Pennies Saved Can Add Up in Your Savings Account
Pennies Saved Can Add Up
in Your Savings Account
February 28, 2007
By HUMBERTO CRUZ
At the grocery store, the cashier dutifully informs you of all the money you've saved with the store specials. "You saved $6.45 today," she proclaims, pointing to the highlighted figure on the receipt.
So, what do you do with the money?
You may not give it a thought, considering the whole thing smacks of showmanship and that specials are meant to get you into the store so you buy other stuff, too. But a few savings-minded readers have told me that, the minute they get home, they put in a cookie jar an amount similar to what they saved (or round it off to the next dollar).
When the jar is full, they deposit the money in their savings account. After months and sometimes years of doing this, they have balances in the hundreds and even thousands of dollars.
Consider this a painless way to save and build an emergency reserve, and the type of idea the Consumer Federation of America and other organizations are looking for as they celebrate "America Saves Week" through March 4.
"It is a new initiative to focus greater attention on the needs and opportunities for personal savings," said Stephen Brobeck, executive director of the CFA.
A survey released by the federation this week found that only 40 percent of adult Americans have a separate emergency savings fund. Of those, almost half have $2,000 or less or did not say how much they have.
Among younger Americans, lower-income families and minorities, the situation is worse. Only 19 percent of those ages 18-24 and 23 percent of those with household incomes under $25,000 have a separate emergency fund.
And less than a third of African-Americans and Hispanic-Americans have one, according to the survey of more than 1,000 adult Americans commissioned by the federation and conducted by Opinion Research Corporation this month.
"The ability of Americans to cover unexpected expenses such as a car repair or emergency dental visit depends greatly on their having an emergency savings fund," Brobeck said. Without one, they risk falling prey to high-interest credit cards or "payday loans" to bail them out, he said.
Financial institutions participating in the America Saves campaign have set a goal of opening almost 10,000 new savings accounts for low- and moderate-income Americans nationwide. In Cleveland alone, 11 banks have pledged to open 4,500 accounts. (Through America Saves, launched in 2001, more than 68,000 "Savers" have committed to implement a detailed plan toward a specific savings goal. The most popular is building a reserve fund).
In addition, readers of the Savings Game column are being invited to submit ideas to build or maintain an emergency fund. If yours is chosen among the best, Brobeck said it will be published in the American Saver newsletter (Download a copy at www.AmericaSaves.org) and you'll win a $50 face-value EE U.S. savings bond, worth $25 at issue.
"We'll keep accepting good ideas as long as we keep receiving them," Brobeck said.
The most effective idea, most everyone agrees, is to put savings on autopilot. "For most Americans, an appropriate [emergency savings] fund would be a savings account at a bank, thrift, or credit union that is funded by automatic monthly transfers from checking or by a portion of directly deposited paychecks," said a statement by the federation, the Federal Reserve, the National Foundation for Credit Counseling and other organizations participating in America Saves.
Indeed, most Americans with an emergency fund save through automatic transfers, the CFA survey found. I will look for other ideas that show the ability to spot savings opportunities and the discipline to carry them through.
One example: Brian Cohee, a self-described "very middle class" real estate appraiser, told me he used to spend $14 of his own money on film development and processing for every appraisal. When he bought a digital camera for $300 eight years ago, he elected to set aside the $14 he saved on each appraisal, literally writing himself a check every week. Today, $14 a time, he has saved $44,800!
"I realized every dime counts," Cohee said. "I took the responsibility and applied weekly discipline. It's hard work, but pays major dividends."
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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