Are You Saving Enough?
This past weekend, my husband and I worked on our taxes. (This is early for us, but when you have a baby due next week, you have a powerful antidote to the procrastinating tendencies that normally kick in.)
Eyeballing our form, my better half guessed we'll probably have to pay this year, after a couple years of receiving refunds.
This wasn't a surprise. We went to a financial planner who assured us it was better to change our withholding so that we could have money now, as opposed to letting Uncle Sam hold onto it until tax refund time.
But I gotta say, while her advice I'm sure was fiscally sound, I am not looking forward to being the one shelling out versus being on the receiving end.
And no, it's not because I have a grudge against the government or because I want to demonstrate my solidarity with Marion Barry. It's because I'm not naturally a good saver and while the government may get the benefit of earning interest off my hard-earned dollars for a few months out of the year, I'm more likely to see that money if it sits in the Treasury than if it lands in my wallet. A fair trade, I always thought.
Anyway, it turns out, I'm not alone.
The Consumer Federation of America and a coalition of other consumer groups and government agencies kicked off the first America Saves Week yesterday.
It's not as if we haven't all been told a million times Americans are lousy savers. But CFA decided to tell us again with a not-so-surprising survey.
As you probably already guessed, those who have less money to save, save less.
According to a poll of more than 1,000 adults, the young, the poor, and minorities were least likely to have a separate emergency savings fund.
Those who had savings broke down like so:
*19 percent of those aged 18 to 24
*23 percent of those with household incomes under $25,000
*31 percent of African Americans
*32 percent of Hispanic-Americans
This compares with 58 percent of those with incomes over $75,000.
Altogether 40 percent of Americans said they had rainy day funds. Though, when you take a closer look at how much money is in some these funds, you hope for their sake, it won't rain long or hard.
Fourteen percent of those with emergency funds had less than $500 in them. Fifty-one percent said they had $2,000 or more.
What I found interesting was where people get the money for their funds. One quarter pay down expensive debt and then deposit the amount of their monthly payment into emergency savings. A third deposit "loose change" periodically, the survey found. And half--yes half!--said they deposit a portion of their tax refunds!
We'll see how I feel next year, after a few months of being hard up for daycare money.
In the meantime, if you're looking for truly BASIC advice on how to start saving, check out this handy guide from bankrate.com. Plus, listen to Michelle Singletary's tips on painless savings. You can also set some savings goals with an online calculator.
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