Maybe we're not such crummy savers after all

"You should never underestimate the ability of the American consumer to spend another dollar," says Roger Tutterow, economics and finance professor at Georgia's Kennesaw State University.

"We're still a country of high consumption and, at the personal level, savings isn't significant."

John Nofsinger, finance professor at Washington State University and author of Infectious Greed: Restoring Confidence in America's Companies, says the increase in savings may also be partly due to uncertainty in the world around us.

"When the general level of concern increases in society, we are going to react by being more safety conscious in all areas, including financial. If the rest of the world seems more uncertain, we're going to do something with our investments that has a more certain outcome."

Fear and saving in the U.S.
History shows how a war economy can motivate us to save.

In 1941, our average annual savings rate was 12.4 percent. In December of that year the United States entered World War II. The average annual savings rate jumped considerably the following year, and stayed high the next three years:

1942 -- 24.4%
1943 -- 25.8%
1944 -- 26.3%
1945 -- 20.6%

There's no doubt that much of today's increased personal savings rate also is due to our latest phobia: Wall Street.

People are so shell-shocked from watching their portfolios evaporate that they're selling low and handing what's left to the bank. Even the piddling interest from money market accounts or certificates of deposit, which gets gobbled up by taxes and inflation, is preferable to losing chunks of money every day as stocks swan dive off the cliff.

"People no longer trust the stock market," says Nofsinger. "They won't really start investing until the stock market has built a level of trust with them, so you won't really see a lot of people getting into it until it's gone up quite a ways. On the way down, they bail out after it's gone down quite a ways."

Frank Arvai, a certified financial planner in Troy, Mich., likes his clients to save 10 to 20 percent of their gross income. If that seems too steep for you, it becomes even more important to try to get the highest return possible on whatever money you can save.

Arvai suggests making your money work harder by investing in high-yield corporate bond funds.

"The high-yield correlation to interest rates isn't very high. I'd be inclined to underweight Treasuries because they have a 100 percent correlation to the direction of interest rates. But high yields have less than 50 percent correlation to the direction of interest rates."

Arvai says two of the funds he likes are Janus High Yield and PIMCO High Yield.

Remember, you can lose money in a bond fund. It's best to use savings you can afford to invest longer term. If you have an aversion to losing any money at this point, stick with true fixed income.

What's most important is building a savings cushion that will ensure your short-term and intermediate goals aren't crushed by stock market downturns.