Delawareans Urged To Save Their Money

Delawareans Urged To Save Their Money

February 28, 2008
BY LESLIE A. PAPPAS
Delaware Online

Ask Pernell Guy how much money she saves every month, and the Wilmington resident rolls her eyes in exasperation.

"Savings is ridiculous right now with gas prices," says Guy, 47, who runs her own business making gift baskets. "I think savings is important, but how can we save with everything going up so high? ... It's getting hard to live, to tell the truth."

Despite the tough times, the city of Wilmington hopes to convince residents like Guy to find more ways to stash away their pennies.

On Tuesday, the city launched its "First State Saves" campaign, kicking off a series of events to encourage Delawareans throughout the state to build wealth and get out of debt. At a news conference on the first-floor lobby of the City and County building, about 50 people gathered to champion the value of hoarding more cash.

"Savings is really about freedom," said New Castle County Executive Chris Coons, who spoke at the event along with State Treasurer Jack Markell and Wilmington Mayor James M. Baker. "It's about freedom from debt, freedom to make choices for our financial future."

These days, many Americans lack that financial freedom. Personal savings as a percentage of disposable income slipped into negative territory in November to - 0.5 percent, according to the most recent figures from Bureau of Economic Analysis. That month, Americans spent $48.4 billion more than they made.

"Americans are currently spending much more than we earn," said Tina D. Betz, Wilmington's cultural affairs director. "In Delaware, we want to counter that national trend."

Adding to the reluctance to save is a dwindling rate of return. The payback for putting money in the bank these days keeps getting lower as the Federal Reserve continues to cut interest rates.

Banks reacted quickly in September when the Fed cut the federal funds rate by a half a percent, immediately dropping the interest rates paid on savings accounts.

Last week, the Fed unexpectedly cut the rate another three-quarters of a point, which buoyed jittery stock markets but drove interest on savings accounts even lower.

ING Direct, the Wilmington-based online bank that touts the value of savings and boasts higher-than-average yields, has dropped rates on savings and short-term certificates of deposit to 3.65 percent, down from more than 5 percent in August.

The Fed is expected to cut rates again today.

Still, the "First State Saves" campaign attempts to raise awareness and spur people to positive action, said Ronni Cohen, executive director of the Delaware Financial Literacy Institute, which is coordinating the campaign. An offshoot of the national America Saves campaign, First State Saves will officially launch statewide on Feb. 26.

Similar to awareness campaigns like "Buckle Up" and "Don't Drink and Drive," the campaign offers a Web site (www.firststatesaves.org) with savings tips, a personal wealth coach, access to low-fee accounts at local banks, and information on free financial education classes and events.

Saving can be a tough sell in these tough economic times -- even among its advocates.

"I know I don't save as much as I should," Wilmington Mayor James M. Baker admitted in his speech. "Because every time I do, something breaks and I have to fix it."

Leslie A. Pappas is a columnist for Delaware Online. Email her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .