The Federal Deposit Insurance Corporation (FDIC) has reminded the country that February 20-27th is "America Saves Week".
Savings enable consumers to withstand unexpected expenses or income disruptions, in addition to also funding large expenditures, such as the purchase of a home or college education. Research indicates that people who save have better relationships with family and neighbors and increased community involvement.
The theme for the annual event is "Make Savings Automatic" and the Americans are urged to set up ways to pay themselves first through automatic plans such as payroll deduction into the savings bond program or a retirement account or by way of a regular automatic transfer from a checking to savings account. With tax season coming up it is possible to have a refund deposited directly into savings rather than checking or receiving a paper check. Saving automatically can help reduce the chances that money will be spent automatically, especially if it is saved into an account such as a 401(k) where it is not easily retrieved.
FDIC Chairman Sheila urges Americans to help children save more by giving a little extra in their allowance that must be put straight into their piggy banks, "That way you will teach them the value of saving automatically." Of course savings in a FDIC-insured institution are protected up to $250,000.
Actually, Americans are already saving at a higher than usual level. According to the Bureau of Economic Analysis, the rate has remained over 5 percent of disposable personal income since the fourth quarter of 2008. The rate shot up over 7 percent in the 2nd quarter of 2009 - concurrent with the tanking of the stock market and the most recent rate available, in the fourth quarter of 2010 was about 5.3 percent. In the years preceding the current economic problems - 2004 to 2008 - the savings rate never exceeded 3.5 percent.
Bair said, "The recent financial crisis has wreaked economic havoc on a lot of families. But if there is one silver lining, it is that we have learned the hard lessons of too much borrowing. We are paying down our debt and saving more. In the process, we are rediscovering the peace of mind of financial security achieved through saving."
[View:http://www.youtube.com/watch?v=pe84rqbiKmE:640:390]
FDIC maintains a web page with information for consumers on increasing their savings' level and paying down their debt. The site, http://www.fdic.gov/deposit/deposits/savings.html, has links to the FDIC Money Smart education program which includes the "Pay Yourself First" module that specifically addresses saving, and FDIC Consumer News, a quarterly publication that provides practical financial tips and information. Free tax help is also available from IRS trained volunteers, including information on how to deposit a tax return into savings at Volunteer Income Tax Assistance (VITA) sites nationwide. Call 1-800-906-9887 to find one nearby.
