This Week in Your Wallet: February 21, 2012
Yesterday marked a special occasion — but I’m not talking about President’s Day. No, I’m talking about the sixth annual America Saves Week, a “holiday” in which organizations you’ve probably never heard of band together to promote good savings habits.
The week unofficially started last Friday with the release of the national household savings survey, and — not surprisingly, if you’ve heard me lament that Americans need to save more money — the results of this were mixed. Let’s start with the good news: two-thirds of Americans spend less than they make and save the difference, and nearly 80 percent say they are working toward being debt-free. I like that. But only 52 percent of Americans are saving enough for retirement, down from 60 percent just two years ago. That’s troublesome.
After reading the survey, I can tell you that one thing is certain: developing a savings plan can make ALL the difference. And it doesn’t have to be a complex plan, either. It can be as simple as setting a few small savings goals and working toward those goals. Families with such plans are twice — that’s right, twice — as likely to live below their means and save the difference, which is what I want for you.
Some of you might be reading this and thinking, “Save money? What money?” This is why I want to share part of a list of the top 10 foods for which Americans overpay, courtesy of ZipList. Here are three things to think about:
- Coffee: Half of Americans who buy coffee at work are spending $20 a week, or $1000 a year.
- Vegetables: Last year, Americans spent a whopping $32 billion on vegetables they never ate. Assuming the U.S population is around 300 million, that works out to roughly $106 per person. (The moral here, by the way, is not to stop eating carrots, but to stop buying carrots when all you want is a juicy red pepper.)
- Bottled water: You know it’s bad for the environment, and I’m sure deep down, you know that $2 a pop is bad for your wallet. So invest in a good Nalgene and kiss the vending machine goodbye. Even if you only buy one bottle a week, this will still save you $104 a year.
And if you want to read more on the latter subject, here’s a great interview on Dan Pink’s blog with Charles Fishman, the author of The Big Thirst. Among other things, he notes that “in the U.S., we spend $21 billion a year on bottled water. We spend $29 billion a year maintaining our entire water infrastructure — pipes, pumps, treatment plants. And bottled water can’t rescue us in a crisis. When your house is on fire, you can’t call Dasani.” I enjoyed it.
So, now that you’ve seen some creative ways to save money, I have a challenge for you: I want you to come up with three savings goals. They can be small, like cutting your chewing gum habit and putting the difference in a piggy bank, or they can be big goals, like finding $2,000 to put toward your emergency cushion within the next six months. And I want to hear these goals, too, so share them with me on my Facebook wall. Once I know what you’re working toward, I can be one of your cheerleaders!
Finally, if you’re a boomer nearing retirement and you have questions about making the money you’ve already saved last, I’d love to answer them on the first live episode of my new TV show Cash Call on RLTV next week (find out what channel RLTV is on in your area here.) Reply to this email, tweet orFacebook me and I’ll get to as many as I can.
And now, here are the other headlines for the week.
Some good news in the world of college tuition
Yes, that’s right — I just used “good news” and “college tuition” in the same headline. According to this SmartMoney article, six colleges are bucking the trend of making tuition more expensive and, instead, lowering the cost of attendance — and by significant margins, too. The University of Charleston in my home state of West Virginia is cutting tuition by 22 percent, and the private Cabrini College outside of Philadelphia is lowering costs by 13 percent.
Additionally, if you have college-aged children and haven’t filled out a FAFSA (Free Application for Federal Student Aid) yet, do it now! As this CNN Money article points out, priority deadlines in many states still aren’t for another two weeks. If you think you won’t qualify for federal aid, I’d recommend completing the FAFSA anyway — and not because I like to see you do extra paperwork. According to the article, a third of families with college-bound children don’t submit a FAFSA, but “almost every family qualifies for some form of assistance.” It’s like I always say: if you don’t ask, the answer will always be no.
Past returns are no guarantee of future success
You’ve heard that saying before, most likely as a caution in dealing with the stock market. Now, there’snew research to back it up. Neuroscientist Paul Glimcher over at NYU found that the cells deep in our brains give the greatest weight to the most recent outcomes when evaluating events. This means that our brains give more weight to a month or two of really great stock returns despite the fact that you may have had a really bad year or two (or three).
So how do you battle your brain for control? Jason Zweig, a columnist for the Wall Street Journal, suggests the following: think back to the last time you said you knew where the market was heading. Were you right? Simply assessing the quality of your own intuition might stop you from making any rash decisions. And when it comes to the stock market, a rash decision is never a good decision.
Have a great week!
Jean
