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(ARA) - More than 40 percent of Americans
say they live beyond their means, according to a 2004 survey by the Charles Schwab Foundation.
Highlighting this trend, the Center for American Progress shows that personal bankruptcies hit
an all-time high, as more than 1.6 million families filed for bankruptcy in 2004.
"While three-fourths of Americans say they're doing a
good or excellent job of controlling their spending, approximately 35 percent count on others,
whether it be the government, family or friends, to support them financially," says Sam Goller,
national spokesperson for Achieve Financial Independence Week, which occurs annually during the
third week of October. "But in the end the only person they can count on for financial
independence is themselves."
Take the following quiz to test your financial IQ. Do you
know which statements are fact and which are fiction?
Using a bank's automatic deposit option
can help curb the temptation to over spend and under-save.
Fact: Paying yourself first can help you avoid the spending
trap. By automatically putting a percentage of each month's earnings into a savings account, you
can avoid the temptation to spend. Automatic deposit is an easy way to make certain a percentage
of your paycheck is saved monthly.
It is never too late to start saving.
Fiction: Time is money. For some people, it's hard to think
about retirement when it seems so far off, but starting a retirement savings account just 10
years earlier makes a big difference. One thousand dollars put into an investment account with
a return of 6 percent at age 23 will grow to twice the value of an account started at age 33.
The average American spends about five
percent of their income eating out.
Fact: Believe it or not, according to the Statistical Abstract
of the United States this statement is true. One easy way to save money is by taking your lunch to
work. If you spend around $5 a day, that's $25 a week and $1,300 a year! What a difference you
can make just by rediscovering good ol' PB&J.
Investment portfolios should contain a
minimum number of investments to minimize risk.
Fiction: Your portfolio should have a mix of investments that
seek the highest rate of return. Seek advice from a Certified Financial Planner (CFP) when it's
time to invest and put your money to work for you.
Saving at least six months of typical
living expenses will give you a proper cushion when tough financial times come.
Fact: Maybe the transmission goes out on the way home, or the
washing machine goes belly up mid-cycle. Life is full of unexpected crises, small and large.
By creating an emergency fund that contains at least six months of typical living expenses,
surviving in times of financial crisis will be easier.
Tracking expenses can help you
determine your wants and needs.
Fact: Do you really know where your money goes? Keeping a
small notebook with everything you spend, from a few cents to a big splurge, can help you better
manage your money. You may be surprised to find the list filled with lattes, magazines, bottled
water and other "small" purchases that add up. None of these are wrong to buy, but by
tracking your expenses you can get a true picture of your financial situation. This can help you
better control your wants and provide for your current and future needs.
"Taking responsibility for your own finances and knowing
how to manage them is one of the first steps toward financial independence," says Goller.
"These surprisingly simple truths can go a long way toward improving your financial
position."
For more information, visit www.stowers-innovations.com.
Courtesy of ARA Content
Get a PDF version of this page here.
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