Savings Strategies
With a plan, almost anyone can remain financially fit
source:http://www.blackenterprise.com/ExclusivesekOpen.asp?id=1582
By Tennille M. Robinson

“If I have money in my purse, I will spend it,” says Chantelle Aris.

She is not alone.

The U.S. Commerce Department reports the personal savings rate continues to slump. As a percentage of disposable personal income, it was a disappointing negative 0.4 % for 2005. This is the lowest the rate has been since the height of the Great Depression. For the first two months of 2006, the rate is at negative 0.5%.Aris, 22, who currently lives with her parents, refuses to let her spending vices get the best of her.

Aris, a 2005 graduate of the University of Pennsylvania is currently studying for the LSAT and hopes to pursue a legal career. In the meantime, she’s working full-time as an assistant dispatcher with All-State Air Control Sales in Mount Vernon, New York, a HVAC contractor servicing heating and air conditioning units as well as refrigeration and ice machines. She earns about $2,500 a month after taxes and makes extra money working odd jobs for family members.

Page 2 ...continued from previous page


“I hate owing money to anyone so if I have it in time, I try to pay more than the minimum,” says Aris. “Then, I won’t have to worry about budgeting as much.”

You might think this strategy leave Aris’ savings account high and dry, but guess again. Ten percent of her paycheck is automatically deducted and placed into a savings account.

Aris, who was born in Jamaica, does not just save money through her salary. She participates in a group savings method common in the Caribbean. Participants give $100 a week or $400 per month to a designated leader. Each then decides when to receive what they have contributed. Aris pulled her six-month share out—$2,400—to help buy her car.

“You’re giving it to somebody else, but when you need it it’ll be there,” she says.

For those who are not as savings-savvy as Aris or who do not think they have the means to implement such tactics, David Hargraves, Senior VP/Chief, Retail Banking at Carver Federal Savings Bank (No.1 on the BE 100s Banks list) assures anyone can do it. It just takes courage to learn as well as discipline to maintain.

“People want to start but they don’t know how, which opens the door to fear of the unknown,” he says. “If you begin now and continue, you’d be surprised what you can save.”

Here are a few tips you can use to help keep more than pennies in your pocket:
Page 3 ...continued from previous page


· Pay yourself first: Putting money aside to save before you begin paying your expenses sounds simple in theory yet Hargraves understands the challenge. “Sometimes the ends won’t meet, so it can be very difficult,” he says. “But with this concept, whether the ends meet or not, you have now started to develop that nest egg.” Saving just $5 a day can lead to $50 every two weeks, $100 a month equals $1,200 in a year. “When people start to see their account crawling up, they start to pay themselves not only first, but more.”

· Transfer or Direct Deposit: Most banks offer to switch money from your checking account or straight from your paycheck to be placed in a savings account that is not linked to your ATM, which discourages spending. “Make it where you have to work to get that money,” says Hargraves. “Go to the bank, stand in line, and fill out a withdrawal ticket.”

· IRAs, 401(k)s, Mutual Funds, Annuities: IRAs and 401(k)s allow you to divert a certain amount from your income into an account that you cannot touch before the age of 59 1/2 without a penalty. “[Mutual Funds and annuities] are tax differed until you use it,” he says. “We all hope to retire and your salary drastically drops when you retire, which is why you need to have that nest egg to pull from.”

· Attend financial seminars: Most banks offer free bank-sponsored seminars about savings products, investing, retirement or simply how to obtain financial freedom. Attending seminars offers financial literacy, a must for saving. “It’s the information, it’s the knowledge,” says Hargraves. “It’s so cliché but knowledge is definitely power.”

Deposit coins: Save your spare change and once a month or at the end of the year take it to the bank for deposit or use it to invest in a CD. “I have customers who will tell me they will purposely break a large bill [to make change].”

4/7/06

Aris is more than able to take care of monthly expenses including orthodontia expenses, credit cards, and cell phone bills. She also helps out with household expenses. To get ahead, she doubles up on her car note payment and pays her car insurance premium in a six-month lump sum.