Thursday, July 20, 2006

Boost Low Savings Rates

My Aunt Norma and Uncle Ike just sent me a check for my birthday! Should I buy a new outfit? Books? A Meal? Nah. I think I'm taking the suggestion below about saving unexpected funds. THANKS AUNT NORMA AND UNCLE IKE!!!

The news release is about the recent lows in savings rates. Honestly: I should be saving more. Check it out:

"As Savings Rates hit a 70-year Low, CCCS Offers Tips for Saving for Emergencies and Beyond

"With personal savings at its lowest level since 1933, and with the Federal Reserve announcement to once again raise the lending rate, many consumers may be just a paycheck or two away from financial disaster.

"Living from paycheck to paycheck isn't an uncommon practice," said Jessica Cecere, president of Consumer Credit Counseling Service of Palm Beach County and the Treasure Coast (CCCS). "And while that practice might work under ideal circumstances, many consumers would find themselves ill prepared to handle the unexpected financial challenges that can accompany a job loss, sudden illness or disability, divorce, or other life altering event."

Saving money is a key component of personal financial planning, and saving for long-term financial security starts with some basic strategies.

Set your sights on a goal
Start by developing some short and long-term financial goals. Short term goals might include saving for a down payment on a car or home, taking a family vacation, or purchasing furniture. Long term goals might include saving for a child's college education, creating an emergency fund, or preparing for retirement. You will be more motivated and likely to follow a savings plan if you are working toward something specific.

Make savings part of your monthly budget

You plan for your monthly rent or mortgage payment and for your car payment, so make paying yourself part of your planned monthly expenses. If possible, have a portion of your paycheck directly deposited into a savings account, and when you get a raise, be sure to raise the amount your are saving-you won't even know it's gone. If you don't already have a budget, it's time to create one. You can find helpful worksheets and budgeting tips at

Create your own "Extra Income"
There are lots of opportunities to reduce expenses that can add up to big savings over time. Drop your spare change in a bucket at the end of each day, and once a month deposit that money into a savings account. Instead of making a daily trip to your favorite coffee spot, pour a cup at home and save $800 or more a year. Bring your lunch to work even two days a week and you could save $120 or more each month-that's $1440 a year. Reduce your air-conditioning bills by raising your thermostat 1-2 degrees. Take advantage of sales at grocery and department stores; stock up on staple items you normally buy, but be careful not to impulse buy items simply because they are on sale. If you do use credit cards, use cards with no annual fee and pay off your balance every month to avoid compounding interest charges.

Plan for the Unexpected
Most financial experts recommend having a minimum of three to six months of living expenses in an emergency fund. This fund can provide financial security in times of emergency and can significantly reduce the stress associated with the crisis. An emergency fund should be kept in a separate account that would be easily accessible should you need it.

Unexpected Money Should Always Be Saved
One of the easiest ways to boost your savings is to put all unexpected money into your savings account. This can include bonuses from employers, income from yard sales, tax refunds, rebates on purchases, and gifts of money from relatives. You will never miss the money, and your savings account will grow even faster.

A Few Words About Retirement
Whether you are on the verge of your golden years, or you have only recently entered the job market, you should be planning for your retirement. The fewer years you have until retirement, the more aggressively you will need to save. Many company retirement plans allow for "catch up" savings for older workers. If you wonder whether saving today can really pay off in the future, consider this: If, beginning at age 18, you saved $3,000 a year for 5 years, and earned a return of 10 percent each year, at age 65 you would have over a million dollars. Your $15,000 investment over five years would yield more than a million dollars.

"There really is no secret to saving money," said Cecere. "It requires a little bit of planning and a personal commitment to invest in your future."

About CCCS
Since 1975, families have turned to Consumer Credit Counseling Service (CCCS) of Palm Beach County & the Treasure Coast for help with money problems. CCCS is a nonprofit, community service agency dedicated to empowering consumers to achieve economic freedom. A United Way partner, CCCS provides confidential budget counseling, money management education, debt management programs, comprehensive housing counseling and bankruptcy counseling and education."

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