Budget Basics
Learning to save can be challenging -- but rewarding
February 13, 2006
Budgeting Basics
NEW YORK -- Dawn Wilcox wasn't always a saver.
"I grew up in a family that lived paycheck to paycheck," said Wilcox, who runs her own public relations company in Los Angeles. "They didn't save, and I didn't save."
Then she met Anthony Bloch, whom she plans to marry this summer. Her fiancé, she says, brown-bags lunch, uses coupons to save on dry cleaning bills, rents a movie instead of going to the theater and cooks dinner at home rather than eat out.
"It was kind of a shock when we first started talking about our finances," said Ms. Wilcox, who is 34. "He was surprised that at my salary level, I didn't have more saved. He made less, but had more saved."
Most Americans in recent years have been better at spending than at saving.
The nation's savings rate dropped into negative territory at minus 0.5 percent last year for the first time since the Great Depression. A negative savings rate means consumer spending was greater than after-tax income, suggesting that Americans not only weren't saving but were also going into debt to support their spending.
"It's a consumption problem," said Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach, Fla. "We have to learn to look ourselves in the mirror and say, 'I have to spend less money so I can save more.' "
Without savings, Americans quickly get into financial trouble if they lose a job or the car requires a major repair. They end up borrowing heavily to get their kids through school and face potentially dismal retirements without adequate financial resources.
The key is to start setting aside a small amount, even a dollar or two a day, to get into the habit of saving.
Ms. Wilcox, who runs Penguin PR Inc., is now a convert to saving, both for things she and Mr. Bloch want to buy as well as for an emergency cushion and their retirement. They figure they've saved enough to cover the entire cost of their wedding next June; then they'll start putting money aside as a down payment on their first house.
"We've made it a game," she said. "He'll come home and say, 'I put $1,000 in my savings account today.' Then I start thinking that I should put more money in mine, too."
Or, she said, "we'll challenge each other to find more ways to save," such as agreeing to put $100 into their savings account rather than going out to a restaurant for dinner.
