Back to school, back to school savings: Why people need a plan to save money

Did Labor Day already pass me by? One thing that my wife doesn’t get – Labor Day is not labor day!  But, I guess when there’s a day we have off together, what could be more fun than laboring on our little slice of heaven?  I am continually amazed at what it takes to own a home – the supposed “American Dream.”  I respectfully disagree with that sentiment!  My dream does not include fixing stuff, mowing for hours, dumping money in the blood-sucking pool, etc.  Now, don’t get excited; I am thankful for all of that, but it just isn’t the dream.  Some day I may tell you the dream, but today, I was thinking about one aspect for achieving the dream – budgeting.

Back to school, back to school savings
Back to school, back to school savings

I bet you weren’t expecting that, were you? Too many times, I have sat with families to discuss their situation and the peril into which they have placed themselves.  Now, there are many outside forces at work that plague us all – unexpected medical bills (translation – children), the refrigerator having ears (I think that is from Erma Bombeck), and a loss of a job (a sad reality in our present economy).  It’s these outside forces’ effects on our wallets coupled with a lack of a written spending plan and our bent on having what we want when we want it that truly gets us in trouble.

Budgeting ought to be taught from elementary school forward and especially at the end of a student’s high school career. Would you believe that the average family in Seneca County earns over $1 million in their 30 year working career?  Forget the lottery; we won that when we were born in America!  Imagine what you would do with a cool million?  Oh, we don’t have to imagine – we, unfortunately, do get a million in our life.  How did you do so far with that?  Am I the only one that thinks that anyone with a million should have a written plan for spending it?

Saving for the future needs to be at the core of our individual values. Gone are the days of a defined benefit pension plan.  Forget 100% funded health insurance.  Social Security and Medicare taxes are only expected to increase, while benefits decrease.  If we could contribute the same amount as our FICA taxes into our 401(k) plans – about 15% of our gross pay – and earn just 5% on that money for our entire working career, we could all retire at over 90% of final pay, assuming pay of $10 per hour, increasing by 2% per year (A sidebar – what’s the average Social Security benefit for a retiree? Right, nowhere near that level.  A great argument for privatizing Social Security and for smaller government.).

So, as we send our children back to school, maybe we should take some time to teach them about spending plans. Generations will do its part – provide students with the best school savings plan around and continuing to stop by the schools on banking day to collect deposits.  And, I hope that we can someday provide regular classes about spending plans too.

 

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