It's a sad but true fact: Americans are creating debt faster and at larger rates than they are saving. More than 40% of American households do not have proper savings in reserves, and fewer are saving using automatic savings and retirement planning. There is a national initiative gearing up that is designed to address these facts and help millions of Americans to start planning. America Saves is a national campaign that starts next week. It is a great time for you to get your personal savings in order.
The campaign provides an opportunity to get yourself and your family involved in thinking about where your savings stand, how to put together a savings plan, and action steps you can begin immediately. The campaign offers more than just lip service. It brings thousands of organizations across the country together to promote saving, and provides individuals with the tools needed to ensure this most basic financial requirement is met.
“America Saves Week provides organizations with the opportunity to promote the benefits of saving and encourage people to build wealth,” said Nancy Register, national director of America Saves in a recent press release. “Through the thousands of organizations that participate in the Week, we are able to encourage millions of individuals and families to take financial action.”
America Saves promotes three key savings principals, (1) have a savings goal; (2) have a savings plan; and (3) participate in automatic savings program:
Set a Goal
You can save more by having a goal in mind. Visualizing what you want to save for gives your savings a purpose and meaning. You may be tempted to withdraw from your savings if it has no purpose. But once you have a goal in place, you know that taking money out of your savings is taking away from your goals. Make your goals short and long term. It can be for your emergency family fund, a home, retirement or a car.
Make a Plan
Once you have your goal in place, make a plan for how you are going to save and how much.To start, cut down on your spending and reduce high-cost debt. Next, keep track of what you spend and make sure you live to a budget. Once you understand where your money (income) is going each month, you can specifically cut unneeded spending and put that money directly toward saving.
As part of your plan, be sure to keep your savings safe, secure and growing, if possible. This means, if you can open up an interest bearing account at a bank or credit union, you should do it. Interest rates are very low, so growth of savings is harder to achieve in this environment. However, any growth is better than none and your money can be protected if its in the bank. Saving with zero return (money under your mattress or in a shoebox) is risky because its easier for you to spend the money, and lose track of your savings plan. Just be sure that whomever you open a savings account with doesn't charge you a fee -- that defeats the purpose of your plan.
It can be difficult to put money aside for savings. But there is an easy way to save money without ever missing it. Once you know how much you can afford to save, make your savings automatic. Many employers allow you to divide your paycheck into different accounts thru direct deposit. Take advantage of this by putting part of your pay into your savings account. If you get paid in cash, take a small amount to the bank to deposit into savings each week. Make it routine, so it becomes habit. Start with small amounts, and increase when you are able. This also applies for retirement savings. Many employers offer plans that not only let you automatically deposit, but also provide a match deposit to increase your savings. This is the best way to start growing your future nest egg, no matter how old you are. If you have a job and employer willing to provide this benefit, take advantage of it.
America Saves is an initiative of the Consumer Federation of America involving more than 1,000 non-profit, government, and corporate groups that encourages individuals and families to save money and build personal wealth. America Saves Week is coordinated by America Saves and the American Savings Education Council.