Saving – Your Part in Fixing the Economy
“Anything that we can do to raise personal savings is very much in the interest of this country.” – Alan Greenspan
The FPA, along with more than 1,000 non-profit, government, and corporate groups, supports America Saves Week, this February 20-27.
There is never enough to be said about the personal reasons to save: it puts you on firm financial footing, building a safety net and foundation for you to grow from.
But, how often have you considered the national benefits that arise from your simple act of saving?
During rocky economic times, your savings safety net extends over others as well. Below are some of the ways everyone benefits when we save money:
Savings are the backbone of our capitalistic system. Barron’sDictionary of Finance and Investment Terms defines ‘capital formation’ as the creation of producer goods — such as buildings, machinery, and equipment to produce other goods — through saving, which results in economic expansion. The process of economic growth begins with the act of saving; or, as my college professor David Breuhan notes in his book Spread the Wealth: “Capital is the core of capitalism.”
Savings support the small business owner and their community.When there are savings available to lend, it is the small business owner’s local community that benefit the most. Not only are jobs created when businesses expand locally, but jobs are required to provide public and private services to those employees, benefiting the community even more.
The act of saving shows others positive financial habits. Much of our relationship with money is learned from family members and those around us. Promoting positive financial habits sets an example for those around you and teaches them the value of saving for the future.
Savings create the backbone of our economy, and our own financial plans. If not for savings, we would not have the ability to: take risks for growth to meet our long-term goals in other parts of our portfolio, take advantage of opportunities that require savings, and feel comfort that we are able to weather financial storms as they arise.
And so during this week, kick start a savings habit! Below are a few ideas on how to get started now:
This year every worker is getting an extra 2% in their paychecks thanks to a payroll tax reduction. Start saving at least this unexpected amount from your paycheck automatically.
Are you one of the many who use Uncle Sam as a no-interest savings bank, and receive a large tax refund annually? This year, instead of spending all of your money, save your tax return – and deposit it directly to a savings account, or split your refund over several accounts by asking your preparer to file Form 8888 – Allocation of Refund.
Talk to your tax preparer or financial adviser about keeping more of your money this year in your regular paychecks, instead of waiting until next year to get that bloated refund check. Instruct your employer to send that money directly to a savings account.
If you need more ideas, spend some time with the Savings category here on the blog, which currently has more than 70 postings to give you the information and encouragement to implement a successful savings program. But, above all else this Savings Week, I hope you learned just a little more about the power that the simple act of saving can have for the good of us all.
The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site.