America Saves Week - February 20-27Monday, February 21, 2011

CredAbility offers tips to help consumers jumpstart their savings effort

ATLANTA GA — Many families have been significantly affected by the economic crisis, and most do not have adequate savings to meet major emergencies, let alone accumulate enough savings for retirement. The typical American household has less than $100,000 in net wealth, including home equity and 401k accumulations, and only about $10,000 in net financial assets.

“Most consumers are not saving adequately and are ill-prepared for even small, unplanned expenses,” said Mechel Glass, director of education for CredAbility, a member of the National Foundation for Credit Counseling (NFCC) and supporter of America Saves Week. “A single event, such as a job loss or a medical emergency could quickly spell financial disaster for many families.”

As part of America Saves Week, consumers are encouraged to take a look at their current finances and develop strategies for saving to build a financial cushion that will reduce their vulnerability in the event of a crisis. “Taking proactive steps now can reduce the impact of an unplanned expense or emergency,” added Glass.

Not sure if you are saving adequately? Consider the following:

Do you have 3-6 months of living expense in a savings account that you could access quickly? If you do, great—you should probably look at increasing this amount to 8 months worth of savings if you believe it will take you a little longer to find replacement dollars in case of a job loss. If you do not have a minimum of 3 months of living expense in a savings account, this is a great savings goal to strive for.

How did you pay for your last unplanned expense or emergency? If you answered “with a credit card,” that is a sign that you are not saving adequately. It is also reasonable to assume that if you do not have the resources to cover the expense, you are also not prepared to handle the interest, late fees and other expenses associated with an emergency.

Building your savings takes time and effort. Despite your current financial situation, it is possible to save, even just a few dollars at a time. Start small, save regularly, and the results will come. CredAbility offers tips to help you identify ways you can get started.

Control spending despite rising costs. Food and gas costs are on the rise, so save money on groceries by using coupons and shopping wisely. Take the following steps:

• Look for buy one, get one free deals, but only on things you would normally buy.
• Compare prices and buy in bulk when it is more cost effective or when non-perishable items are on sale.
• Save on gas by planning your travel to limit driving time, carpooling to work when possible, or coordinating with neighbors to get the kids to school and share the expense.

Cut back. Reduce your daily expenses by cutting out expenses that are not necessities. You can also:

• Skip the daily trip to your favorite coffee shop.
• Bring your lunch and snacks to work.
• Eliminate your land line and use just a cell phone.
• Cut out the premium channels and get back to basics when it comes to television.
• Pass on purchasing lottery tickets—that money will serve you much better in your emergency fund.
• Call all your current utility providers to make sure you are playing the lowest competitive rates for service, and ask to be placed on their budget billing plan.

Automate your saving. Consider having money from your paycheck directly deposited into a savings account. If you never have those funds available to you to spend, you won’t miss them and the savings will add up quickly. If your employer will match your savings into a retirement account, do what you can to be eligible for any matching funds.

Need help? If you’re not sure how to get started, consider contacting CredAbility, which provides confidential budget counseling, money management education, debt management programs and other services to help consumers. Contact CredAbility at 800.251.2227 or online at www.CredAbility.org. Glass also recommends takin the free course called Financial Success Starts Here on our Web site at http://www.CredAbility.org/Education to learn more savings tips to help you build an emergency fund.