Personal Finance: America Saves Week

Personal Finance: America Saves Week
Claudia Buck
The Sacramento Bee
2/22/09

I'm living so far beyond my income that we may almost be said to be living apart.

– U.S. poet E.E. Cummings

It's taken a financial crisis, but it's starting to stick: Americans are saving more. Or at least trying.

Part of it has been forced. As paychecks shrink, jobs dry up, mortgages collapse and credit card companies clamp down, many Americans have had no choice. They couldn't keep spending.

And the savings are beginning to add up. Last month, the federal government reported that the U.S. personal savings rate jumped to 3.6 percent in December, a staggering leap up from near-zero, where it's languished in recent years.

That means the third annual America Saves Week, today through March 1, could hit home like never before.

"It's not about saving vs. spending, but finding that healthy balance," said Nancy Register, director of the nonprofit America Saves project in Washington, D.C. "Particularly in hard times, individuals and families need that safety net so an unexpected expense (job loss, car repair) doesn't become a nightmare."

Register said this year's goal is to reach 40 million people and sign up 75,000 new savers, getting them to "begin saving or start saving more."

Hundreds of banks, nonprofit groups, community groups, military bases and others are trumpeting the start-saving mantra.

Among them:

• Karyn Hodgens, co-founder of Rocklin-based KidNexions, has been handing out paper coin wrappers to the second-to-eighth-grade students in her after-school money-management classes. She urges them to "search the couch cushions" and fill the penny, nickel, dime and quarter wrappers – totaling $17.50 – and use the coins to open a savings account.

"Kids like to act like adults," said Hodgens, and a savings account is "the first step to getting on a path to managing their money."

Earlier this month, Hodgens sent a letter to the White House, urging the "first kids" – Malia and Sasha Obama – to lobby their parents for a big raise in their allowance.

Hodgens urged the girls, who reportedly get only $1 a week, to request an allowance equal to half their ages – $5 and $3.50 respectively. And she suggested asking their parents to match their savings, dollar for dollar.

As her letter to President Barack Obama's daughters noted: "Your dad is busy working on solutions because a lot of people did not know how to manage their money properly."

This week, as an official America Saves participant, Hodgens is dropping the price of KidsSave, her company's money-management software, to $19.95. It's at www.kidnexions.com.

• Jack Gallagher and Pam Krueger, co-hosts of the PBS TV show "MoneyTrack," are helping kick off the U.S. military's savings efforts in California Monday at Travis Air Force Base. Krueger and Gallagher, a Sacramento comedian and TV personality, plan to address 500 personnel about financial security.

All military branches – Army, Navy, Marines and Air Force – are revving up financial readiness campaigns to ensure more military personnel stay debt-free. For details, go to: www.militarysaves.org.

• Banks, investment brokers and credit unions are rolling out new saving incentives.

Sierra Central Credit Union, which has 16 branches including ones in Auburn, Grass Valley and Roseville, just upped its holiday savings account from 0.75 to 2 percent (variable), part of a "back-to-basics" savings inducement, said spokeswoman Pam Sweeney.

Charles Schwab, the discount investment brokerage, this week is debuting a new high-yield savings account, with a 2 percent annual interest rate and no monthly service charges, ATM fees or minimum balance.

"You can't control what the markets are doing, but you can do something about your own current situation," said Kevin Rose, a Charles Schwab branch manager in Roseville. "As consumers, we like to spend. But if you have savings set aside in a separate account that's not (mingled) with your everyday checking account, you can see it grow."

• Wal-Mart, in a move aimed at Americans living paycheck to paycheck, has announced it's slashing fees on its MoneyCard, a prepaid, reloadable Visa debit card. Requiring no credit check or existing bank account to open, the card can be loaded in any amount up to $3,000 a month, usable anywhere that accepts Visa debit cards. When the amount is gone, there are no overdraft or late fees.

Wal-Mart is repricing all basic fees at $3: initial activation, monthly service and reloading charge. Previously, those MoneyCard charges were $9, $4.95 and $4.65. For those who use direct deposit and minimum amounts, the $3 monthly and reloading fees are dropped entirely.

"We thought originally it was (mainly) for 'unbanked' customers, but we're finding a new set of customers who are using it to get their finances in order," said Jane Thompson, president of Wal-Mart Financial Services. Since the debit card was launched in June 2007, Thompson said, more than 1 million cards have been activated.

Curtis Arnold, founder of CardRatings.com, a Little Rock, Ark.-based credit card comparison site, gave Wal-Mart's announcement a thumbs-up. "For a company that prides itself on being a price leader, they weren't prior to these changes. Now, they are."

Meanwhile, officials of the third annual America Saves Week hope it will pick up even more savings converts, especially given the economy's turbulence.

"It's an annual chance to look at your spending and saving … identify a goal and a time frame to reach it," said Register, the America Saves director. "The whole idea is to take action and get into a savings habit. Even if it's only a small amount, it's transformative."

For more information on America Saves, go to: www.americasaves.org.