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Creative Techniques for Finding Money to Save

Plus a Bonus:Saving

Resources

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How would you you define savings?

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One Montanan’s Definition

•Amount left over after expenses…

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Which is, most of the time, zero

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Federal Reserve Board Definition

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• Savings is the process of setting aside a portion of current income for future use.

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WIKIPEDIA Economics Definition

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•Saving is income not spent or deferred consumption.

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Question: What year between 1962 & 2013 did Americans have the highest rate of saving? o 1962o 1975o 1983o 1991o 2000

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Personal Savings Rate1962-2013

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•May 1975

•14.6%

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2014

•As of January •3.9%

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$aving Technique$

used by$uccesful $avers

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Make savings automatic

Make savings automatic

Technique #1

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Automatic deposits

• Arrange for monthly automatic deposits from paychecks or checking to savings accounts for an emergency fund

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•Don’t have to think about it every payday–Can adjust/change as needed

Benefit!!

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• Arrange for automatic contributions to retirement plan:–tax deferred • (401k) (403b) (457)

Save for Retirement

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Tax Deferred Plan Limits (401k, 403b, 457)

• $17,500 – 2014• Catch up if age

50 & older• $5,500

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• Some plans offer loans foremergencies• Borrow if really, really, really needed

Benefit!!

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•Penalty if withdraw before age 59 ½Less likely to make withdrawal

Penalty!!

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IRAs• $5,500 yearly• Catch-up amount if

age 50 & older $1,000

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Boost Saving by 1% More & have more at retirement

Salary Age 25

Age 35

$25,000 $102,827 $41,639$30,000 $123,393 $49,967$35,000 $143,958 $58,295$40,000 $164,523 $66,623$45,000 $185,089 $74,951$50,000 $205,654 $83,279Assuming 8% rate of return; Pay Increases 3%

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Boost Saving by 1% More & have more at retirement

Salary Age 40

Age 50

$25,000 $25,675 $8,559$30,000 $30,810 $10,271$35,000 $35,945 $11,983$40,000 $41,080 $13,695$45,000 $46,215 $15,047$50,000 $51,351 $17,118Assuming 8% rate of return; Pay Increases 3%

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Technique #2 •Once a loan is paid Pretend you are still making paymentsPlace former payment in savings

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Benefit!!• Already altered lifestyle so

you can make loan payments

A reallocation of payment to savings can be made without “sacrifice”

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Technique #3

•Put 2014 state/federal tax refund into savings

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Tax Refund

•A tax refund is not a “bonus” it’s a refund of your money that can become savings

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Benefit!!

• It’s money you have already “adapted” to being without during the year

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Technique #4

•Open an MSA•Montana Income tax “savings”$207 if taxable income above $16,700$414 for married couple

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Benefit!!

•Saving tax money on medical expenses you have anyway

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Question: What percent of Montanans have MSAs?

o 1.4% o 25.2% o 53.6% o 70.3%o 92.5%

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Percent of Montanans with MSAs

• Only 1.4%%

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Technique #5Technique #5

•Utilize creativity for saving… Techniques used by Montanans

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•U. S. Treasury says Americans hold $15 billion in loose change

Piggy Bank Your Extra CoinsPiggy Bank Your Extra Coins

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•Eastern Montana mother•Filled-up old socks with loose change & hid in the closet

Sock it awaySock it away

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Hidden Savings in Checking Account

• Central Montana woman wrote checks for next $1 or $5 up in checking account register

• Monthly she deposited the “extra” in savings

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Recipe Box• Western Montana Family who put money that they didn’t use for “eating out” in recipe box• Would go through weekly

to show, “This is what we saved by not eating out…..

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Nothing Week

• Central Montana Family saves money that would have spent on activities that cost

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Sugar Bowl

• Woman on the high-line who squirreled away cash in sugar bowl at the top of the kitchen cabinet

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Under the mattress

• Grandpa in central Montana who hid money in envelope under his mattress

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Save lunch money• Parents in

northwest Montana packed lunches & totaled their savings

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Coupon

• Southeast Montana woman who saved money that would have spent without using coupon

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Technique #6

•Kick habits that cost $$$$$$

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Item Yearly Savings

Snack/Candy/Soda $360Coffee, Latte, Etc $1,140Fast Food Meal $1,320

Money Saved if not spent on Everyday Items

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•Accelerate debt repayment so have money to save

Technique #7

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•PriorityPay off highest interest rate debt first to save on interest

Which to accelerate?

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https://powerpay.org

PowerPay Web site(Utah State University-

Extension)

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Without Power Payments(Highest Interest First)

Creditor Name # of payments Total Paid Int. Paid

Chase Auto 31 $7970.04 $770.04

Mastercard 119 $23039.93 $11472.92

Security Bank 49 $3617.69 $267.69

Lowes 14 $1317.51 $67.51

Payoff Time 9 years 11 months May 2010

Total Paid $35,945.17Total Interest $12,578.17

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With Power Payments(Highest Interest First)

Creditor Name # of payments Total Paid Int. Paid

Chase Auto 31 $7970.04 $770.04

Mastercard 47 $16725.36 $5158.36

Security Bank 47 $3617.34 $267.34

Lowes 14 $1317.51 $67.51

Payoff Time 3 years 11 months May 2013

Total Paid $29,630.25Total Interest $6,263.25

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Bottom Line Benefits (Highest Interest First)

• Time to Pay off Reduced by:

– 6 years • Amount Saved in Interest:

– $6,314.92

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Bottom Line Benefits (Highest Interest First)

• Amount Saved in Interest:– $6,314.92

• No Power Pmt $12,578.17• Power Payment - 6,263.25

$6,314.92

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•Kick the minimum payment habit on credit cards!!!!!

Technique #8

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Credit Card Smarts Calculator

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Orange Side--Side 1

• Paying Just 3% on Your Credit Card Debt–Check the REAL cost

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Blue Side: Side 2

• Pay MORE than 3% and Save a LOT

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Matt & Julie—Side 1

•Credit Card Debt$10,000

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Minimum Payment DANGEROn $10,000 Loan

•$300•$9,421 in interest•20 years to pay off

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Increase payment amount--Side 2

PMT $400 $600Years 13 years 8 years

Interest $5,738 $3,226

Savings $3,226 $6,195

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Another Example Debt: $25,00010% APR Years Interest

$330.38 10 $14,645$531.18 5 $6,871$631.18 4 $5,467$731.18 3.3 $4,548

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•Once loans paid off the money not paid in interest is available for saving!

Benefit of Power Payments

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•Individually•As a couple•As a family

Technique #9: Establish Savings Goals & Track Progress Towards Them

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•Things?•Experiences?•Regardless MSU Extension has a tool for you

Goals: What are you saving for?

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Front Cover

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Track’n Your Savings Goals Register

• Funded by Montana Credit Unions

for Community Development First Interstate BancSystem

Foundation

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What are you saving for?

Savings Goals

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Decide on Amount Needed:

Figure 2

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My Savings Goals:

Figure 2

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Recording a Savings Deposit

Figure 4

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Technique #10

• Moonlight for additional income for savings

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Until Ron got me this job, I didn’t realize

I was an important factor in his savings plan.

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Moonlight Savings

Yearly Amount

Age 25 - 65 Age 45-65

$1,000 $120,800 $33,066$2,000 $241,600 $66,132$3,000 $362,400 $99,198$4,000 $483,199 $132,264

Assuming 5% rate of return

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Technique #11

• Trade down to a smaller home

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Retire? Sure, Cheryl you can retire….if we live in a tent!

Ha, Ha, Ha, Ha, Ha, Ha,

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Savings from Smaller Home

• Lower or no mortgage payment• Reduced maintenance costs • Lower utility bills• Lower property taxes • Lower insurance premiums

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Technique #12

• Move to a less expensive location

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Move within Montana

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Montana Average Home PriceCity Median CostBozeman $227,300

Missoula $144,300Billings $138,400

Anaconda $102,800

Chinook $96,800

Ekalaka $74,100

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Move to another State

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Question: Which state in the U.S. is the most affordable to live in?

1. Montana2. Texas3. Oklahoma4. Florida5. Minnesota

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Most Affordable States

1. Oklahoma2. Tennessee3. Idaho &

Kentucky

http://money.msn.com/personal-finance/americas-cheapest-states-to-live-in 77

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oFriends/relativesoMedia (TV, newspaper, magazines)

oInternet-WeboParentsoFinancial Planner

What are sources of advice about saving?

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Make a commitment to save by utilizing savings techniques that work for you, then take action!!!!!!!

Make a commitment to save by utilizing savings techniques that work for you, then take action!!!!!!!

Commitment

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Savings Resources

•Organizations •Government Sources

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USDA—Extensionhttp://www.csrees.usda.gov/nea/economics/fsll/publications/66_ways.pdf

•66 ways to Save Money

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Investing for Your Futurewww.extension.org/pages/10984/investing-for-your-future

• eXtension:

11 lesson web/study at home course

eXtension-Sponsored by Rutgers University

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NEFEhttp://www.smartaboutmoney.org/Portals/0/ResourceCenter/WealthCareKit-Insurance.pdf

• Wealth Care Kit: A guide for financial wellness 

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The Money Mammalswww.theMoneymammals.com

• Teaching kids to share, save, and spend smart

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Question

• According to the (March 2013 Retirement Confidence Survey), what % of workers said they are very confident they’ll have enough for retirement?

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What % of workers say they are very confident of having enough for retirement?

1.30%2.20%3.15%4.13%5. 5%

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Confidence Survey 2013

•13% • lowest level since survey started in 1993

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• Easy-to-use, two-page worksheet –Helps you quickly identify approximately how much you need to save to fund a comfortable retirement 

Ballpark E$timatewww.choosetosave.org/ballpark

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Department of Labor http://www.dol.gov/ebsa/pdf/savingsfitness.pdf

• Savings Fitness: A Guide to Your Money and Your Financial Future

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U. S. Securities & Exchange Commission www.sec.gov/investor/pubs/roadmap.htm

• Get the Facts: The SEC’s Roadmap to Saving & Investing

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• Calculators on: Auto Bond Budget College Credit Card Employee Benefits

American Savings Education Councilwww.choosetosave.org/calculators

Home Insurance-

Disability Insurance-

Health Insurance-Life

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• Calculators on (cont’d): Mutual Fund Paycheck Planning Retiree-Health Retirement Roth IRA Taxes

American Savings Education Councilwww.choosetosave.org/calculators

Stock Savings

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America Saveswww.americasavesweek.org

•Designated weekFebruary 24 – March 1, 2014

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Montana Saves

www.montanasaves.org

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America Saves:Savings Messages

•Receive savings tips and reminders straight to your phone

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American Institute of Public Accountants: Offers information to help

consumers make sound financial decisions at every stage of lives.

www.360financialliteracy.org

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• Life Stages Couples Parents and Children Home Owners In Crisis Retirees

www.360financialliteracy.org

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• Life Stages Small Business Owners Military and Reserves Employed College Students Tweens and Teens

www.360financialliteracy.org

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• Get Savings TipsE-mailPhone

• Join a discussion• Beat your brain

Feed The Pigwww.feedthepig.org American Institute of CPAs

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• 4, 5, 6th graders• The Great Piglet Challenge

Interactive Adventure in Saving & Spending

www.feedthepig.org/tweens

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Conclusion• Almost “overwhelming” amount of savings information organizational & governmental resources

• Find the source that “works” for you

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Understand yourself

• What motivates you to save?

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Question: What is your primary goal for saving at this point in time?

o Retiremento Emergency fundo College educationo Family vacation o New Caro New Home chat

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Savings bottom line……

•Are you willing to delay gratification so you’ll have money to save?

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In other words……

•Are you willing to make a change in your behavior to make saving a priority?

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In Conclusion

•Best wishes as you select the savings technique that works best for you & explore savings resources