BUSINESS & FINANCE :: AUGUST/SEPTEMBER 2008

Saving in Tough Times

Presented By: Danielle E. Thomas, CRPC ® & Stephen A. Rifici, CRPC®, CFS

When the economy is struggling, we seem to put more thought into our financial decisions. For instance, the importance of saving money for a rainy day is always more apparent when the clouds are rolling in. Yet the savings rate in America today is at historically low levels. By comparison, the savings rate peaked at more than 14 percent in 1975, and was just shy of the 5 percent level ten years ago*. Even if you are doing better than that, the truth is most of us could put more money away to help us through tough times or to prepare for our key financial goals.

It is easy to say we can’t afford to save any more, because keeping up with day-to-day living expenses is as much as we can handle. But if you look hard enough, you just might find ways to do it.

Where to find the money

Here are eight places where you could easily find more money available to build up your savings:

Save your tax rebate – until recently, none of us knew the government was going to send out a check for several hundred dollars (and for some, even more) with no strings attached. You weren’t counting on having that money to spend, so why not tuck it away for a time when you may really need it?
Cut back on eating out – bring lunch to work a few days a week. Buy fewer expensive gourmet coffees, and see how fast the savings add up.
*Source: Bureau of Economic Analysis, Personal Saving Rate
Try budgeting – if you can’t discipline your spending habits, you need a budget to keep you in line and live within it.
Cut energy costs – today’s high gas prices dictate smarter driving. Carpool when possible and eliminate unnecessary trips. At home, see if you can adjust your thermostat by a degree or two to reduce heating or cooling bills, and turn off lights when you aren’t using them.
Go to the store with a list – plan ahead what you are buying before you go to the grocery or discount store. Buy only what is on the list and avoid impulse purchases.
Get rid of credit card debt – interest rates on credit cards are extremely costly. The sooner you can eliminate credit card debt, the better.
Consider refinancing your mortgage – check current interest rates to see if you can reduce your monthly payments enough to justify the costs of refinancing your mortgage. If you’re able to refinance, invest the savings.
Put a plan in place – your financial advisor can help you develop a long-term financial plan that can provide you with a roadmap to reach your financial goals. A financial plan may also help you determine how much you should be saving to make your goals a reality.

A little more diligence about saving can go a long way. If you can find an extra $100 per month, continue doing it over thirty years and earn an 8 percent average annual return, you will accumulate an additional $85,000 in savings.

As Ameriprise financial advisors, our dream is to help make your dreams realities. To set up a consultation, call Danielle Thomas at 302-439-2163 or Stephen A. Rifici at 302-439-2150.

This column is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation. Consult with qualified tax and legal advisors concerning your own situation.

Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA & SIPC.

File # 72871

(3/08)