Believe it or not, there was a time not long ago when Americans tracked their savings instead of their credit card debt! Now saving money seems like a memory from yesteryear. To be sure, many Americans set aside money, but it goes straight into mutual funds, often by way of 401(k)s and other qualified retirement accounts, where it is no longer liquid, guaranteed, or under their control.
These days, we are so eager to run that we forget to walk first! We neglect saving in order to "invest," when both are necessary. Saving money provides the crucial foundation that allows us to then invest successfully.In his book Pound Foolish, Steve Utkus points out that before the rise of the financial planning industry in the 1970s, the cornerstones of personal finance were “savings accounts, whole life insurance, and the home mortgage.” Most people’s number one fear was speaking in public, not running out of money.
However, personal savings peaked in 1975, when the average household socked away 14% of their earnings. That’s a stark contrast to the average post-2000 family, who set aside as little as 1% of their yearly income
Personal Savings: A Foundation of Prosperity
An active and consistent savings strategy is KEY to our economic health. It provides a number of short- and long-term benefits, such as:
1. Having a robust emergency fund available
2. Having liquidity for opportunities
3. Weathering economic downturns
4. Saving triggers an upward spiral towards financial security.
5. Save more money, save the economy.
5 Tips to Jump Start Your Saving
1. Track what you're spending now
2. Align your spending with your priorities.
3. Focus on changing habits, not deprivation.
4. Make saving automatic.
5. Out of sight, out of mind.