Another Study About Spending and Saving

Posted by: Sophie H. | Dec 10,2007


Every time you turn around, there’s another survey about American spending habits.  Why do they keep putting together these surveys?  I’m glad they do because they’re interesting, but human interest can’t be the only reason.  This survey was done in part by Wachovia, so it’s mostly so the banking industry can get a clear idea of their customer’s financial help.  I should think, though, that their customer’s credit ratings and success at paying bills would be more definitive.  Go figure, at least it gives me something to write about.  

Surprisingly, the survey shows that over 53% feel they are saving adequately for retirement.  But then comes this amusing addition: “When all short- and long-term financial needs are considered, only 44 percent say they are saving, or have already saved, adequately.”  I had a feeling that might be the answer.  I think people think they’re saving adequately if they’re saving at all.  When they actually factor in how far those savings can be stretched, when accounting for health care costs, loss of income, rising inflation, plummeting dollar value, and more, that savings may seem fairly meager.  

The answer is to not pat yourself on the back too quickly.  Just because you pay above the minimum on your credit card and are careful to save some money every month this does not mean that you’re saving at all adequately. Putting those savings into a high-yield account, such as a high-interest savings account, and/or 401(k) with a matching fund is a good start, but not the be all end all.  First you need to save adequately and aggressively so you can put as much spare cash as possible into those high yield accounts.  

To do so you need to factor in every possible expense you might be facing, as well as those you may not yet know about.  The latter is obviously difficult to surmise, but having an emergency fund is imperative.  The biggest problem for a lot of retirees are not just medical expenses but putting those medical expenses on credit cards.  If you do not plan for this by both having a sizable savings, in addition to having empty credit cards before retirement, you will find yourself in a difficult position in your retirement years.  

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