This Week in Your Wallet: A Conservative and a Liberal Walk Into a Department Store
I’m typically not a sucker for the ceremonial days and weeks that end up on our calendar each year. The fact that today is Chocolate Mint Day or that next Monday is World Bartender Day? Of course, I love a great bartender. And I’m a longtime Frango mint fan. (For those who don’t know Frangos, see the history of Marshall Field’s or read this.)
America Saves Week is in another class entirely. We could use an entire month focused on saving. Why? Because – as you’ll see below courtesy of a new study from Bankrate.com – far too many people are giving saving short shrift. Whether the goal is long term (retirement) or short (emergencies) we’re simply not socking enough away. Where is that money going? Or, how do you save when you don’t have much of it coming in? See how one woman coped (and saved) after losing her paycheck here.
According to another piece of research that may depend on whether you lean red or blue. We know the Republican and Democratic Parties’ approaches to saving and spending can differ to say the least. But did you ever think your party affiliation might influence your shopping habits? In honor of Washington’s Birthday, RetailMeNot conducted a survey to see whether or not the political stereotypes are true: Are conservatives the savers, opening their wallets less, and liberals the spenders, freely dropping more dough? The verdict? That seems to be the case…
For example, those who leaned right were more likely to describe themselves as savers rather than spenders (66% versus 53% of liberals). And, you guessed it, those who leaned left were more likely to declare themselves as spenders (47% versus 34% of conservatives). RetailMeNot looked into it a bit further and found that conservatives and moderates are more likely to save for retirement compared to liberals (30% and 29% versus 22%). However, liberals are more likely to save for higher education (23% versus 16% for conservatives and 14% for moderates). In other words, what you’re saving for – and aren’t saving for – might also shed some light on your party affiliation’s influence.
On the topic of saving…
Many of you aren’t for emergencies
Only 51% of Americans have more emergency savings than credit card debt, according to a new report from Bankrate.com released today. I use the word “only,” because in the few years Bankrate has tracked the issue, it’s the lowest percentage yet, which means we’re heading in the wrong direction.
As Greg McBride, chief financial analyst for Bankrate, points out, long-term unemployment, stagnant incomes and higher household expenses are all likely to blame here. Psychology isn’t on our side either. We’re not hardwired to save, be it for the present or the future. This especially holds true for when we have immediate expenses to tend to. So, for the 28% of Americans who carry more credit card debt than a padded safety cushion, McBride offers some simple, straightforward solutions to move in the right direction. (Yes, you may have heard these before. But if you’re not doing them, trust me: You need the reminder.)
- Pay yourself first. “You have to automate — that means paying yourself first,” McBride said. “Have money taken directly from your paycheck and directly deposited into a dedicated savings account.”
- Look in the mirror. “Take a good, hard look at your expenses, and see where the debt came from so that you can make the appropriate cutbacks,” McBride said. And after confronting the problem areas, “Try to create the room in your budget to accelerate those payments (for your CC debt).”
- Aim high. “With debt repayment, from a completely financial standpoint, you want to focus on the highest interest rate debt first,” he said. “Not everyone’s wired that way, however, some people need moral victories to boost confidence and get momentum. If that’s you, then knock out a couple of your smaller debts first. It gives you confidence and momentum. By knocking out smaller debts, now you’ve got more ammunition to attack that higher (rate) debts.”
- And remember, it’s not a choice. “This isn’t savings versus debt. You need to do both at the same time.”
Another reason to pay the rent on time
In addition to not having your landlord breathing down your neck, paying your rent on time could improve your credit score. As The New York Times reports, Experian, one of the three major credit bureaus, will consider on-time rent payments for people’s credit reports. This is especially helpful for people with limited credit histories, like those just starting out in the workforce, or for people who might shy away from credit cards altogether. One of the downsides at the moment however is that Experian is the only national credit reporting agency that is currently offering this, according to the Times. Therefore, if lenders opt for Equifax or TransUnion to check you out, they won’t see your possibly better score. Read the full article here.
Question of the week
I’m curious, when you think of saving do you think of: A) Putting money away for the future, or B) Scoring a great deal? Let me know in a reply to this email, and I’ll report your answers next week.
Have a great week,
Jean
