Saving – It’s a habit, not a hobby

Personal savings rate is a key measurement of the amount of resources American household have available to contribute to the national saving.  A low personal saving rate limits how much the nation can invest and so ultimately limits future economic growth.


Bit of History


From 1960 until 1990, households socked away an average of about 9 percent of their after-tax income, government figures show. Americans got out of the habit in the 1990s as they saw their wealth build up in other ways, first through surging stock prices and then soaring home values.




The annual personal saving rate (effectively, income minus spending) averaged around 10% during the early 1980s, when the economy was in a severe double-dip recession. It then began to fall steadily, even as the economy weathered two more recessions, averaging about 7% around the time of the 1990-91 recession, then falling below 2% for the first time in 2001. It averaged about 0.6% from 2004-07. Americans also spent more than they earned in recent years which is another reason for pushing the personal saving rate below zero. Check out the link for a detailed clear picture.


Current Mindset

A change in money mindset has emerged again from this recession. That has resulted in a rise in the personal saving rate, which the government calculates as the difference between earnings and expenditures. Economists now expect the rate to rebound to 3% to 5%, or even higher, in 2009, among the sharpest reversals since World War II. Goldman Sachs last week predicted the 2009 saving rate could be as high as 6% to 10%. (Wallstreet Journal article – See “Hard-Hit Families Finally Start Saving, Aggravating Nation’s Economic Woes”.)


Many banks and financial institutions are sending out flyers and phamplets encouraging customers to save money. Actually they need deposits to increase their reserver which is different story. Money gurus recommend various methods and techniques which are hard to follow strategies. It doesn’t always fit all types of people and lifestyle. We need a simple, realistic, and ideal plan to reach the saving goal, whether it is short to long term.
 
Whether you are looking to save money for your first Ipod or little bit more for your first car or  bigger target to buy your first home. Just three simple steps to follow to create a good saving plan. Before that, you better set your mind set by realizing the truth.  “Saving is a habit and not a hobby.” It is hard to start saving and never easily comes off the cuff.  Many of you do not like to hear it, but that’s the fat.
 
How to Realize your goal?
 
Many of our habits are product of constant practice whether its from child hood or teens. If you don’t have that saving habit built in you, it is going to be take time start one so you better show some patience. Making something habitual needs determination and constant practice. 


I like to mention a quote by Frank Outlaw.


“Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.”


You need to first cultivate thoughts about Savings. Keep thinking about saving money in different ways whether from your paycheck or reducing electricity bill or credit card bill. You just keep thinking about saving something every day or month. Next, talk to your spouse and friends about money saving ideas and plans. Finally, take action by following your own idea or any of three ways mentioned below.


1. Don’t spend your dimes and quarters. Start putting them in a piggy bank or digital money jar. Digital money jar will give your amount. Every month, take the change to nearby bank and deposit it in you savings account. You can Open a savings account either with Nationalized bank or local banks with just minimum deposit of $1. I would recommend Credit unions for small saving accounts. 
 
2. On every ATM withdrawal, take $10 out and put it away in the secret wallet/purse compartment. Don’t ever touch it whatever happens. At the end of the month, take it all out and deposit in your savings account. 


3. This one is the easiest of all, called Blind savings – Set up automatic withdrawal to put away a small amount from your paycheck as Payroll deduction or Auto deduction from your checking account to your CD or Savings account. You will never see this money and it is blindly saved.


Once you start taking action and sticking with it rain or shine. Everything will fall into picture automatically, transforming yourself. Your savings habit gets built into you slowly. Once you get into the habit, it just comes as a second nature. 

So do not procrastinate and think it is impossible. You already took your first step thinking about saving, you just need make an habit. Sart working towards your next step by talking, planning and taking action. Try it out and share your thoughts.
 

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