Welcome to the
Military Families Learning Network Webinar:
Saving Strategies for Non-Savers
A	
  few	
  days	
  aPer	
  th...
Welcome to the
Military Families Learning Network Webinar:
Savings Strategies for Non-Savers
www.eXtension.org/militaryfam...
Additional Resources Available
https://learn.extension.org/events/1426
Today’s Speaker
Dr. Barbara O’Neill, financial
resource management specialist for
Rutgers Cooperative Extension, has
been ...
Saving Money: Savings
Strategies for Non-Savers
https://learn.extension.org/events/1426

Barbara O’Neill, Ph.D., CFP®, AFC...
“Street Cred”

Published in 1994; still available online
http://www.amazon.com/Saving-Shoestring-ExpensesReduce-Stash/dp/0...
Week
A national social marketing campaign designed
to build a culture of savings in America as a core
component of financi...
Savings Coat of Arms
•  TR- Places where I save money…
•  TL- Obstacles to saving money…
•  Middle- A personal savings goa...
Question #1
Would you please share a section or
two from your Savings Coat of Arms?
Saving is an Important Part of
the Financial Planning Process
Three Keys
To Successful Saving
Set a Goal….

SMART Goals
Specific
Measurable
Achievable
Realistic
Time Bound
Make Progress Toward SMART
Financial Goals
•  Short-term goals (< 3 years)
•  Intermediate-term goals (3-10 years)
•  Long...
Examples of SMART Goals
•  Save $2,600 for a down payment on a
car by saving $50 a week for one year.
•  Reduce credit car...
Financial Goal-Setting
Worksheet
http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf
1
Goals

Short-Term (under 3...
Then Do the Math!
•  Approximate amount needed
•  Number of months to save
•  Divide number of months into goal amount
•  ...
Start Early…Small Amounts Add Up!

http://www.dinkytown.net/java/
CompoundSavings.html
18
Make a Plan….
Track Income and Expenses
•  Income: money that is received
•  Expenses: payments that are made
•  Fixed exp...
Save Automatically….
“Pay Yourself FIRST!”
• Pre-authorized deposit to savings or
investment account
• Pre-authorized tran...
Question #2
How do you save automatically and/or
encourage others to save?
Definition of Savings
“Setting money aside from present
earnings to provide for the future.”
Types of Savings
•  Emergency fund (3-6 months expenses…or more)
–  About half (49%) of Americans have 3 months’ expenses ...
Saving vs. Investing
•  Saving

•  Investing

–  Provides money for short- –  Accumulates money for
long-term goals
term g...
The Rule of 72
Source: Garman/Forgue, PERSONAL FINANCE, Fifth Edition
Reasons To Save
•  To cope with emergencies
•  To purchase “big ticket” items
•  To fund high-cost future goals
•  To gene...
Why People Don’t Save
•  Overspending and outstanding debt
•  No goal or plan
•  Lack knowledge about how/where to save
• ...
15 Ways to Save
Money
1. Collect Coins
•  Something that many people do
•  Many banks and credit unions have free
coin-counting machines for acc...
2. Anticipate Extra Paychecks
•  Paid weekly: 4 months with 5 paydays
•  Paid weekly: 2 months with 3 paydays
•  Mark payd...
3. Automated Employer
Retirement Savings Plans
•  401(k) Plans- Corporations
•  403(b) Plans- Schools, colleges, non-profi...
4. Other Automated Saving
Opportunities
•  Direct deposit of paycheck
•  Mutual fund AIPs (automatic investment programs)
...
5. Continue Paying a Loan or
Bill: To Yourself
•  Continue making monthly payments- to savings- after a loan
or expense en...
6. Accelerate Debt Repayment
•  Always pay more than minimum payment
•  Get PowerPay analysis from www.powerpay.org
7. Track and Slash Expenses
•  Write down everything you/family spend
•  Get monthly total for all categories
•  Study num...
Spending Plan Leaks
Question #3
Have you tracked your own expenses?
If so, what did you learn about your
spending habits?
Improving Cash Flow
•  Relationship between income and expenses
–  Positive cash flow
–  Negative cash flow

•  Three sust...
Ways to Increase Income
•  Adjust tax withholding/tax benefits (EITC)
•  Add a second job or work overtime
•  Start a smal...
Ways to Reduce Expenses
•  Housing
•  Food
•  Transportation
•  Clothing
•  Utilities
•  Other expenses
See http://pubs.ex...
Assess Spending Plan (Budget)
•  List after-tax sources of income
•  List expenses
–  Fixed (including revolving savings)
...
Spending Plan Worksheets
•  Excel Spreadsheet:
http://njaes.rutgers.edu/money/#resources
•  Downloadable printed worksheet...
8. Bank Windfalls
(a.k.a., “Found Money”)
•  Retroactive pay
•  Gambling proceeds
•  Tax rebates
•  Gifts and inheritances...
9. “Kick It Up a Notch”
•  Whatever you’re doing to save, do more
–  Example: 3% of pay in 401(k) instead of 2%
–  $2 a da...
10. Increase Yields on Savings
•  Interest rates are extremely low
•  Expected to remain so through 2014-2015
•  Higher-yi...
11. Reinvest Cash Distributions
•  Dividends and capital gains on
–  Mutual funds
–  Stock purchases

•  Check appropriate...
12. “Installment Plan” IRAs
•  Don’t need to save contribution all at once
•  Simply need to meet minimum of IRA custodian...
13. Take Advantage of “Free Money”
•  Employer 401(k) or 403(b) match
•  Tax credit for low income savers
–  50% singles <...
14.Take Advantage of CatchUp Contributions
•  Extra amounts for persons age 50+ to save
in tax-deferred retirement savings...
15. Reinvest Lump Sum Payouts
•  EBRI Study: Even small payouts add up!
–  $5,000 distribution at 25, 35, 45, 55
–  8% ret...
Question #4
Can you think of any other savings
strategies for non-savers?
Seeing the Possibilities is Key
•  Bankrate.com Savings Goal Calculator:
http://www.bankrate.com/calculators/savings/
savi...
EBRI: What $20 a Week in
Savings Adds Up To:
•  5% Return:

•  10% Return:

–  20 Years: $36,100

–  20 Years: $65,500

– ...
Family Communication is Key
•  Rutgers study of Extension MONEY 2000
participants in NJ and NY
•  Asked “What challenges y...
Experiencing Success is Key
•  Saving Challenges
–  America Saves Challenge: http://goo.gl/kgYWXo

•  Savings “Lotteries”
...
Personality Characteristics Are
Key: Organization and Planning
CFA Research: Having a savings plan with
specific goals can...
Automation is Key
•  Direct deposit of paycheck
•  Saving in employer credit union
•  Checking to savings account transfer...
Question #5
What other factors help people
become successful savers?
Resources for Savers
•  Choose to Save/ASEC:
http://www.choosetosave.org/
•  America Saves: http://www.americasaves.org/
•...
Every Small Step Makes a Difference

http://njaes.rutgers.edu/sshw/
What People Think About, They Bring About!
Promote Saving and America
Saves Enrollment
America Saves Video #1: Saving Money with America Saves
http://www.youtube.com...
Video Outreach to Service Members
•  Saving Money With Military Saves:
http://www.youtube.com/watch?v=E0HqKb1xx5k
•  Savin...
Question #6
Can you think of any other good
resources to help non-savers save?
Turn Your Dreams to Reality
First Steps
•  Commit to saving regularly
•  Pay down debt
•  Set aside and adequate emergency fund
•  Do a retirement sav...
America Saves Week
Co-coordinated by America Saves and
the American Savings and Education Council.

A national initiative ...
Celebrate America Saves
Week: Take the Pledge
Become an American Saver today!
http://www.americasaves.org
http://www.ameri...
Make It Personal: Write
Down Your Savings Goal
•  Download the poster:
http://www.americasavesweek.org/forindividuals/pict...
Closing Thoughts
“If saving money is wrong, I don’t want to be
right”- William Shatner
“If you would be wealthy, think of ...
Questions? Comments
Experiences?
Upcoming Webinar: Tuesday, Feb. 27, 11
a.m. ET: Saving Money: Research Insights
https://l...
Continue the Conversation
•  Find the Personal Finance Team online
–  Facebook: PersonalFinance4PFMs
–  Twitter: #MFLN
–  ...
Upcoming SlideShare
Loading in …5
×

Savings Strategies for Non-Savers

569
-1

Published on

Dr. Barbara O'Neill presents savings strategies for clients who are new to saving money or need help finding money to save.

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
569
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
22
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide
  • America Saves is a national social marketing campaign that seeks to motivate individuals to develop a saving habit as a core component to financial stability. We have found that the best way to reach individuals is through the organizations and institutions in which they work, participate and utilize, like financial institutions and non profit organizations.
  • we use the SMART acronym to assist people in setting successful financial goals. We all know that goals are important, but if we don’t reach our goals, it can be discouraging. Creating SMART goals gives us an action plan for reaching the goals we set. So here we go.
    Make Your Goals Specific
    Write down exactly what it is you want to accomplish. For example, instead of writing “I want to pay off credit card debt,” write “I want to pay off the $5000 balance on my Visa Card.” Or instead of writing, “I want to start an emergency fund,” write, “I want to save $1000 in an emergency fund.
    Make Your Goals Measurable
    In general, financial goals are measured by a dollar amount, and you want to be able to see the progress you are making toward your goal. So in the example we used before, if I want to pay off $5000 in credit card debt, I need to figure out how much money I need to pay per month, based on my deadline (this is the Time-Bound part- we’ll get to it shortly). If I wanted to pay it off in 12 months, I would need to pay around $420 per month (plus a little extra to cover interest and fees). Each month, I will see measurable progress toward my goal as my balance decreases.
    Make Your Goals Adaptable
    With finances, we always need to be adaptable. Things change, life happens, emergencies come up, and we have to change our plans. Make sure that your goals are adaptable for changes in your financial situation. For instance, if you figure out that you want to pay $300 per month toward paying down your credit card debt, but then you have some unexpected expenses one month, you may have to pay less this month and either make up for it next month or stretch out your timeline.
    Make Your Goals Realistic
    One of the biggest reasons we do not reach our financial goals is because we set the bar too high. If I only have $100 extra dollars in my budget, but I commit to paying $300 toward my credit card bill, I am setting myself up for failure. I could make this goal more realistic by 1) lowering the amount I plan to pay toward my credit card bill and stretching out the time I will be paying it down or 2) looking for other places in my budget where I can cut expenses in order to make this payment possible.
    Make Your Goals Time-Bound
    Set deadlines for your financial goals! If you are anything like me, tasks without deadlines get pushed farther and farther down my to-do list. If you are serious about meeting your financial goals, set deadlines by which you want to accomplish them. This will also help you to determine how to measure your goals (see making your goals measurable above.
  • These are examples of SMART
  • Track Income and Expenses
    To create a savings plan, start by tracking all of your income and expenses. Income is money that is received whether from employment, welfare payments, child support, alimony, or other sources. Expenses refer to payments that are made for products and services. Some expenses will be fixed and others will be flexible. Fixed expenses are payments that must be made each month and the amount stays the same. Examples are rent, car payment and insurance. Flexible expenses vary in amount depending on your choices. Examples are clothing, food and electricity. Flexible expenses are where you are likely to have the opportunity to save money to put toward savings.
    Some expenses that only occur a few times during the year such as insurance premium payments. To calculate the monthly amount, divide the total payment by the number of months of coverage. For example, divide quarterly payments by 3, semi-annual by 6, and annual by 12 to get the monthly amount.
  • What is meant by the phrase “Pay Yourself First”? Accept answers –
    Before you get your hot little hands on your money, before it lands in your checking account, put it aside in a savings or investment account.
    If we wait to save what is left over each paycheck or month, what is likely to happen? Accept answers –
    It will be spent instead of saved or invested.
    Ask your payroll department to split your paycheck by sending the amount directly to a savings or investment account.
    If your payroll department doesn’t offer the ability to split your paycheck, ask your bank or credit union if they can automatically divert a specific amount each pay period to your savings or investment account. Or, have your bank, credit union or brokerage automatically draw a pre-set amount from your checking account on a specific date.
    Do you have online bill pay? Set up a recurring payment to your brokerage account or the bank where you have a separate savings account.
    Transition –
    What accounts do you use for your goals? Accept answers
    All of these answers are possible. But the important thing is to choose the type based or your goal. - click
  • Cash flow, very simply, is the relationship between the total of household income and expenses:
    Earn more than you spend and you have positive cash flow.
    Spend more than you earn and you have negative cash flow.
    Occasional periods of negative cash flow can happen to almost anyone and are probably not a major concern. When negative cash flow becomes a way of life, however, it is very dangerous because it indicates that you are living beyond your means. In order to spend more than you earn, you are probably depleting savings and/or relying on credit to maintain your lifestyle.
    When one wants to lose weight, they can do three things: eat less, burn more calories through exercise, or do a little of both (better diet and exercise).
    When one wants to have positive cash flow, they can also do three things: increase income (or products or services in lieu of income), reduce expenses, or do a little of both (increased income and reduced expenses).
  • This slide lists possible strategies to increase household income:
    Adjust tax withholding, using Form W-4 through your employer.
    Taking advantage of available tax benefits, such as deductions for tax-deferred savings plans, the child tax credit, and the earned income tax credit.
    Starting a home-based business or freelancing your talents and skills.
    Trying to increase/collect child support or alimony (caution: this may require court intervention and the expense of a lawyer).
    Accessing public benefits such as free rabies shots for pets and low-cost immunizations and health screening tests).
    Selling assets, such as a unneeded car, or having a garage sale.
    Upgrading job skills through additional education and training.
    Charging adult children “rent” and bartering (swapping) products/services.
  • Note to Instructor: Review each household expense category and ask participants to share strategies that they have used to reduce expenses. Some examples are:
    Housing- refinancing mortgage, canceling private mortgage insurance when equity reaches 20% of home value, buying energy efficient appliances, trading down to a smaller home at retirement, etc.
    Food- combining coupons and store sales for double savings, buying in bulk when food is on sale or in season, buying cheaper store brands, etc.
    Transportation- keeping a car for as long as possible (8-10 years), buying “new used” (2-3 year old) cars, purchasing low cost airline tickets, having car routinely maintained to avoid major repair problems, etc.
    Clothing- shopping sales and “alternative” vendors such as thrift and consignment shops, avoiding dry clean garments, coordinating colors, etc.
    Utilities- using e-mail instead of the telephone, low-cost telephone calling plans, insulating the water heater, lowering the thermostat, etc.
  • Here’s What $20 a week Adds Up To:
    These figures on the slide are provided in the 1998 Retirement Confidence Survey report prepared by the Employee Benefit Research Institute (EBRI).
    At a 5% rate of return, an investor would have $36,100 more than they would otherwise have in 20 years, $72,600 more in 30 years, and $131,900 in 40 years.
    At a 10% rate of return, the accumulations are even more dramatic: $65,500 in 20 years, $188,200 in 30 years, and over a half million dollars ($506,300) in 40 years.
    The longer that money is invested, and the higher its rate of return, the more that an investor will accumulate.
    The following quote from the EBRI report says it all:
    “The message is clear that seemingly small amounts of money saved on a regular basis over long periods of time can accumulate into a nest egg that would make a difference at retirement.”
  • Savings Strategies for Non-Savers

    1. 1. Welcome to the Military Families Learning Network Webinar: Saving Strategies for Non-Savers A  few  days  aPer  the  presenta6on,  we  will  send  an  evalua6on  and  links  to  an  archive   and  resources.       We  appreciate  your  feedback.    To  receive  these  emails,  please  enter  your  email   address  in  the  chat  box  before  we  start  the  recording.     Once  we  start  the  recording,  all  chat  will  be  recorded  and  archived.   This  material  is  based  upon  work  supported  by  the  Na6onal  Ins6tute  of  Food  and  Agriculture,  U.S.  Department  of  Agriculture,     and  the  Office  of  Family  Policy,  Children  and  Youth,  U.S.  Department  of  Defense  under  Award  No.  2010-­‐48869-­‐20685.    
    2. 2. Welcome to the Military Families Learning Network Webinar: Savings Strategies for Non-Savers www.eXtension.org/militaryfamilies     facebook.com/militaryfamilies     blogs.eXtension.org/militaryfamilies     twi[er.com/MilFamLN     bit.ly/MFLNwebinars     To  receive  no6fica6ons  of  future  webinars  and  other  learning  opportuni6es  from  the   Military  Families  Learning  Network,  sign  up  for  the  Military  Families  Learning  Network   Email  Mailing  list  at:  h"p://bit.ly/MFLNlist   This  material  is  based  upon  work  supported  by  the  Na6onal  Ins6tute  of  Food  and  Agriculture,  U.S.  Department  of  Agriculture,     and  the  Office  of  Family  Policy,  Children  and  Youth,  U.S.  Department  of  Defense  under  Award  No.  2010-­‐48869-­‐20685.    
    3. 3. Additional Resources Available https://learn.extension.org/events/1426
    4. 4. Today’s Speaker Dr. Barbara O’Neill, financial resource management specialist for Rutgers Cooperative Extension, has been a professor, financial educator, and author for 35 years. She has written over 1,500 consumer newspaper articles and over 125 articles for academic journals, conference proceedings, and other professional publications. She is a certified financial planner (CFPÒ), chartered retirement planning counselor (CRPCÒ), accredited financial counselor (AFC), certified housing counselor (CHC), and certified financial educator (CFEd).
    5. 5. Saving Money: Savings Strategies for Non-Savers https://learn.extension.org/events/1426 Barbara O’Neill, Ph.D., CFP®, AFC, CHC Rutgers Cooperative Extension oneill@aesop.rutgers.edu
    6. 6. “Street Cred” Published in 1994; still available online http://www.amazon.com/Saving-Shoestring-ExpensesReduce-Stash/dp/0793111188
    7. 7. Week A national social marketing campaign designed to build a culture of savings in America as a core component of financial stability
    8. 8. Savings Coat of Arms •  TR- Places where I save money… •  TL- Obstacles to saving money… •  Middle- A personal savings goal… •  BR- The best way that I save money… •  BL- Advantages of saving money...
    9. 9. Question #1 Would you please share a section or two from your Savings Coat of Arms?
    10. 10. Saving is an Important Part of the Financial Planning Process
    11. 11. Three Keys To Successful Saving
    12. 12. Set a Goal…. SMART Goals Specific Measurable Achievable Realistic Time Bound
    13. 13. Make Progress Toward SMART Financial Goals •  Short-term goals (< 3 years) •  Intermediate-term goals (3-10 years) •  Long-term goals (> 10 years) Match savings and investments to financial goal time frame •  Money market account for emergency fund •  Stock index fund for retirement in 30 years
    14. 14. Examples of SMART Goals •  Save $2,600 for a down payment on a car by saving $50 a week for one year. •  Reduce credit card debt by paying an extra $15 a month (above the minimum payment) for twelve months.
    15. 15. Financial Goal-Setting Worksheet http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf 1 Goals Short-Term (under 3 years) Medium Term (3-10 years) Long-Term (10 or more years) 2 Approximate Amount Needed 3 Month & Year Needed 4 Number of Months to Save 5 Date to Start Saving 6 Monthly Amount to Save (2-4)
    16. 16. Then Do the Math! •  Approximate amount needed •  Number of months to save •  Divide number of months into goal amount •  Try to automate savings Example: $15,000 goal divided by 48 months = $312.50 per month to save
    17. 17. Start Early…Small Amounts Add Up! http://www.dinkytown.net/java/ CompoundSavings.html
    18. 18. 18
    19. 19. Make a Plan…. Track Income and Expenses •  Income: money that is received •  Expenses: payments that are made •  Fixed expenses are payments that must be made each month and the amount stays the same. •  Flexible expenses vary in amount depending upon your choices. •  Occasional or periodic expenses occur less often than monthly
    20. 20. Save Automatically…. “Pay Yourself FIRST!” • Pre-authorized deposit to savings or investment account • Pre-authorized transfer to savings account from checking account
    21. 21. Question #2 How do you save automatically and/or encourage others to save?
    22. 22. Definition of Savings “Setting money aside from present earnings to provide for the future.”
    23. 23. Types of Savings •  Emergency fund (3-6 months expenses…or more) –  About half (49%) of Americans have 3 months’ expenses saved; 27% have no savings; 24% have at least 6 months –  http://www.usnews.com/news/articles/2013/06/24/survey-more-than-one-quarter-ofamericans-have-no-emergency-savings •  “No-touch” money for long-term goals •  Savings for short/intermediate term goals •  “Accumulation fund” for large, irregular bills
    24. 24. Saving vs. Investing •  Saving •  Investing –  Provides money for short- –  Accumulates money for long-term goals term goals and emergencies –  Higher average return that cash assets –  “Parking place” historically –  Principal is “safe” –  Can lose principal –  Low risk –  Volatility of account value –  Low reward –  Potential for capital appreciation (stock) –  “Seed money” for investing
    25. 25. The Rule of 72 Source: Garman/Forgue, PERSONAL FINANCE, Fifth Edition
    26. 26. Reasons To Save •  To cope with emergencies •  To purchase “big ticket” items •  To fund high-cost future goals •  To generate income •  For security and peace of mind •  For the good of the country
    27. 27. Why People Don’t Save •  Overspending and outstanding debt •  No goal or plan •  Lack knowledge about how/where to save •  High cost of living •  Lack of motivation
    28. 28. 15 Ways to Save Money
    29. 29. 1. Collect Coins •  Something that many people do •  Many banks and credit unions have free coin-counting machines for account holders •  Avoid paying a fee to count your own money •  “Kick it up a notch”: $1 a day plus change •  Use see-through containers for motivation
    30. 30. 2. Anticipate Extra Paychecks •  Paid weekly: 4 months with 5 paydays •  Paid weekly: 2 months with 3 paydays •  Mark paydays on calendar •  Use “extra” money to: –  Reduce debt –  Save
    31. 31. 3. Automated Employer Retirement Savings Plans •  401(k) Plans- Corporations •  403(b) Plans- Schools, colleges, non-profits •  Section 457 Plans- State/local government •  TSP- Service members/federal government
    32. 32. 4. Other Automated Saving Opportunities •  Direct deposit of paycheck •  Mutual fund AIPs (automatic investment programs) •  Direct stock purchase plans •  Treasury Direct plan for U.S. Savings bonds •  Credit union •  Holiday clubs •  Other?
    33. 33. 5. Continue Paying a Loan or Bill: To Yourself •  Continue making monthly payments- to savings- after a loan or expense ends –  Car loan –  Mortgage –  Child care •  Does not affect lifestyle •  Don’t feel “deprived”
    34. 34. 6. Accelerate Debt Repayment •  Always pay more than minimum payment •  Get PowerPay analysis from www.powerpay.org
    35. 35. 7. Track and Slash Expenses •  Write down everything you/family spend •  Get monthly total for all categories •  Study numbers and identify “leaks”
    36. 36. Spending Plan Leaks
    37. 37. Question #3 Have you tracked your own expenses? If so, what did you learn about your spending habits?
    38. 38. Improving Cash Flow •  Relationship between income and expenses –  Positive cash flow –  Negative cash flow •  Three sustainable ways to improve cash flow –  Increase household income –  Decrease household expenses –  Do both
    39. 39. Ways to Increase Income •  Adjust tax withholding/tax benefits (EITC) •  Add a second job or work overtime •  Start a small business •  Increase/collect child support/alimony •  Access public benefits •  Sell assets •  Upgrade job skills •  Charge adult children room & board •  Bartering •  Other?
    40. 40. Ways to Reduce Expenses •  Housing •  Food •  Transportation •  Clothing •  Utilities •  Other expenses See http://pubs.ext.vt.edu/354/354-155/354-155.html
    41. 41. Assess Spending Plan (Budget) •  List after-tax sources of income •  List expenses –  Fixed (including revolving savings) –  Variable –  Irregular (periodic) •  Compare budgeted amount with actual amount •  Adjust as necessary
    42. 42. Spending Plan Worksheets •  Excel Spreadsheet: http://njaes.rutgers.edu/money/#resources •  Downloadable printed worksheet: http://njaes.rutgers.edu/money/pdfs/ fs421worksheet.pdf
    43. 43. 8. Bank Windfalls (a.k.a., “Found Money”) •  Retroactive pay •  Gambling proceeds •  Tax rebates •  Gifts and inheritances •  Insurance dividends •  Other? Check www.missingmoney.com for state unclaimed property
    44. 44. 9. “Kick It Up a Notch” •  Whatever you’re doing to save, do more –  Example: 3% of pay in 401(k) instead of 2% –  $2 a day plus change instead of $1 a day –  $100 EE bond instead of $50 EE bond •  Best times to do: –  When expenses end –  When income increases
    45. 45. 10. Increase Yields on Savings •  Interest rates are extremely low •  Expected to remain so through 2014-2015 •  Higher-yielding alternatives: –  Credit union share accounts –  CDs (laddered purchases) –  U.S. savings bonds –  Treasury notes –  Money market mutual funds –  Short-term bond funds (increased chance of volatility)
    46. 46. 11. Reinvest Cash Distributions •  Dividends and capital gains on –  Mutual funds –  Stock purchases •  Check appropriate box on application form •  Painless way to “grow your money”
    47. 47. 12. “Installment Plan” IRAs •  Don’t need to save contribution all at once •  Simply need to meet minimum of IRA custodian •  Can fund with- or like- a holiday club –  50 weeks x $10 = $ 500 –  50 weeks x $20 = $ 1,000 –  50 weeks x $40 = $ 2,000 –  50 weeks x $60 = $ 3,000 –  50 weeks x $80 = $ 4,000
    48. 48. 13. Take Advantage of “Free Money” •  Employer 401(k) or 403(b) match •  Tax credit for low income savers –  50% singles < $18,000; mfj < $36,000 AGI –  20% singles: $18,001-$19,500 mfj: $36,001-$39,000 –  10% singles: $19,501-$30,000 mfj: $39,001-$60,000 •  50% credit means half of deposit is paid for by government
    49. 49. 14.Take Advantage of CatchUp Contributions •  Extra amounts for persons age 50+ to save in tax-deferred retirement savings plans –  IRAs: Extra $1,000 for a maximum of $6,500 –  Employer plans: Extra $5,500 for a maximum of $23,000 •  Can result in tens of thousands more by 65
    50. 50. 15. Reinvest Lump Sum Payouts •  EBRI Study: Even small payouts add up! –  $5,000 distribution at 25, 35, 45, 55 –  8% return –  Almost $200,000 at 65 if all 4 distributions are rolled over into tax-deferred accounts –  If age 25 lump sum is cashed out, only $84k •  Research shows small sums more likely to be cashed out and spent
    51. 51. Question #4 Can you think of any other savings strategies for non-savers?
    52. 52. Seeing the Possibilities is Key •  Bankrate.com Savings Goal Calculator: http://www.bankrate.com/calculators/savings/ savings-goal-calculator-tool.aspx •  FINRA Savings Calculator: http://apps.finra.org/calcs/1/savings •  Council for Economic Education Compound Interest Calculator: http://www.econedlink.org/interactives/ index.php?iid=2&type=educator
    53. 53. EBRI: What $20 a Week in Savings Adds Up To: •  5% Return: •  10% Return: –  20 Years: $36,100 –  20 Years: $65,500 –  30 Years: $72,600 –  30 Years: $188,200 –  40 Years: $131,900 –  40 Years: $506,300 See http://www.ebri.org/pdf/ surveys/rcs/ 2002/02rcssof.pdf
    54. 54. Family Communication is Key •  Rutgers study of Extension MONEY 2000 participants in NJ and NY •  Asked “What challenges you the most in making progress toward your financial goals?” •  Children/family listed by 11.5% of sample •  Need to teach communication skills –  Example: Money “I” messages; “I feel stressed out when we charge more than $200 a month on credit cards”
    55. 55. Experiencing Success is Key •  Saving Challenges –  America Saves Challenge: http://goo.gl/kgYWXo •  Savings “Lotteries” –  http://saveyourrefund.com (Save Your Refund) –  http://www.d2dfund.org/ (D2D Fund) –  http://ne.savetowin.org/ (Save to Win; credit unions) •  IDA Programs –  http://cfed.org/programs/idas/directory_search/ (CFED IDA Program Search) •  “The $11 Savings Story”
    56. 56. Personality Characteristics Are Key: Organization and Planning CFA Research: Having a savings plan with specific goals can have beneficial effects, even for lower-income families. Those with a savings plan are much more likely to: •  spend less than their income and save the difference •  have adequate emergency savings http://njcfe.org/wp-content/upLoads/2012/02/asw2012pr.pdf
    57. 57. Automation is Key •  Direct deposit of paycheck •  Saving in employer credit union •  Checking to savings account transfers •  Checking to mutual fund or stock transfers •  Automated tax refund savings deposits with Form 8888 •  Other?
    58. 58. Question #5 What other factors help people become successful savers?
    59. 59. Resources for Savers •  Choose to Save/ASEC: http://www.choosetosave.org/ •  America Saves: http://www.americasaves.org/ •  Ballpark Estimate (Calculator): http://www.choosetosave.org/ballpark/ •  Save and Invest (FINRA): http://www.saveandinvest.org/ •  Save and Invest Military Center: http://www.saveandinvest.org/MilitaryCenter/
    60. 60. Every Small Step Makes a Difference http://njaes.rutgers.edu/sshw/ What People Think About, They Bring About!
    61. 61. Promote Saving and America Saves Enrollment America Saves Video #1: Saving Money with America Saves http://www.youtube.com/watch?v=yChFVQvzOGc America Saves Video #2: Saving Money on a Tight Budget http://www.youtube.com/watch?v=FV0Ib07WXOM America Saves Video #3: Set a Goal http://www.youtube.com/watch?v=1bc8VmugNE4 America Saves Video #4: Make a Plan http://www.youtube.com/watch?v=1KWyCQz91N8 America Saves Video #5: Save Automatically http://www.youtube.com/watch?v=4bhJ0ck2qSA America Saves Video #6: The America Saves Challenge http://www.youtube.com/watch?v=7UZPZUcwvww
    62. 62. Video Outreach to Service Members •  Saving Money With Military Saves: http://www.youtube.com/watch?v=E0HqKb1xx5k •  Saving Money in the Thrift Savings Plan: http://www.youtube.com/watch?v=SDY0Cc4kqZQ •  Debt-to-Income Ratios: http://www.youtube.com/watch?v=loV5ff8rt5o •  Credit Reports: http://www.youtube.com/watch?v=bUXvc-jyrsk Plus 6 other videos at http://www.youtube.com/user/moneytalkBMO
    63. 63. Question #6 Can you think of any other good resources to help non-savers save?
    64. 64. Turn Your Dreams to Reality
    65. 65. First Steps •  Commit to saving regularly •  Pay down debt •  Set aside and adequate emergency fund •  Do a retirement savings calculation •  Save until it “hurts”
    66. 66. America Saves Week Co-coordinated by America Saves and the American Savings and Education Council. A national initiative designed to encourage and assist Americans, especially lower-income households, to start saving and build wealth Thousands of local partners including: § FDIC § Jump$tart Coalition for Personal Financial Literacy § Department of Defense § Cooperative Extension § CUNA § Federal Reserve Board § Social Security Administration § Many others America Saves is managed by the Consumer Federation of America
    67. 67. Celebrate America Saves Week: Take the Pledge Become an American Saver today! http://www.americasaves.org http://www.americasaves.org/for-savers/savingstools-and-resources/pledge
    68. 68. Make It Personal: Write Down Your Savings Goal •  Download the poster: http://www.americasavesweek.org/forindividuals/picture-your-savings-goal •  Write your savings goal •  Take a picture •  Post it online and at home
    69. 69. Closing Thoughts “If saving money is wrong, I don’t want to be right”- William Shatner “If you would be wealthy, think of saving as well as getting”- Ben Franklin “If it is to be, it is up to me”
    70. 70. Questions? Comments Experiences? Upcoming Webinar: Tuesday, Feb. 27, 11 a.m. ET: Saving Money: Research Insights https://learn.extension.org/events/1442 Please complete the webinar evaluation form and CEU request form
    71. 71. Continue the Conversation •  Find the Personal Finance Team online –  Facebook: PersonalFinance4PFMs –  Twitter: #MFLN –  LinkedIn: Military Personal Finance Managers Group
    1. A particular slide catching your eye?

      Clipping is a handy way to collect important slides you want to go back to later.

    ×