By: Humberto Cruz
March 30, 2010
Start small if you must, but start. And then keep saving your money -- automatically, if possible.
"The essential message is to take action to build wealth, not debt,'' said Dallas Salisbury, chairman of the American Savings Education Council, which helps to maintain the noncommercial www.AmericaSavesWeek.org website.
Its useful 12-item checklist has questions such as whether you know your net worth and have a spending plan that allows you to save enough money to meet your goals.
Millions of Americans, still reeling from the recession, would have to say no. According to a survey of more than 1,000 adults conducted for America Saves in February, the percentage of Americans with a spending plan that allows savings declined from 49 percent in 2008 to 46 percent this year.
And just 49 percent save for retirement at work, down from 55 percent two years ago.
The numbers "don't bode well for the financial future of many Americans,'' said Stephen Brobeck, executive director of the Consumer Federation of America.
Particularly at risk are lower- and moderate-income households: 57 percent of families with incomes under $25,000 and 39 percent of those with incomes between $25,000 and $50,000 say they don't have enough money set aside for unexpected expenses.
"It's very disturbing that a significant number of Americans are not prepared for routine emergencies, let alone retirement,'' Brobeck said.
"Setting up an automatic savings account for emergency funds, retirement, and other major life milestones has never been more important,'' said Nancy Register, an America Saves director.
When you transfer money directly from your paycheck or checking account into a savings or investment account, you're less likely to miss the money -- and more likely to adjust your spending.
For many, relatively high minimum balances to open and/or maintain savings accounts have been a barrier to automatic savings. Last month, the consumer federation, the Employee Benefit Research Institute, and the Financial Services Roundtable, which includes most of the largest banks, announced a commitment to follow "best practices'' to promote and facilitate automatic saving.
These practices include free automatic transfers from checking to savings; low minimums for automatic savers; incentives for customers to use automatic savings; good disclosure of automatic savings options; and active promotion of these options.
"The Roundtable will do everything in its power to encourage retail banks to adopt these practices to improve their programs so that they meet these criteria,'' said Steve Bartlett, the group's president.
Humberto Cruz can be reached at AskHumberto@aol.com.