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THE ISSUE: Saving money

OUR OPINION: Young people increasingly must learn

they are ‘quarterback’ of their future

Results of a Rasmussen poll this past week showed 24 percent of 1,500 American adults surveyed say their personal finances are getting better while 42 percent report their finances are getting worse.

The fact that so many are experiencing worsening finances comes as no surprise with the escalating costs of health care and just about everything else, not to mention the freeze many businesses still have on employee salary increases. For many working Americans and those living on fixed incomes, the money that’s coming in is not keeping up with the cost of living.

Financial experts are constantly encouraging Americans to put more money into savings, but when it takes every dime to pay the bills each month, many have nothing left over to stick into a savings account. The money is bleeding out of their checking accounts as fast as they deposit their paychecks. The experts aren’t buying that, insisting there are always ways to cut expenses and stash away a nest egg.

Don Taylor, Ph.D., CFA, CFP, of, acknowledges that Americans face immediate financial concerns daily and that these take priority over long-term retirement and other savings.

A poll on retirement savings taken by Bankrate in mid-September showed that seven in 10 Americans, or 68 percent, said they are not able to reach their monthly retirement savings goal because of other financial responsibilities. About a third said they are putting some money away, but not enough. Another third admitted they aren’t saving anything at all. Only about 28 percent said they are meeting their monthly retirement savings target.

Financial planning is vital for every American, and Taylor warns that the rules of the game are changing.

“With companies moving away from defined benefit (traditional pension) plans to defined contribution plans, such as the 401(k), the responsibility for retirement savings is shifting from employers to workers. Future Social Security and Medicare budgetary issues also raise the question of how much income and benefits retirees will be able to count on in the future from these programs,” he writes.

Taylor advises that we’ve got to be the “quarterback” in the game plan for our financial future.

“Employers are increasingly offering automatic enrollment programs so that workers can contribute to retirement accounts unless they ‘opt out.’ This should raise the level of employee participation in 401(k) and 403(b) retirement plans,” he writes. “But it’s better if you take a proactive approach and contribute even more than the auto-enrollment feature provides.”

And it all starts with a spending plan, Taylor points out.

“You have a certain amount of household income each month. Allocating income between current consumption and investing for future goals is a financial balancing act,” he said. “Making investing a priority requires cutting back on spending. Carrying a balance on your credit cards and paying 16 percent interest on current spending makes even less sense.”

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He said employees’ whose companies are matching all or part of their contributions to a retirement plan and choose to opt out are “leaving money on the table.”

Bankrate’s poll did reveal some good news: Two-thirds of Americans have at least started saving for retirement. Nearly a third (33 percent) of Americans say they started saving for this goal in their 20s. Two in 10 waited until their 30s to begin saving.

The bad news is that the poll showed a third of Americans have yet to even begin saving for retirement.

All of this should convince parents that it is absolutely crucial to teach their children about financial responsibility starting at a very early age. Neale S. Godfrey, co-author with Carolina Edwards of “Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children” (Fireside, 1994), suggests beginning with the concept that “money must be earned.”

“There’s no entitlement program in life,” she says. “Kids need to know that they can’t just whine for a toy in a store and automatically get it.” She recommends what she calls the “Bill-Paying Game,” inspired by a scene in the old movie “I Remember Mama.”

Godfrey says to “count out a reasonable ‘salary’ in play money, like that from a Monopoly game. Then, take some old bills and write the amount due on the back of the envelope of each. Show the child the entries in each for ‘date due,’ ‘minimum payment due’ and ‘balance due,’ then let them decide how much to pay. If the allotted money is enough to pay the bills, everyone wins.”

The leftover money can be used to introduce the concept of savings, she writes.

“If they’ve been receiving your sage financial teachings from an early age, older children shouldn’t have trouble understanding the concepts of long-term and short-term saving,” Godfrey concludes.

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