Personal Savings Rates of Americans at Just 1.3%
What You Can Do to Save More Money
Americans need to save more. A personal savings rate of 1.3%, and at one point in the third quarter of 2005, a negative personal savings rate, does not bode well for Americans in general. Living beyond your means contributes to such a low overall personal savings rate and when times get tough, Americans just simply do not have the funds to rely on to get them through the rough patches.
2 Easy ways to raise your personal savings rate
Adjust your federal withholding rate: Larry Buhl at Yahoo Hot Jobs has some good, common sense ideas for saving for an unexpected job loss which easily translate into easy ways to boost your personal savings. One very good point that he had was that you shouldn't give Uncle Sam an interest free loan. Tax season for many Americans, myself included, includes a refund check from Uncle Sam a few weeks after filing a tax return. Why struggle a whole year when adjustments can be made to withholding amounts to spread that refund out the whole year by giving you more money in your paycheck each week? Boost your personal savings rate by reclaiming that tax free loan by adjusting withholding. Saving that extra money yourself makes it accessible for emergencies throughout the year, versus just available only after you file your tax return.
Internet banking and multiple savings accounts: Re-evaluating your choice of where you store your savings can reap a higher personal savings rate. Online banks such as ING, HSBC and many more are FDIC insured. Don't snub an Internet bank that is FDIC insured out of fear of not having your money nearby in a local bank. Using an Internet bank can yield a markedly higher APY than you can get at a local bank. I currently use an Internet bank for long-term savings because of a higher interest yield. Transferring money to or from my Internet bank takes just a few days to complete the transaction. I do advise keeping a savings account with your local bank, however, for short-term money needs such as an unexpected bill or having your pay day not match up exactly with bill due dates. Don't keep too much money in that account, though. Analyze your money needs carefully and maximize your personal savings rate by keeping a minimum amount readily available and the rest in a higher yielding account.
Sources:
BEA chart, showing personal savings rates by quarters: http://www.bea.gov/briefrm/saving.htm
St. Louis Federal Reserve personal savings rate chart: http://research.stlouisfed.org/fred2/series/PSAVERT/112
BEA news release, October 31, 2008: http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
http://hotjobs.yahoo.com/career-articles-6_ways_to_save_for_an_unexpected_job_loss-566
Published by Carly Hart
One of AC's Top 1000 Content Producers, Carly Hart's interests include news, politics, parenting, frugal living and consumer related issues. A Featured Contributor in the Shopping and Fashion category, she... View profile
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- Internet banks can have a markedly higher APY.
- Adjust withholding to not get a huge refund.
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7 Comments
Post a Commenti want to know evrything about income tax
Actually, it does look (on paper at least) like Americans are saving more. http://research.stlouisfed.org/fred2/data/PSAVERT.txt The personal savings rate as of 11-1-08 is 2.8, up .4 from the previous month. Maybe we are hoarding our pennies, nickels and quarters after all.
At this low rate, there will be no achieving "The American dream".
;-);-)
Terrific advice, I always used the "save everything except the bills" mode of savings and it helped a lot :) Sheri
You are correct about re-evaluating where you have your savings.
Excellent advice. Paypal has been at about 1.94%, but then they don't offer nearly the same protection as other banks. I'm all for online banks and have used USAA since I joined the AF.