4 out of 5 Not Saving Adequately Says Wachovia

I included an article from Wachovia bank below. Kudos to any organization that takes the time to help solve our country's savings crisis by educating consumers.

The problem with saving is many people think it is just too difficult so they don't save anything. To help overcome this hurdle, I ask them if they can save $1 a day. And if they can do that for a year, can they sace $2 a day the next year. And then $3 a day the following year. If they start at age 25, by the time they are 35, they would be saving $10 a day and have a nice habit of savings. $10 a day is $3,520 a year, which is a nice IRA deposit and will provide for a healthy nest egg at the end of one's working life due to compounding interest.

Wachovia Article:

Holiday shopping season spending increases and consumers head into the New Year with resolutions to do better in 2008, more than half of Americans (52%) say that they currently cannot afford to save or are saving inadequately, according to a comprehensive survey released by the Consumer Federation of America (CFA) and Wachovia this morning (full press release and survey results below).

This in-depth survey examined how Americans view their savings adequacy, major barriers to savings, and successful savings strategies planned. Today’s research reconfirms what Wachovia has learned about consumers’ savings attitudes and behaviors over the past couple of years:

We know from other studies that people don’t feel they’re saving enough, but we were surprised with the data that shows that 4 out of 5 believe that Americans are not saving adequately. Consumers know they should be saving, but they don’t know how to get started. Other consumers have told us they don’t make enough money to cover their short-term financial obligations or they’re not willing to change their lifestyle to set money aside in savings.

Today’s study provides fresh insights around the mindset or psychology of savings – including what keeps people from saving and what would motivate them to save

For young people particularly, “Spending to Feel Good” and “Impulse Spending” were the two biggest hurdles in saving.

We also got additional insights into the factors that would encourage or motivate people to save:

When survey respondents were told that “saving $200 a month for 40 years at a 5% rate would accumulate over $300,000”, 80% said they would be motivated to save more thanks to a better understanding of the miracle of compounding interest.

Other motivating factors are access to attractive saving accounts and help getting started.

These findings provide new insights and opportunities for Wachovia and the banking industry. Based on the insights from this study, Wachovia is looking at ways to help consumers get started, make it easy and fun to save. In partnership with the Consumer Federation, Wachovia is launching a series of savings seminars that kick off during America Saves Week February 24, ’08 in association with employers and our community partners—with the goal of reaching as many consumers as possible.

We believe everyone can get on a pathway to savings – no matter what their financial situation or stage in life.