Saving for a home, car, children, college or retirement

Americans are not saving enough for the future. Just this year, statistics showed that our savings rate hit historical lows. Not only are we spending more than we earn, our savings rates are at the lowest point since the Great Depression. And we are not alone: this reduced savings trend can also be seen in Australia, Canada, Japan and Italy.

Why is this happening? Some experts point to the availability of affordable credit and the relatively high number of people who have most of their money invested in their homes. Whatever the reason, it is clear that we should be saving more.

The first step is to set up a short term savings account with enough money to cover all your expenses for at least three months. This account will help you handle the day-to-day emergencies and expenses. Online high-yield savings accounts from companies like ING or HSBC currently offer savings rates around 4.5%.

Your next step is to think about your long term savings goals. CNN has a special website called "Thinking Long Term" dedicated to helping you plan for future home, automotive, children, college and retirement expenses. On this website you can use free interactive planning tools, share your story, read articles and access planning calculators. Credit.com also offers easy-to-use calculators to help you evaluate your savings, college planning, monthly spending, cost of raising children and need for disability insurance.

How do your savings measure up? Are you doing enough to prepare for retirement and other long term expenses? Share your feedback and opinion in the comments section below.

Comments

[Emma]

We devised our savings plans in January. Things were added in our budget to allow for specific saving.

First, we added vacation, vehicle and furniture categories in our budget. To be able to track our savings allotment for each of those, we opened an ING account with automatic withdrawals from our checking to the account. After the deposit, we separate the amounts into its' proper fund.

Second, I am expecting to start fulltime employment (currently I'm part-time) in the next month or so and will use the HSA money for braces (for me). Well be able to remove that from our allocation plan from last year. :)

Third, since my husband and I get paid bi-weekly, we are going to deposit our extra paychecks into an ESA for our daughter. We will do this every year.

Fourth, my husband has increased his 401k contributions to 15% of his salary. Once I qualify, I'll do the same.

Lastly, a needed component to any savings plan, is a debt-reduction plan. With my fulltime employment we have planned to use my entire income toward paying off Sallie Mae. That will take 2 years, maybe sooner with my other income from freelance work. Once all of that is out of the way, we are going to finish our emergency fund (3 to 6 months of living expenses).

[EmilyPeters]

Sounds like you have a great savings plan!