Finance Metrics » financial literacy

Reasons Why Personal Saving Rates Alarmingly Low In Recent Years!

admin — Thu, 01 Oct 2009 10:10:56 +0000

Personal Savings seem to have reached an all-time low this year. I’m not surprised. Given the very stormy economic conditions, the average American would have been thinking about surviving in the present day, rather than saving up for the future. Apart from the economic conditions, the level of financial literacy of the youth and the public in general is also responsible for this. Americans being spendthrifts by nature and being too optimistic about the future, till the recent recession, did not find the necessity to save up for the future, but the economic famine has woken up people to the harsh reality. Another reason that seems to have made the Americans sleep over the personal savings issue was the highly available consumer credit which has grown at an alarming rate in the last few years. The personal savings infographic from Billshrink will give you the statistics. Here we can take a look at reasons behind declined personal savings in the recent years.

Economic Famine

The recent economic famine seems to be the most important factor in preventing people from making personal savings. A lot of people were thrown out of their jobs and they had hardly any money to run their daily expenses leave alone saving for the future. A person has to be employed first for thinking about the 401(k) retirement savings. To an unemployed person it hardly makes any sense. But the economic downturn wouldn’t have been such a big blow on people had they been in the habit of saving from before. It is because we did not learn to save up for the rainy day that today this economic downturn is taking its toll on us.

Poor Financial Literacy

America being one of the richest nations of the world, its people took its financial resources for granted. They never could think before hand that they might have to face poverty one day. It’s rather surprising that even some of the well educated people are not sound with their knowledge of financial management. Now the government has come up with a lot of programs to educate people about financial management and money awareness which are so very important for personal saving.

Consumer Credit

The effect of easy availability of an abundance of consumer credit seems to be one of the biggest factors in the low personal savings. If you analyze the infographics, you’ll see that prior to 1980 when public consumer credit was not all that popular, people had no other way of financing themselves but to depend on their saved earnings for that. But now, so many banks, financial institutions, credit card companies are all too eager to finance people. Some of them are not even verifying the credentials of their clients properly in their race to make company profits. Money on debt is easily available. These days its not difficult for even a 60 year old person to get a bank loan or a financial aid from an institution. So why will people think of saving after retirement?

Personal savings always work as an armor against the toughest of economic onslaughts. It’s never too late to start. With a bit of frugality and money building awareness, people can start securing their financial future with good persona savings.

Simplest and Most Effective Money Saving Ideas

admin — Sat, 19 Sep 2009 09:31:38 +0000

As a school kid when I’d talk about money frugality, my friends would tease me saying I was stingy. But now the recession has taught even the greatest spendthrifts amongst us to be very prudent with our money. No more is it fashionable to spend big bucks for a lavish lifestyle. In fact, these days, you’re looked upon as a fool if you do that! Everybody is talking about money saving ideas. That gives hopeless misers a chance to be proud of their ways! Isn’t it ?

Here are some easy time-tested ways that have been around for quite some days now. They are simple, short and effective. If you were to go by Financial Literacy survey 2009 of the National Foundation for Credit Counseling, about 45 % of people spend lesser than what they used to in the previous year. It seems when conditions will improve they’ll go back to their old spending habits.

Coupon Usage

According to the Promotion Marketing Association usage of manufacturer coupons has gone up by twenty percent this year. Coupons were widely used in the eighties and early nineties but after that this seems to be the first time since the 90s that the usage of manufacturer issued coupons seems to have increased. The trend seems to remain for some more time to come. Nowadays these coupons seem to be made easily accessible online by not only manufacturers, but retailers as well.

Bargaining Is Embarrassing No More

I observe so many people in my life who buy to impress the shopkeeper and other buyers! I was quite comfortable asking for one or two bananas from the fruit vendor, but my friend Sally has a problem .She gets embarrassed asking for small quantities and buys about a dozen from the fruit vendor even if she actually doesn’t need so many. The trend has changed these days. Even big shops are ready to negotiate the prices as more and more customers are turning down offers to buy highly priced stuff. After all it’s your money and you’ve got the right to spend less if you want to. You don’t have to impress the shopkeeper or your friends by buying more than you require and that too at higher prices. Just tell a retailer how much his competitor is offering a product for, and you’ll find that the retailer is negotiating amounts.

Bartering Is Back

Welcome back bartering – the age old commodity exchange means that existed before currency has come into practice once again. There are so many websites that allow you to barter goods. Craiglist reports that the response to its bartering section has increased three folds in the current year.

Group Shopping

The recession has made people pool in money and buy things at a lower price in bulk quantities. By this they save up the charges they’d have to spend on individual purchases.

Christmas Club Memberships

The Christmas club memberships came with a lot of benefits which is very good money saving idea. Sears and Kmart have come up with Christmas Club Memberships that are getting a good response.

Let’s Talk About Financial Empowerment For Women

admin — Sun, 13 Sep 2009 09:49:06 +0000

Regardless of their culture, nationality, ethnic origin etc. women have traditionally been homemakers and men the money-earners of the family. Other than the knowledge of some basic money saving techniques while running the household, women were not really savvy of the complex financial world around them. But now, with the changing socio- cultural scenario of women having to take up the role of bread-winners of the family and divorces being at an all-time high, a woman needs to set up herself as an independent financial entity and for that she needs to equip herself with more financial knowledge than mere domestic budgeting skills.

According to Ginita Wall, co-author of ‘It’s More Than Your Money – It’s Your Life!’, “A lot of women believe that wealth is a four-letter word. They are particularly afraid of the negative reputation that wealth has — power, greed, corrupt connotations.”

When it comes to money, women have the lesser share and during divorce, most often, the settlements are not done fairly. Here are certain tips that women should follow to empower themselves financially.

Establish goals – Ask a woman how much she expects to see in her bank account after the coming 5 years, most probably you’ll get a blank expression on her face. This is because conventionally women were not the major financial planners of their households. The men usually do that. But if you are a single woman you should be able to plan your monetary goals clearly.
Know The Ins and Outs of Financial Operations – women run households and they show good management skills with the money that is given to them for spending. But women are seen to be lacking in knowledge of managing long term assets. In the event of a divorce or other situations in which a woman has to independently run the finances of the household, she has problems. For example, making profitable investments for the growth of assets is an area that she might not be very comfortable with. Consulting financial experts, taking up a financial literacy course and using online financial tools will help in improving the financial literacy of women using which they can take up long term decision regarding their finances.
Prepare yourself for divorce – This is for women who are conventional home makers. Your husbands might be providing you security at the moment and I wish that divorce should never happen to you. But you never know the future. If such a situation happens what are you going to do? Even when your relationships are alright even before you get married you should think about independent survival and what you are going to do if you face such a situation. Always try to keep a job handy so that you constantly keep earning some amount or the other. Plan for an independent house and lifestyle in case you might have to face that emergency that most of us would want to avoid. Above all never take your spouse for granted.