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March“America Saves” Week
This post comes from Per Stirling Partner and Financial Advisor, Kenneth Price, CFP®, CFA®, AEP®, CLU®, ChFC®.
This week, the Federal Deposit Insurance Corporation (FDIC) issued a press release to encourage consumers to commemorate “America Saves Week” by taking advantage of automatic savings to achieve financial goals.
Why call national attention to something as ordinary as saving? Well, data shows that Americans are terrible at it. According to the Bureau of Economic Analysis, personal saving as a percentage of after-tax income is a mere 5.4%. In plain English, this means that for every $100,000 of after-tax income consumers earn here in the United States, they are saving $5,400 on average.
Bottom line: we could – and should! – save more, and not just because someone tells us to.
“The surest way for an underfunded investor to improve his or her chances at reaching a financial goal is to increase contribution amount,” says Hal Ratner, Morningstar’s Global Head of Research.
So what can you do to increase your savings amount? Consider using any salary increases you received for this year to automatically invest (in addition to what you are already investing) towards your financial goals, whether that means funding your retirement, education costs for the kids, or paying off the mortgage early. After all, double-digit returns of last year can’t always be relied upon.
If you are already saving well, consider using this as an opportune time to teach your kids to do the same. Vehicles they may use include savings accounts, investment accounts and Roth IRAs subject to limitations. The financial literacy you impart to them can last generations.
automatic savingseducationfinancial goalfinancial literacyHal RatnerMorningstarmortgageretirementRoth IRAsalary increasesaving
