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Getting Americans to SaveFebruary 20, 2011 It's a sad state of affairs, and scary, too: growing numbers of Americans have no savings these days to get them through a financial crisis, however minor. The numbers from recent Harris Polls and government sources indicate:
Organized by two savings coalitions - America Saves (an umbrella group for several sector-specific savings programs) and the American Savings Education Council (ASEC) - this is the fifth year for America Saves Week, which seeks to engage banks, employers and community groups in taking concrete actions to promote financial literacy and personal savings in America. The U.S. Department of Agriculture's Cooperative Extension Program, for example, is backing a social media campaign consisting of 70 FaceBook posts and 70 Twitter tweets to online communities and media outlets about savings and America Saves Week. Its partner organizations in the campaign include Choose to Save, the ASEC, the Consumer Federation of America and Military Saves (which, as the name implies, promotes savings among U.S. military personnel). But in an era when we have "weeks" recognizing everything from hot dogs to bosses, it's not easy going to be easy to get folks excited about savings, even banking on the viral impact of the Internet. After all, what's the motivation for Americans to stash money in savings accounts? Who among us with any business sense would willing tie up funds in a 5-year certificate of deposit (CD) paying 2.2% per annum? And what about the poor? How does someone with limited funds deal with minimum balance requirements for opening and/maintaining savings accounts? Let's Get RealIf government and industry leaders are serious about encouraging Americans to save they need to get people on board at an early age, like 6 or 7, by bringing financial literacy back into the classroom. And they should make it worthwhile for people of all ages to save. When I went to grammar school in the 1960s everyone in my classroom had a savings account, administered by the school system and a local bank, and everyone was encouraged to make deposits (however small) every week on Bank Day. It was a great way to demonstrate the importance of savings, and we were encouraged to set college savings goals. But that approach to financial literacy appears to have been ushered out by the "new math" schools began teaching in the 1980s. Some financial institutions try to make savings a bit more palatable. One commercial bank I use, for example, promised a $50 bonus for opening a savings account and making 12 monthly checking to savings account transfer ($10 minimum). Today, almost 2-years later, I continue the monthly transfers and use the account to save for wish-list purchases.
Lotteries of this type may not appeal to everyone, but there are sectors of the population drawn to lotteries. (Truth be told, I enjoy the occasional scratch off lottery ticket.) Several state governments have such lotteries under consideration, but no state yet has implemented a savings lottery. The federal government could step in, offering tax incentives for savers. The current yearly tax-free contribution limit for individual retirement plans (between $1,000 and $5,000 depending on the plan) is woefully inadequate; raising that limit might help stimulate more retirement savings. What about tax enticements for other types of savings accounts? After all, interest paid on savings account is taxable. Why not give folks a tax break for placing money in time deposit instruments (e.g.: 5-year CDs)? |
 One in four people, worldwide, survive on less than $1.25 a day |
Hoping to stir more interest in savings, scores of public and private sector groups have joined together in sponsoring 
Several credit unions and public service groups, meanwhile, are experimenting with lotteries as a way to promote personal savings. One nationwide program, called