Humberto Cruz

Start small if you must, but start. And then keep saving your money -- automatically if at all possible.

That's the message from more than 100 not-for-profit, government and business groups that participated in the recently concluded fourth annual America Saves Week campaign. With a fresh commitment from a major banking and financial services group, this year's events emphasized the need and effectiveness of automatic savings, particularly for lower- and middle-income Americans.

"The essential message is to take action to build wealth, not debt," said Dallas Salisbury, chairman of the American Savings Education Council, which helps to maintain the non-commercial www.AmericaSavesWeek,org Web site.

The site, accessible year-round, contains a useful 12-item "savings checklist" with questions such as whether you know your net worth and have a personal spending plan that allows you to save enough money to meet your goals.

Millions of Americans, still reeling from what has been dubbed the "Great Recession," would have to say no. According to a survey of more than 1,000 adults conducted by Opinion Research Corporation for America Saves in February, the percentage of Americans with a spending plan that allows savings declined from 49 percent in 2008 to 46 percent this year.

And just 49 percent save for retirement at work now, down from 55 percent two years ago.

These declining numbers "may largely reflect job loss and other income reductions," said Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves. "However, they don't bode well for the financial future of many Americans."

Particularly at risk are lower- and moderate-income households -- 57 percent of families with incomes under $25,000 and 39 percent of those with incomes between $25,000 and $50,000 say they don't have enough money set aside for unexpected expenses such as needed car repairs.

Little wonder that even higher percentages of these two groups -- 77 percent of those making under $25,000 and 54 percent of those making between $25,000 and $50,000 -- say they are not saving enough for a retirement with a desirable standard of living.

"It's very disturbing that a significant number of Americans are not prepared for routine emergencies, let alone retirement," Brobeck said.

Given those numbers, "setting up an automatic savings account for emergency funds, retirement and other major life milestones has never been more important," said Nancy Register, associate director of the consumer federation and America Saves director.

When you save automatically -- transferring money directly from your paycheck or checking account into a savings or investment account, for example -- you're less likely to miss the money and more likely to adjust your spending to the money in hand.

For many Americans, relatively high minimum balances to open and/or maintain savings accounts have been a barrier to automatic savings. Last month, the consumer federation, Employee Benefit Research Institute and Financial Services Roundtable, a group that includes most of the nation's largest banks, announced a commitment to follow "best practices" to promote and facilitate automatic saving, especially by low- and moderate-income customers.

These best practices include free automatic transfers from checking to savings; low minimums for automatic savers; incentives for customers to use automatic savings; good disclosure of automatic savings options, and active promotion of these options.

"The Roundtable will do everything in its power to encourage retail banks to adopt these practices to improve their programs so that they meet these criteria," said Steve Bartlett, the group's president, who also committed to publishing a review of their progress in one year.


Personal Finance - Automatic Saving Painless Way to Build Emergency & Retirement Funds

© Humberto Cruz


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