Humberto Cruz: Start thinking about savings now
March 3, 2008
Valeria Johnson of Okaloosa County was living paycheck to paycheck because she wasn't saving.
She started small, saving loose change (Americans hold $15 billion of it, the U.S. Treasury says). Whenever she got a raise from her job at a bank, she put most, if not all of it into savings, with the money automatically deposited from her paycheck.
"I've been living without this," Johnson said of the raises." I can keep living without it."
Johnson also became a more careful shopper, clipping coupons, doing her grocery shopping from a list, comparing prices and taking advantage of rebates — but buying only items she actually uses. She has cut back on "impulse buying," distinguishing between wants and needs.
Her credit card is just for essentials. "I don't purchase anything with it unless I'm going to pay it off right away," she said.
Her advice on savings? Don't start big and make a goal that's unrealistic. Instead, start small and stick with it. As you watch your savings grow, it's encouraging, she said. Johnson managed to save enough for her first-ever vacation — a trip to the Bahamas. "That's the only goal I didn't mind taking the money out for," she joked.
Johnson's story in her own words is one of many the organizers of America Saves ( www.americasaves.org) hope will educate and inspire all Americans but especially those with lower incomes to save and build wealth, not debt.
"A low income certainly makes it difficult to build adequate retirement savings but does not prevent developing saving and spending plans," said Stephen Brobeck, executive director of the Consumer Federation of America, which manages the America Saves campaign.
Last week, as part of the second annual America Saves Week, the federation and at least 87 other groups, from governmental and not-for-profit agencies to trade groups and private firms, joined forces to promote savings. Although the week officially ended Sunday, the Web site www.americasavesweek.org, will continue to offer many resources, including a savings checklist and the ability for savers to enroll in special programs and track their progress.
"It is a constant place for people to go back to," said Dallas Salisbury, president of the Employee Benefits Research Institute and chairman of the American Savings Education Council. "There are no products being sold on this Web site. I want to stress that."
As to the need to promote savings, "it would be great if we didn't need to engage in activities such as this," Salisbury said. But the need is there. A survey of more than 1,000 adult Americans done by Opinion Research Corp. for America Saves Week found only slightly more than half (53 percent) say they save at least 5 percent of their income. Just 28 percent say they save at least 10 percent — the minimum many financial experts recommend.
More than two-thirds (71 percent) report that they "have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit." But only 57 percent of workers say they are saving enough for "a desirable standard of living" in retirement.
Also, fewer than two-thirds (62 percent) of Americans have a "savings plan with specific goals" and only 42 percent save automatically through regular pre-authorized transfers from checking to saving or investments, arguably the most effective and painless ways to save.
"Building wealth starts when you set a goal and make a plan to reach that goal," the America Saves Web site reminds us all. That's true whatever our goal is, whether to retire comfortably or simply stop living paycheck to paycheck, as Johnson did.
Primary Press Contact
The Consumer Federation of America
Attn: America Saves Campaign
1620 Eye St NW, Suite 200
Washington, DC 20006
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