My decision whether or not to save in my work savings plan was neither long nor complicated.
Yes, I actually had to fill out a form, and yes, I actually had to figure out how to invest those savings (although in all honesty there were only four funds to choose from, one of which was shares of the society). Yes, there was also a generous match, but when you’re young, there are more appealing ways to spend your income than not spending it. That said, and at 22 I hadn’t always fully followed my parents’ advice, my mother didn’t hesitate to insist that I do.
My mom, now a retired teacher, reminds me then (and still) with some regularity (and deserved pride) that she started having $50 off her salary at work – although my dad protested at At the time, they couldn’t afford it. do it. Or at least he did until he saw that first quarterly statement – at which point he started researching how he could start saving in his company savings plan. They started relatively late in their working life – and yet she continues to tap into that 403(b) account (and my father’s, who survived him) to this day.
These memories have a special resonance for me this week, which happens to be America save the week-and although if you’re reading this, you’re probably saving all day, a lot of Americans don’t. While the overall theme/emphasis this year (it’s been a ‘thing’ since 2007) is ‘building financial resilience’, each day of this special week has a different focus: yesterday (Monday) was Save automaticallyit’s today Save for the unexpected (and boy, hasn’t COVID reminded us again and again of this need?), Wednesday – one of my favorites –Saving for retirementwhile Save money by reducing your debts is scheduled for Thursday and the week ends with a focus on Save as a family.
Now, no doubt each week could (or at least should) be America Saves Week, but the particular focus of this week offers us all the opportunity to share not only success stories, but also practical ideas on how to do what we are told (often by us -same) this can not be finished.
You do not have to have having a workplace retirement savings plan to save, sure, but it helps. We regularly cite data that proves that even low-income workers, i.e. those earning between $30,000 and $50,000/year, are 12-15 times more likely to save through their company savings plan than to do so on their own. It’s a combination of making it not only automatic, but easy! Particularly these days with auto-enrollment, various default investments like target date funds and managed accounts, and the ability to automatically increase that savings rate on a regular basis – easy, automatic and efficient.
I’ve never been very comfortable lecturing others on the importance of saving – we all have unique circumstances and challenges to overcome, after all – and saving is, in the end, a question of responsibility and personal choice. But I need look no further than my parents’ example to see the impact discipline of saving and, let’s face it, sacrifice can have.
You see, my dad thought they couldn’t afford to save, but the reality is they couldn’t afford not to.