February 19-26 marks both America Saves and Tennessee Saves weeks. Financial educators mark this week as a time to remind people of all socio-economic levels to build wealth. Following are reasons we all may need to save more from Dr. Dena Wise, UT Extension family economics specialist:
You may be only one emergency away from financial trouble. One out of four Americans is living from week to week with no emergency savings. More than half wouldn’t be able to get by three months if they lost their job. (bankrate.com, 2011)
You may need to save more for retirement. Only one of four Americans say that they are confident that they have enough retirement savings. (TD Ameritrade, 2011) Forty percent will only have Social Security to rely on when they retire, and it typically replaces less than a third of your working income.
Your credit may be costing too much. Almost half of those who use credit cards carry balances from month to month, and pay an average of over 15% APR. (CreditCards.com, 2012) In a 2009 national study, Tennessee consumers had the second highest average credit card debt in the nation at $7,054 and Tennessee’s credit card debt also had risen second fastest in the nation for the preceding quarter at 2.7%. (cardtrak.com, 2009)
You may need to replenish your home equity. Historically, working Americans had their largest investments in their homes, but over the last decade, many eroded that investment by taking out second mortgages and home equity loans. Some saw the market value of their home fall as well. Overall, the percentage of equity the average homeowner holds is down from 61% in 2001 to 38% last year. (Federal Reserve, 2011)
You may need to save for future purchases. Whether you need a new washing machine or are planning a luxury cruise, it pays to pay cash. Savvy consumers no longer fall for the “buy now, pay later” line that got so many of them in trouble during the economic crisis. They understand that buying only what you can afford when you can afford to pay cash is the best policy.