"If you have no debt at all, you're making no monthly payment," he says. "It's very easy to kind of go along without budgeting your money month to month. I would assume the budgeting process itself and the discipline that flows from that is probably good, in terms of getting some kind of regular savings contribution going as well."
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| America's savings aspirations |
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The income correlation
Our survey shows that income is a big factor in Americans' ability to save. Some 29 percent of those earning less than $50,000 say they aren't able to save any of their salary, compared to only 5 percent of those earning $50,000 or more. Nearly all those earning $50,000 or more are able to save at least part of their salary (92 percent).
But Robert Manning, professor at the Rochester Institute of Technology and author of "Credit Card Nation," is skeptical about this finding.
"As people have higher incomes they tend to report better financial situations. What we find is no matter what people make, they find ways to spend it," says Manning, who is also the director of the New Center for Consumer Financial Services. "People are more likely to say that they are saving because they have a higher income, but that's definitely not the case."
Gail Cunningham, senior director of public relations at the National Foundation for Credit Counseling, is also dubious. "My initial reaction to the results of this question was that people are fooling themselves about their level of saving. If the national average puts saving in the negative, yet your respondents indicate they are saving, something's amiss, and I suspect it's their perception.
"Many people are well-intentioned, knowing the value of saving, but just can't seem to consistently save any real amount of money. Others actually do make deposits into a savings account only to pull it out when the slightest need arises."
No such thing as too much savings
Even if the numbers aren't inflated by optimism, veteran debt expert Gerri Detweiler says they show we have a long way to go.
"Nearly half (47 percent) of consumers are saving either nothing or less than 10 percent of their income. That seems to be a sign of the times," she says.
Savings needs change with time, Cunningham points out. "Even very small amounts wisely invested over time can accumulate into fortunes. But, time is not on your side if you start saving later in life. Therefore, saving 10 percent might be the perfect amount for the young person, but far too low for the middle-aged American staring at retirement.
| -- Posted: March 17, 2008 |