02/17/2011 03:03 pm ET | Updated May 25, 2011

Get Ready for America Saves Week

So many expenses, so few dollars saved. That's the dilemma faced by millions of Americans -- everyone from struggling college students to young families saving for a down payment to baby boomers approaching retirement.

During severe recessions, people tend to curtail spending and increase saving as a hedge against potential -- or real -- hardship. In fact, the average personal savings rate as a percentage of disposable income has risen to about 5 percent, compared to an all-time low of negative 0.5 percent in 2005. Back then, the economy was booming and many people assumed that the stock market and home values would climb indefinitely. How wrong we were.

It's probably too early to tell, but some worry that the strong 2010 holiday shopping season may signal a return to old spending habits. Here's hoping we've learned our lesson about living beyond our means and the importance of saving for a rainy day.

There are many reasons why it's important to develop and maintain sound savings habits during good times and bad:

  • You could lose your job or see your hours cut. Most experts recommend having at least six months' income readily available for emergencies.
  • Those approaching retirement need to boost their net worth that was slashed by plummeting home and retirement account values.
  • Costs for high-ticket items like medical expenses, college and retirement continue to far outpace the rate of inflation.
  • Many fear that future funding for government-provided benefits like Social Security and Medicare is at risk.
  • Lending standards have become much more stringent, so qualifying for loans and credit is more difficult.

Although many believe that low- and moderate-income families cannot afford to save and build wealth, research shows that there are "savers" and "spenders" in all income classes. To help encourage people to learn sound saving habits, a broad coalition of non-profit, government, military and corporate organizations formed the America Saves campaign in 2001.

Last year, some 2,000 of these member groups sponsored the fourth annual America Saves Week. Millions of Americans were reached through their campaigns -- everything from educational events at military installations outside the U.S., to financial planning seminars hosted by participating employers, to free tax preparation assistance.

This year's America Saves Week is slated for the week of February 20-27, 2011.

America Saves offers many tools for learning more about the importance of saving, including:

  • You can use the America Saves interactive Personal Wealth Estimator to determine your current net worth and then estimate your future net worth.
  • Sign up to receive monthly savings messages from national financial experts on topics such as money management, investment basics, building wealth through home ownership, saving during tax time and ways to get out of debt.
  • Read Saver Stories submitted by people from around the country, like the Wisconsin man who learned how to raise his credit score by 200 points. You can also submit your own story to help others.
  • Test your savings knowledge by taking this online quiz. Did you know that families that have a savings plan in place save about twice as much as those with no plan?
  • Answer a few questions designed to gauge your progress toward meeting savings goals.
  • Read tips for saving on everything from food and household items to medications to banking and insurance products
  • Handy links to numerous other websites that feature financial education materials.

Some of the more effective strategies I've seen for reducing expenses and building savings include:

  • Write down every cent you spend for a month -- food, gas, clothes, entertainment, everything. Review the list for items you could live without or at least reduce. For example, brown-bagging once a week would reduce your lunch budget by 20 percent -- potentially hundreds of dollars a year.
  • Banking and credit card fees for things like overdrafts and late payments can quickly add up, so carefully monitor your balances and account activity. Bouncing one less check a month could save hundreds of dollars a year.
  • Always try to pay more than the minimum amount due on credit cards to reduce the amount of interest paid.
  • Shop around for better car and homeowner's insurance rates; you can always ask your current carrier to match better rates found elsewhere. And consider raising deductibles, which can save hundreds of dollars.
  • Visit Energy Star for tips on reducing home energy consumption and to learn about relevant rebates and tax credits.

Chances are that economic prosperity is still a ways off; but when it eventually comes, I hope we all remember the harsh lessons of the past few years and retain the thrifty habits learned out of necessity.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

To participate in a free, online Financial Literacy and Education Summit on April 4, 2011, go to Practical Money Skills.