Just 28 percent of all Americans say they save at least 10 percent of their income. That's one of the findings from a new survey by the American Savings Education Council.
Matt's View
What percentage of your monthly gross income do you save each month? For most people, 10 percent should be the absolute minimum. Do you have an emergency fund of three to six months' worth of living expenses? If not, make that your first savings goal. A savings account at a bank (traditional or online) or credit union, or a money market mutual fund are good choices for such money. Set up an automatic monthly transfer from checking to savings to build the account. Beyond that, are you eligible to take part in a retirement savings plan where you work? And does your employer match some of your contributions? If so, that's the easiest money you'll ever make. Don't miss out.
Are you among the 130 million taxpayers who will receive a rebate as part of the government's economic stimulus plan? (Check eligibility requirements here
) If so, with the government poised to begin sending checks in May, now would be a good time to decide what you'll do with the money. Single tax payers will receive up to $600; married couples filing jointly will receive up to $1,200, with another $300 per qualifying child. While the government hopes the money will be spent, MarketWatch reported on a recent survey which found that people plan to use a little over half of any money they receive to pay down debt or build savings.
Matt's View
As you might have guessed, I like the idea of using the money to reduce debts or increase savings. If you have children and have been thinking you'll get around to saving for their future college expenses some day one day, that day may be right around the corner. Assuming you have an emergency fund and are saving for your later years, check out the options for college savings at Savingforcollege.com
. No matter what you plan to save for or which debts you plan to pay down, an important step is to commit to using the money that way before it shows up in your mailbox.
A recent article in the Wall Street Journal had some good ideas for helping kids cultivate wise money management habits. Whenever your son or daughter tells you about something they desperately want, add it to a written wish list. A few days or weeks later go over the list to see what they'd still like to buy or receive as a gift. You'll be surprised at how many items they can't remember ever wanting. That teaches the value of a cooling off period--walking away from a potential purchase long enough to think about whether it would be wise. Next, as the article's author discovered, kids spend more freely when using their parents' money rather their own. He once gave his daughter $5 for a school field trip and asked her to give him back the change. She came back with a few pennies. Next time he said she could keep whatever change she had leftover. She came back with the full $5. The lesson? Give them an allowance, but require that they use a portion for some of the discretionary items you used to buy for them.
Matt's View
Of course, the cooling off period idea is a good one for us big kids as well.
In the last issue of this eNewsletter I summarized an article about appealing your property assessments. One reader wondered what implications a successful appeal might have on his homeowner's insurance coverage. In another article I had commented on the importance of married couples using joint financial accounts wherever possible. A reader wrote to say that even though many of her married friends have combined accounts, it's usually one person in the marriage who handles the finances. That can leave the other spouse uninformed or ill-prepared to deal with the finances.
Matt's View
Apparently, a successful appeal of your property taxes would have no impact on your homeowner's insurance. My agent told me they do not go by assessed value. They have their own computer models and use different inputs. In addition, assessed value includes the land, whereas insurance covers the structure and its contents. As for the other story, I agree about the need for both spouses to be on the same page financially. I encourage couples to hold monthly "board of directors" meetings to go over the family's finances--looking at how actual spending from the past month compares with planned spending, discussing any needed changes, deciding on goals, and more.
If you'd like to comment on any article in this eNewsletter, please drop me a line
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