This week, February 23 to March 1, is America Saves Week. It is the week set aside to remind us to start saving now. As we talked about last week, this is much easier said than done. I often talk to people who tell me that they can barely meet their financial obligations, much less save anything. The reality is that this is the norm for most folks.
According to a recent survey by Bankrate.com, 76 percent of all Americans live paycheck to paycheck. This number is high since it counts those who don’t have six months of expenses in savings. That is a high standard for many of us. However, we are even coming up short at much smaller amounts of money. CashNetUSA says in its recent survey that 22 percent of those surveyed had less than $100 in savings and 46 percent had less than $800. That is a cause for worry. If you don’t have enough money in savings, the next resort in case of an emergency is high-interest credit.
This week, let’s see how it is possible to save even if you are watching your money.
Find small savings. If you save $10 a week, over the course of a year it adds up to over $500. Consider giving up a purchase each day and saving that money. It might be a soda ($450 a year), latte ($1,387) or lunch one day a week ($520). Cutting out any one of these expenses and putting the equivalent amount in a savings account will get you a long way toward reaching your savings goals.
Compare prices. Make sure when you spend money that you are getting the best deal. Prices vary depending on where you pick up your items, so make sure you are selecting wisely. If you are shopping for a new television, the price might vary from $50 to $100. Buy the cheaper one and put the rest of the money in your savings account. Don’t overlook recurring expenses such as your monthly cable or phone bill. A periodic review may save you money. Multiply that savings by 12 months in the year and you can really pump up your savings account.
Reduce debt, particularly high-interest debt. Let’s say you have $5,000 on a credit card with an interest rate of 11 percent. If you make a monthly payment of $200, it will take you 29 months to pay off, and you’ll pay a total interest charge of $700. If you increase the interest rate to 28 percent, that same debt will take you 39 months to pay off and will cost you almost $2,600 in interest charges. This interest rate seems high, but if you miss one payment, the interest rate on an 11 percent card can easily rise to the 28 percent level. Pay off the highest interest rate accounts in your financial world and bank the savings.
Save for emergencies. The average emergency costs a family about $2,000. Whether it is a car repair, a health emergency or a house repair, these unforeseen events are what cause many of us to resort to credit cards. Save $200 a month and before the end of the year, you’ll be ready if an emergency hits.
Curb impulse spending. Whether it is those darling boots or a new comforter for the bed, those impulse buys add up. If you are an average consumer, 40 percent of the things you buy are on impulse. That can amount to big money over the cost of your lifetime. On a trip to the grocery store, go directly to what is on your list and leave the store. Don’t be distracted by the cakes, deli items or the flowers. If you don’t need something, don’t go to the store. Too many of us treat shopping as a pastime. Buy what you need and nothing else.
This week, examine ways you can save a few dollars. By continuing this practice throughout the year, you will find yourself closer to your savings goals.
Christina M. Roden – Administrative Assistant
University of Alaska Fairbanks Cooperative Extension Service – Delta Junction