The New Year is still relatively new which means lots of suggestions on how we can save more..thanks to Beth for curating another awesome set of articles about savings trends.  

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Suggestions for more successful savings:

Just before and after the new year, personal finance professionals are trying to provide helpful guidelines to help your success with your financial resolutions. Here is the advice from a few of them:

• 5 rules for saving from Motley Fool:
• Michelle Singletary of the Washington Post suggests you can jumpstart your savings with 3 financial fasts for 21 days:

1. A Food Fast: eat up all of the food in your refrigerator, freezer, and pantry.  Buy only milk, eggs, bread and perishables and see how much you save (and clean out your kitchen!).
2. A Clothing Fast: pretty straightforward
3. A Financial Fast: don’t buy anything that isn’t truly a necessity!  Don’t eat out, don’t browse your favorite online sites.  (Of course, pay your bills.)

You might be surprised when you realize how much you spend without thinking and establish better spending habits in the process.  

Personal Commentary: This article might be enlightening for people who are able to cover their basic bills but for whom the credit card balances may be increasing or savings accounts are stagnant.  However, these “fasts” describe the daily reality for many people, including many of our students.  Not much in the news addressing this.

Need to motivate your students?

We hear the scary statistic regularly that over 60% of the population could not cover a $1000 emergency expense.  

• A Bankrate article makes this even scarier with another statistic: one-third of American households in fact suffered an economic emergency, and the average cost of those emergencies was more like $2500, not $1000.  How do people cover these expenses? [See bar chart at bottom of post for the answer]
• Same song – slightly different lyrics from Newsday (a New York paper):

How prepared are Americans to weather a financial crisis? The answer is that most are not, to a shocking extent. Some 46 percent of Americans say they could not scratch up $400 in ready cash to meet an emergency. That percentage would be hard to believe had it not come from the Federal Reserve.

• Another scary statistic? The US personal savings rate is at a 10 year low!  And consumer spending is high?   

Americans are saving at the slowest pace in a decade, likely in anticipation of continued job and wealth gains as stock indexes barreled to new records last month and the unemployment rate stood at a 17-year low. The personal saving rate in November was 2.9%, the Commerce Department said Friday, falling below 3% for the first time since November 2007, just before the last recession hit.

• Why is the saving rate so low and consumer spending so high?  And these statistics came out before the new tax law was passed.  Were people expecting a tax windfall?  Is the Great Recession to small in the rear view mirror at this point?  According to a WSJ Heard on the Street column, the low savings rate should be cause for concern.

Ready for some good news?

• Millennials seem to have cracked the code on savings.  Let’s hope it will rub off on their children!  Many media outlets picked up the results of the Bank of America’s “Better Money Habits” survey of 2000 millennials that suggest they are doing a better job than other generations at saving money.  The percentage with savings of $100,000 (currently 16%) has been growing.
• Now, if only we can get them to invest some of that savings! It seems they are happy to keep that savings in a savings account.  
• While the amount and location of Americans’ savings may be inadequate, Motley Fool reports that 75% of Americans are at least saving something.  This comes from a Discover Study that also reports on the high savings rates among millennials.  There is good intergenerational data in this study.
• Interest rates on savings accounts and CDs offered by some (online) banks are higher [Editor's note: While the Fed has been raising interest rates over the past two years, banks have been slow to return the favor for savers]!  
  • Ally Bank just raised their rates and now offer 1.35% on their savings account.
  • Capital One is still offering 1% unless you have a $10,000 balance (1.4%)
  • Investment bank Goldman Sachs is getting in the online consumer savings business as well with Marcus, and tops the list offering 1.5%! (Anyone know where the name Marcus comes from?)

• Bankrate.com offers us encouragement and information about how small investments can generate big returns. They review some of the products out there that can be used to start the investment process.  These products can be the point of entry to savings and investing for a wide range of people.
• Would young people be more engaged in banking and their financial health if they could help design a digital banking product?  Citibank wants you to help shape digital banking explains how Citibank is trying to develop a better and more effective product.

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