Feb. 21, 2007

COLLEGE STATION – When it comes to developing a personal savings plan, little things mean a lot, said Nancy Granovsky, Texas Cooperative Extension family economics specialist.

These little things are more important than ever, she said, because American savings habits look bleak.

"We are dis-saving in this country," Granovsky said. "Currently we have a negative savings rate – we are spending more than we are taking in and saving nothing, on average."

According to America Saves, a national campaign to encourage individuals and families to save, the current national savings rate of 0 percent is "something that has not occurred since the Great Depression."

At the same time, debt is increasing, the campaign stated: "A recent study, commissioned by Consumer Credit Counseling Service, revealed that overall consumer debt has increased by 38 percent for households at all income levels over the past year."

That's why the week of Feb. 25-March 4 was designated America Saves Week for 2007, Granovsky said.

Establishing a personal savings habit while becoming debt-free isn't always easy, she said. But it doesn't have to be that hard either.

Watch your daily spending habits and determine where you can pocket money instead of spending it, she advised. For example, buy store brand items instead of name brands when shopping for groceries; order water instead of soft drinks or tea when dining out.

She also offered these suggestions from America Saves:

- Drink regular coffee instead of expensive coffee drinks.

- Bring lunch to work instead of buying lunch out every day.

- Dine out one less time each month.

- If taking prescription medications, ask about taking the generic versions and then shop for the lowest-priced pharmacy.

- Reduce credit card debt and be sure to make payments on time.

- Keep your car tuned and its tires inflated to the right pressure; shop around for the cheapest place to buy gasoline.

- Shop for clothing at discount outlets.

- Give up premium channels; rent movies instead.

- Borrow books from the library instead of buying them.

- Save loose change.

- Keep track of spending and review spending habits every month.

- Never make big purchases on impulse. Think about it for at least 24 hours.

None of these steps require big life-impacting changes but they can help you grow wealth, Granovsky said. These savings can be used for retirement or college funds, major purchases such as a home, car or vacation, or as a financial cushion in case of emergencies, she added.

But how much should an individual save? That depends on the individual, she said. Wi$e Up, an online financial planning program designed for Gen-X women, offers a suggestion.

"In Wi$e Up, we tell people they should accumulate three to six months worth of living expenses," Granovsky said. "Not income – living expenses. Determine the bare bones (of your) living expenses ... do the math. What's the least amount you need to cover the basics and cover your bills?"

Although Wi$e Up focuses on financial issues often faced by younger women – roughly those born between 1961 and 1981 – anyone of any age or gender can benefit from the program, she said.

The key to any savings plan is to "pay yourself first," Granovsky said. Set money aside every month before you're tempted to spend it.

"If you don't see it, you won't miss it," she said. "That gives you a sense of control over your financial life ... Save before you pay your bills. If you're living so close to the edge that you pay your bills and have nothing left to save, you're in deep, deep water."

In fact, she said, a close look at how money is really being spent each month usually reveals unexpected ways to save.

"To get a handle on it, we ought to know how we spend money on a daily basis and determine why we do it," Granovsky said. "If people would look at their financial situation, they might not like the way they are spending money in the first place. The whole concept of paying yourself first is basic (to developing) financial skills, growing assets. If you don't pay yourself first, you're never going to save money."

For more information on Wi$e Up, visit the Web at http://www.wiseupwomen.org or http://wiseupwomen.tamu.edu/ Wi$e Up is a national initiative of the U.S. Department of Labor Women's Bureau, Granovsky said. It is managed by Extension and sponsored through grants from State Farm Insurance Companies and the Women's Bureau.

More information on American Saves can be found on the Web at http://www.americasaves.org/ . Click on the link to Local Campaigns and scroll down for information on the campaign in the Lone Star State.

For more information on this and other family economics topics, visit Extension's Family and Consumer Sciences Web site at http://fcs.tamu.edu/ .