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New habits convert spenders into savers

Written by By Brian Monroe
Florida Today

For release June 19th, 2004

Nearly 70 percent of Americans are spenders, rather than savers -- meaning they have a lifestyle that
leaves them little money at the end of the month to put away for retirement.

But, with a few "lifestyle changes," spendthrifts can learn some miserly habits, benefiting them in the
long run, said officials from the Institute of Consumer Financial Education.

"It's a great challenge to get John and Sue Workhard to focus on saving for the future when all of their
income is devoted to the present," said Institute of Consumer Financial Education Director Paul
Richard, a registered financial consultant. "They didn't develop these habits overnight, so they aren't
going to bust them overnight, either."

Contrary to what you might think, the key to getting your credit back on track and saving money for
the future isn't pinching every penny and going hungry, but rather spending your way out of trouble,
Richard said.

"Changing your everyday spending . . . is the key to your financial future," he said. "That can be as
simple as how often you eat out, instead of making your own lunch; pumping gas yourself, instead of
someone else doing it; or mowing your lawn yourself."

Using national average prices for nine monthly expenses many consumers deal with -- ranging from
rent, cable television and telephone to groceries, gas and movie rentals -- Richard found consumers
could save more than $520 a month.

How?

Here are some examples, with comparisons based on a single person living in a two-bedroom
apartment, paying $800 a month in rent and driving a 1999 midsize two-door sedan.

A spender might pay $800 for rent each month, while a saver could rent out a room for $250 a
month.

A spender might pay $85 for cable for 200-plus channels, while a saver could pay $35 for basic
cable, saving $50.

A spender might pay $260 a month for groceries, while a saver could pay $234 using coupons and
watching for specials.

Being a spender is a "big problem," said Patricia Driver, a financial planner in Allstate Financial's
Indian Harbour Beach office.

"People are trying to retire, but what they have to remember is there is only so many dollars in their
budget," she said. "They have to prioritize."

Driver saw recently how poor planning early on could cause dire problems later.

A couple in their 50s came to see her and said they both wanted to retire at age 65.

The problem?

The couple recently had gone on a vacation and spent $10,000, about half of their savings.

"The answer to their problem was to save $1,700 a month," she said. "But they didn't even make that
much to begin with. In a situation like that, you have to really go through a budget and see what you
can save. It's like the old adage: How did the little ant eat the big elephant? One bite at a time."

These lessons are not lost on Michelle Anderson-Ryan, a self-described saver.

Running her business, Designer Glass Studios in Melbourne, and taking time for her husband and two
children has taught her the value of frugality.

"I am a saver because I have children and want to be able to afford to put my kids through college and
give them whatever they need," she said, adding she pays off her credit cards every month, has basic
cable, and makes no long distance calls on her home phone.

end


For more information contact:

Paul S. Richard
Executive Director
Institute of Consumer Financial Education
PO Box 34070
San Diego, CA 92163

619-239-1401

www.financial-education-icfe.org

Email Reply: info@icfe.org 
 

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