheck, have some of the funds directed into a savings account.
Use gifts wisely. If you receive unexpected funds, do not be tempted to spend them frivolously. Instead, put all money received from tax refunds, inheritances and gifts into an interest-bearing savings account.
Enroll in employment retirement plans. Participate in your company’s retirement plan, particularly if they have a “matching funds” program. Not participating in this type of program is literally leaving money on the table and passing up significant tax advantages. If a company program is not available to you, consider establishing an Independent Retirement Account (IRA).
Through the efforts of America Saves, many Americans will find financial freedom in saving. Research shows the benefit of saving is priceless. Besides having more money in your pocket, having savings to rely on can decrease stress and increase peace of mind. Visit AmericaSavesWeek.org to get more information about America Saves Week. There, you’ll find saving strategies and can take the pledge to become an American Saver.