Top 10 Tenants for Creating a Culture of Smart Saving and Investing
Whether from a family-centric view or the entire society, smart savings and investing isn’t just a process. According to reports, the average American household has about $15,355 in credit card debt, much more if you factor in mortgages, personal loans, student loan debts, and vehicle loans. This is an expensive fact of American life. How can we change it? What will it take to create a culture of savings and investing instead?
#1: Teach Kids Smart Money Management
Even from a child’s perspective, money management should start with savings. Instead of spending a whole dollar, teach children to save half of it.
#2: Instant Gratification Isn’t the Best
From turning on the laptop to purchase something desired instantly to buying from a smartphone, it’s easy to spend money. Instant gratification, though, is not necessarily the best for people. It teaches to spend without regard to savings. How often do you make a purchase only to wish you didn’t a day later?
#3: Move Away from Credit Use
Credit cards are a key reason people face debt. It’s often considered the smart decision to use credit for everyday purchases, in fact. However, moving to a cash-based payment system within the home, for example, teaches better money management. You can’t buy it if you don’t have the money on hand to do so.
#4: Access to Easy Investing Tools
People are very digitally focused today. If you provide access to digital ways to save and invest, such as through the use of apps or online tools, people are more likely to engage in this activity. Going into the financial advisor’s office isn’t likely, on the other hand.
#5: Budgeting Has to Be a Priority
Another key area of concern is creating and sticking with a budget. Online tools are available to help with this. A budget should be a focal point of the monthly money management process.
#6: Tracking Spending
Sometimes, people don’t realize just how much they spend on spur of the moment purchases. From stopping to pick something up at the grocery store to getting a cup of coffee on the way into work, tracking how much is spent is essential.
#7: Rewards for Savings
On a society level, creating a system that rewards people for saving and investing, much like it does for using credit cards, can help to show people the value of making this change.
#8: Create Long Term Goals
Not only do financial advisors have tools to tell people how much money they need to save to achieve retirement goals, but so does most of America. The need to use such tools to plan savings is growing.
#9: Access to Education Is Essential
From credit unions to community colleges, there needs to be more focus on teaching everyday people how to invest and the rewards that it offers.
#10: Teach the Consequences
It’s also important for people to see, visually, the consequences of not saving. Education online or otherwise should showcase what happens when people don’t save, the cost of debt, and the cost to their future.
At the height of the recession, Americans were very conscious of their money. Now that the economy has improved, it appears many Americans have gone back to bad habits. Creating a culture of savings is anything but easy to do. However, it is one of the most important changes society needs to benefit in the long run.