Start a savings account — don't break the piggy bank
Verle Brown is in rare company — she’s one of few Americans who is comfortable with what’s in her savings account. And as a result of the recent recession, chances are the company that Brown keeps is getting bigger.
A Pew Research Center study back in 2008 showed that three of every four Americans said they weren’t saving enough. In a follow-up study in 2010, the research center found that more than 42 percent said they’ve adopted a more conservative approach to saving and investing, and 48 percent of Americans planned to save more once the economy recovered.
Only a few years ago, Americans said they weren’t too concerned about their savings — or lack thereof. They saved, on average, less than 1 percent of their incomes, according to the Pew Research Center.
That trend had actually been ongoing for longer than the past two decades, but some have now started asking what they can do to start feeling secure again after the damaging recession.
Seventy-four percent of women responding to the 2008 survey said they weren’t saving enough, and the survey showed few differences among people of different ages or races.
Angela Gay, 27, said she was one who didn’t feel comfortable with what she was saving. Although she does have a savings account, Gay said it was tough for her and her husband, David, to continually add to the account when they had a child.
However, now is the perfect time to start getting into the good habit of saving. As the economy is picking itself up, so are the consumers. Americans have learned what it feels like to not have as much in their savings to fall back on as they would have liked. Experienced saver Verle Brown explained it’s not as hard as one might think to set money aside.
Brown, 74, said her secret to success didn’t involve anything special. In fact, the key was never seeing her savings money. She followed one of the recommendations others can find on the Missouri Saves website by making savings a fixed expense. Missouri Saves is a program run through the University of Missouri Extension.
Experts say to plan to deduct a certain amount — no matter how small — from your paycheck instead of waiting to throw whatever cash is leftover into savings.
Gay pointed out that certain credit cards offer “save the change” options that automatically round up purchases to the next dollar and deposit the extra change into a savings account, which is another way people can start saving without really noticing a difference.
With the option of automatic payments available at most workplaces, tucking some money away into savings should be easier than ever. Missouri Credit Union President Hal James said it’s critical for an employee to deduct money from every paycheck for savings.
“It doesn’t matter how much anyone makes; they need to save something,” James said. “Payroll deduction has always been easy. If you don’t see it, you don’t miss it. That’s the key.”
Brown agrees and said she thinks she would have spent the money that automatically went into her savings account if it had come to her first. By automatically having some money deducted from every paycheck, Brown said she was able to start saving without it impacting her daily life.
“I don’t think it made a difference at all,” she said. “You just kind of worked with what you had. … We got accustomed to where you knew, approximately, what you were going to have to work with. So you just did that, and it was very easy for us.”
For someone who hasn’t saved before, James said he recommends starting with a simple amount like $10 per paycheck. Although it doesn’t sound like a lot of money, James said that kind of money adds up to an amount that everyone needs. James said that amount varies from person to person, but he thinks everyone should at least have $500 to $2,000 in an account to cover emergencies.
“If you can do that, you’re going to be able to cover those catastrophes that come up, like a flat tire, or a broken heater, or a broken washer, or something bigger with your car, or something bigger with your house or even something that happens to you,” James said. “You’ve got to have a cushion to cover those events.”
He added that people who don’t have enough money to cover these types of emergencies, or emergencies like a sudden recession, end up paying a lot more in the end because they have to go into debt to fix the problem, and, typically, that type of debt carries a high interest rate.
Once an emergency fund is established, James said the next goal should be to get out of debt.
To do that and start building savings, bankers and the Missouri Saves website say a person must build a budget, a task that seems more daunting than it really is.
“It’s based on what you spend anyway,” Gay said. “You just have to sit down and think about what your bills are each month or what they could be on average, at least, and then stick to it. It’s not hard to stick to because it’s based on how we spend anyway.”
A Pew Research Center study back in 2008 showed that three of every four Americans said they weren’t saving enough. In a follow-up study in 2010, the research center found that more than 42 percent said they’ve adopted a more conservative approach to saving and investing, and 48 percent of Americans planned to save more once the economy recovered.
Only a few years ago, Americans said they weren’t too concerned about their savings — or lack thereof. They saved, on average, less than 1 percent of their incomes, according to the Pew Research Center.
That trend had actually been ongoing for longer than the past two decades, but some have now started asking what they can do to start feeling secure again after the damaging recession.
Seventy-four percent of women responding to the 2008 survey said they weren’t saving enough, and the survey showed few differences among people of different ages or races.
Angela Gay, 27, said she was one who didn’t feel comfortable with what she was saving. Although she does have a savings account, Gay said it was tough for her and her husband, David, to continually add to the account when they had a child.
However, now is the perfect time to start getting into the good habit of saving. As the economy is picking itself up, so are the consumers. Americans have learned what it feels like to not have as much in their savings to fall back on as they would have liked. Experienced saver Verle Brown explained it’s not as hard as one might think to set money aside.
Brown, 74, said her secret to success didn’t involve anything special. In fact, the key was never seeing her savings money. She followed one of the recommendations others can find on the Missouri Saves website by making savings a fixed expense. Missouri Saves is a program run through the University of Missouri Extension.
Experts say to plan to deduct a certain amount — no matter how small — from your paycheck instead of waiting to throw whatever cash is leftover into savings.
Gay pointed out that certain credit cards offer “save the change” options that automatically round up purchases to the next dollar and deposit the extra change into a savings account, which is another way people can start saving without really noticing a difference.
With the option of automatic payments available at most workplaces, tucking some money away into savings should be easier than ever. Missouri Credit Union President Hal James said it’s critical for an employee to deduct money from every paycheck for savings.
“It doesn’t matter how much anyone makes; they need to save something,” James said. “Payroll deduction has always been easy. If you don’t see it, you don’t miss it. That’s the key.”
Brown agrees and said she thinks she would have spent the money that automatically went into her savings account if it had come to her first. By automatically having some money deducted from every paycheck, Brown said she was able to start saving without it impacting her daily life.
“I don’t think it made a difference at all,” she said. “You just kind of worked with what you had. … We got accustomed to where you knew, approximately, what you were going to have to work with. So you just did that, and it was very easy for us.”
For someone who hasn’t saved before, James said he recommends starting with a simple amount like $10 per paycheck. Although it doesn’t sound like a lot of money, James said that kind of money adds up to an amount that everyone needs. James said that amount varies from person to person, but he thinks everyone should at least have $500 to $2,000 in an account to cover emergencies.
“If you can do that, you’re going to be able to cover those catastrophes that come up, like a flat tire, or a broken heater, or a broken washer, or something bigger with your car, or something bigger with your house or even something that happens to you,” James said. “You’ve got to have a cushion to cover those events.”
He added that people who don’t have enough money to cover these types of emergencies, or emergencies like a sudden recession, end up paying a lot more in the end because they have to go into debt to fix the problem, and, typically, that type of debt carries a high interest rate.
Once an emergency fund is established, James said the next goal should be to get out of debt.
To do that and start building savings, bankers and the Missouri Saves website say a person must build a budget, a task that seems more daunting than it really is.
“It’s based on what you spend anyway,” Gay said. “You just have to sit down and think about what your bills are each month or what they could be on average, at least, and then stick to it. It’s not hard to stick to because it’s based on how we spend anyway.”