A consumer group released a recent analysis of Federal Reserve date in February, 2009, indicating that among Americans, the typical household has net financial assets – including retirement savings – of less than $10,000. Financial assets included savings and investments but excluded equity in primary home and vehicles. Among low- and moderate-income households, the typical net financial assets were less than $1,000.

That’s not a lot of cushion folks and just surviving day to day is no way to live.

The America Saves campaign is a nationwide campaign comprised of a coalition of non profit, corporate, and government groups to help individuals and families begin to save their money and start building wealth.

It provides information, advice, and encourage for those who wish to:

-pay down debt

-build an emergency fund

-save for a home

-save for education

-save for retirement

… all of these are primary concerns for people, but many are concerned about how to get started.

Take a look at their website and take advantage of the many free services which include:

-brochures explaining ways to save and savings plan enrollment

-access to coaches who can assist you with setting goals and following a plan

-access to financial planners who can provide more detailed planning advice when you are ready

-no- to low-balance savings accounts and even CDs at local banks and credit unions

-information about buying U.S. Savings bonds and saving in money markets

-subscription to a quarterly newsletter

Strategic information provided at the America Saves site works hand-in-hand with budgeting. Finding money to save seems difficult until you set up your budget and start looking at your finances strategically.

Disclaimer: Overall management for the campaign is provided by the non profit Consumer Federation of America (CFA). CFA is a federation of some 300 consumer education, advocacy, and cooperative organizations dedicated to advancing the consumer interest.

Uncertainty about the current and future economy has pushed many Americans to start saving more and paying off more of their debt. Recent studies in 2008 and 2009 have indicated that as Americans are feeling less secure about their financial stability, they have begun to change their spending behavior. As confidence falls, many have chosen to exercise prudence, paying down debt and setting aside some of their money in savings accounts and money market funds rather than spending it all.

As consumer’s personal investment losses mount, the amount of money put aside in short-term savings rose from consistently low averages and Americans also increased their contributions to their personal retirement accounts. In addition, the amount of money Americans are using to pay down short-term debt has increased as people tighten their belts, reduce spending, and warily watch the economy.

Here at BudgetPulse, we say, “It’s about time!”

It’s about time that Americans start saving more. It’s about time that everyone has a budget plan too. A solid budget can help you save more – quickly and easily. With a solid financial plan in place, you  can worry less about the short-term dips in the economy because you’ll have some of the time-honored essentials in place, including:

1 An emergency fund - start with a little bit and keep growing it steadily until you have at least 3 months’ worth of expenses saved – some economists recommend 6-9 months’ worth, so get started!

2 Reduced debt – by paying down the debt with the highest interest rate, you gain speed in paying down debt. Once that one is paid off, move that payment amount to the next highest interest rate debt, and so on. Reduced overall debt will give you great peace of mind in these troubled times … and it works great when the economy is rockin’ too!

3 A controlled spending plan – by outlining a budget and sticking to it, you know what you can afford and you know what you need to keep yourself and your family safe.

4 A savings plan for future items – whether it’s a vacation or going back to college, you can’t get anywhere without saving for it, so get started right now.

Of course, it’s not just Americans who need to make changes in their financial habits – we all do. But we thought it was good to see that the turn around has started and we hope that all Americans take heart and start applying some good financial common sense to their spending and savings habits.

Two of the most important things you must do  after college are:

•  Conduct a “State of the Union” for your finances, sign-up (sic) for an online money management system”
•  Develop sound saving habits from the start”

… and we couldn’t agree more.

•l  Set up an online money management system

Treating your finances seriously is crucial to your ability to create a sound financial future for yourself, and for your family later. One of the best – and easiest! – ways to do this is to sign up for an online money management system that gives you an entire view of your finances.

Sound a little obsessive-compulsive? Well, perhaps it is, but you won’t find a financially successful individual who hasn’t done something similar and why not use the free Internet tools that are available to help you with this chore?

•l  Develop good savings habits

Starting with good savings habits right from the start is important. So, what do you need to save for right now? Well, here are a few you probably can’t get away from:

- You need an emergency fund right now. Otherwise, how will you pay those bills on time if you lose your job?

- If your are employed, you need to begin retirement planning right now. You can’t count on social security and there are no more gold watches with a comfy retirement after 30 years.

- If you plan to purchase anything of any value in the future, you need to start saving right now. Do you really want to stay in that rat-trap you call an apartment forever?

So, let’s break these requirements down into bite-sized bits:

1 Setting up an emergency fund, even if you put only a little into it each month, can be a great way to ensure you will be able to pay your bills in the event a problem occurs. Saving while paying down debt is the only way to ensure you’ll be able to pay for the unexpected expenses that will happen as you continue to pay down your debt.

2 Retirement planning can never begin too early and if you are lucky enough to be working for a company that contributes a matching percentage to your retirement account, you are throwing away their good dollars if you don’t match it. So start investing at least the match and see “In the future …” below for hints to improve those dollars.

3 Saving for the future has to start right now. No, it doesn’t have to be a lot, but for every debt you pay off, put a little more into your future savings funds. For every expense you clear off your monthly list, put a little more into your future savings. When it comes time to put money down on a car, or a condo, or an engagement ring, you’ll be prepared.

• l In the future …

As you get raises, pay yourself first – increase your 401(k) contributions by just 1% with each raise, and you will be contributing the maximum in only a few years. Increase your savings percentage with each raise as well. Don’t use your raises only as a way to ‘get out of debt faster’; use some of that money to improve your financial growth too.

Yes, we all agree that the economy isn’t the best right now, but enough of the blame game already. There is nothing that new in this financial crisis and some of us who have been around awhile have seen all this before. Remember the high interest balloon payment mortgages of the 1970s? I do, and I’m only in my 40s!

The old rules are now new again

When did it become not cool to save money and take a long-term interest in our own personal financial security? I don’t know, but we have to implement the old rules again if we’re going to make it. So, for those of you in the cheap seats who haven’t been paying attention before, here are some of the old rules to help you get started.

1 Housing prices are subjective, so you have to protect yourself.

• a Buy only what you can afford. This means a full monthly payment (that’s payment, insurance, taxes, and interest – or, your PITI) of no more than 1/3 of your gross monthly income.
• b Short-term fluctuations in housing prices cannot be controlled are best eliminated by carefully negotiating the purchase price and paying 20% down.
• c Get the lowest, fixed rate mortgage you can find and keep hunting until you find it.
• d Save money over the long term by investing in energy efficient appliances.
• e Improve your home’s energy savings in windows, doors, and roofing over time.

2 Start and build an emergency fund.

• a Get started, even with a small amount, and do it now.
• b Take a look at your monthly outgoing payments and figure out how much you’ll need for 3-6 months’ (some say up to 9!) worth of expenses in case you lose your job or are temporarily unable to earn income.
• c Now, go to your budget, set up an emergency fund, and start contributing to it every month.
• d Realize that you will be contributing to an emergency fund forever. You never know what expenses you will encounter, so do like the Boy Scouts do and Be Prepared.

3 Treat credit with great caution and specifically, stop rationalizing credit cards.

• a You don’t need credit cards as a safety net (remember your emergency fund?).
• b You don’t need credit cards for convenience (when was the last time you couldn’t use your debit card in the same situation?).
• c You don’t need credit cards to get the cash-back bonuses (this is a trick to keep you spending, haven’t you caught on to that by now?).
• d Debt is debt and when the money you owe outweighs your net worth, that’s bad. Period. So, take on new debt with great caution and pay it off with everything you’ve got.

When it comes to creating a budget, it’s common knowledge that you’ll need to track your money and where it goes. However, the most effective budget plans consist of more than just expense tracking; they also incorporate long-term savings goals. For the most part, these will be unique to each individual budget and lifestyle, but there are also some general goals that everyone should include. Here are 3 of the must-haves:

Goal #1: Eliminate Toxic Debt to Build Up Your Savings

 Some expenses are inevitable, while others are simply a waste of money. The poster child for this second category is toxic debt. According to MSN Money columnist Liz Pulliam Weston, debt is considered to be “toxic” if it meets the following criteria:

          – The lender can change rates and terms at any time, with little or no provocation. 

          – The standard or default interest rate is in the double digits, or higher, which typically prolongs the time you remain in debt. 

          – Initially easy payment terms encourage you to rack up more debt than you can comfortably repay.

 Toxic debt hinders your financial growth by sticking you with sky-high rates and nit-picky fees. Examples of this are payday loans, credit card debt and car title loans. If any of these debts are part of your current expenses, set aside as much as possible to pay them off ASAP. By doing so, you’ll eliminate unnecessary fees and interest rate payments and can use the money you save to further your long-term financial goals.

 Goal #2: Put 10-20% of Annual Income in Retirement Savings

 As a future retiree, your golden years won’t be anything if you’re forced to rely on Social Security or a pension for your income. In order to afford your current standard of living as an old timer, financial experts recommend putting at least 10% of your annual income in a retirement account if you begin saving in your 20s or 30s. If you wait until your 40s to save for retirement, plan to set aside at least 20% of your annual income. Keep in mind that these percentages are only the minimum of what you should be saving, so put away even more if you can afford to.

 Not only will you be better off the more you save, but the sooner you start the more you’ll end up having. This is due to the magic of compound interest, which turns time into your biggest ally for increasing your earnings. For example:

          – Investor A deposits $200 every month in an account averaging 8% in interest earnings. He makes these monthly deposits for 35 years, depositing a total of $84,000 in his account. 

  Investor A’s account total (35 years, 8% average return, $84,000 in total deposits): $462,000

 Investor B also deposits $200 each month in an account averaging 8% in returns.

             He does this for 40 years, a total of $96,000 in account deposits. 

Investor B’s account total (40 years, 8% average return, $96,000 in total deposits): $703,000

 After 5 additional years and $12,000 more, Investor B’s account total is $241,000 more than Investor A’s – a windfall well worth the price of admission.  

 Goal #3: Establish an Emergency Fund

 Today’s poor job market makes it more important than ever to save for a rainy day. Along with your retirement account, an emergency fund is another fundamental savings goal. Establishing an emergency fund will help you to weather the unexpected layoff, medical emergency, or other financially draining catastrophe. Experts recommend putting a minimum of 3 to 6 months worth of living expenses in your emergency fund. Due to the current recession, however, 8 months to 1 year is a better goal to strive for.

Start small even if it is only a dollar. Remember that no amount is too small. Keep a change jar handy. Save all of your change. It adds up very quickly. Take all the change out of your purse and stick it into a container. Once every six months, make a deposit into your savings. It is a small way to start. You can do the same thing if using your debit card. After a while, start putting away two dollars and keep bumping it up, as you feel comfortable. Always pay yourself first, even if it is only ten dollars a paycheck. Slowly build up your savings. The idea is to make it a habit. Always put something aside.

Make sure to have savings. When anything goes wrong, there is nowhere to go for funds. Create an emergency fund. Try to have at least twelve months of regular monthly expenses saved. Put the rest of the money saved in a high interest savings account and do not touch it unless it is absolutely necessary. A lot of experts suggest an emergency fund holding 3-6 month salary.  During the times now, many even consider increasing that number to 6-9 months.  Also make sure to save for your retirement.

Step By Step:

• 1. Pay off credit cards before saving for an emergency fund.
  2. Look at all of your income vs. your monthly expenses.
  3. From your expenses, determine what a want is and what a need is.
  4. Spend less on the wants and put the money into savings instead.
  5. After doing that, you will come up with a figure of what you can save per week or per month.
  6. Add 20% to the figure and try to save the much.
  7. Find the highest interest savings account you can and put your money there. Make sure it is an FDIC insured account.

What are some of your tips to starting an emergency fund?