Finding Hidden Money

Finding Hidden Money
Nation of spenders needs to build wealth

May 1, 2006
Greater Milwaukee Today
By COLLEEN BURKE

Setting money aside for a specific goal should not be a habit only for the millionaire jet-set. Through Individual Development Accounts, many of our nation’s nonprofit organizations have shown that even those who don’t make a lot of money can still save.

"A book called ‘Assets and the Poor’ by Michael Sherraden points out that most approaches to poverty look at income level," said Richard Schlimm, executive director of the Wisconsin Community Action Program Association. "Sherraden argues that a better approach to poverty is looking at the assets of the poor. The poor should have savings accounts."

So should everyone else.

News this year that the nation’s personal savings rate dropped into negative territory prompted many to look for ways to boost their savings. While many Americans save in the form of employer-sponsored 401(k) plans, they fail to build a more liquid savings account for emergencies.

"We really encourage a layered savings approach," said Keli Loga, a financial literacy educator at University of Wisconsin-Extension and a coordinator with the Milwaukee Saves program. "You need an emergency savings account, but you also need investments such as CDs for long-term savings goals. Then, of course, there is the need to save for retirement."

Even simple steps can help Joe Consumer spend less of his disposable income and divert those savings into a bank account, Certificate of Deposit, 401(k) or other investment vehicle.

"People need to sit down and really look closely at their expenses," Loga said. "Even if you can find just $10 a week, you need to get into the habit of saving."

Here are some ways to find "hidden" money.

Take your lunch to work. Even at $6 a pound, a pound of turkey lunch meat will make several sandwiches - better than spending $6 for one sandwich at a restaurant.

Pack your beverage, too. You could spend $5 a week on five bottles of soda from your office vending machine, or you could spend $3.49 on a 12-pack of soda that could stretch beyond five work days.

Quit smoking. Or if you don’t quit, then cut back. A pack-a-day smoker who quits altogether can save $1,000 a year.

Partner with a financial institution. A check-cashing institution charges for each check it cashes for you. Your bank won’t.

Make saving automatic. Divert a portion of your paycheck to your savings account or another investment vehicle. "If you don’t see the money in your checking account, you’re less likely to use it," Loga said.

Give your car a rest. Carpool, combine trips or consider public transportation.

Get to know your library. If you’re eligible, get a library card to access your local library’s offerings. The Waukesha Public Library has books, CDs, movies on DVD or tape, books on audio cassette and CD-ROMs for cardholders to borrow. Just return them on time to avoid a fee.

More ideas can be found on the America Saves web site at www.americasaves.org. The sooner you start saving, the better.

"It takes a few weeks to build a habit," Loga said.