A March 18,, 2014, article authored by Nanci Hellmich and published in USA Today contains shocking statistics relating to savings and investments by U.S. workers and retirees.
The most shocking statistic indicates 36 percent of workers and 29 percent of retirees have less than $1,000 in savings and investments. Although this does not include the value of a primary residence or defined benefit plans such as a traditional pension, it leads to one significant conclusion: Too many Americans have forgotten how to save.
Growing up I recall how our government, as well as financial institutions, encouraged individuals from a young age to save.
Not a day went by when you did not see a television commercial that urged people to buy U.S. Savings Bonds. The catchy jingles sang the praises of how much your investment would grow and how in nine years and eight months you would be “sitting pretty” a $25 bond that cost $12.50. When you bought one you were given a certificate from the United States of America that said when payable it was worth twice what you paid.
Back then, you could buy a bond and get it that day at almost any financial institution. Then, in its undeniable wisdom, our government stopped the practice of distributing bonds immediately upon purchase and started to send them by mail. It took away the instant gratification of having your savings in hand. Now, it is even more difficult to buy a bond. You need to go online, open an account and give our government more information than is probably necessary.
I also remember how every financial institution would give away small savings books for children to put coins in and return, when full, to deposit their savings in a passbook account. These savings books let you put five dollars of dimes or nickels in them. They were fun to fill and instilled an understanding of saving money. They were little coins but added up to big dollars.
Our way of saving has changed, just as the way we pay our bills. But is it for the better?
Maybe it’s too late to teach some people how to save. That’s unfortunate. But, we must teach our youngest generation that saving money is important. I believe if you learn that lesson early you will carry it through your entire life. We have to bring back some of the old techniques.
And who better to recreate the wheel than credit unions?
Offer passbook accounts to your members and encourage parents to open one for each child.
If a child is in the credit union, give him or her a small piggy bank and savings book to put coins in. Go to schools and pass them out to children, encouraging them to come in with their parents and offer to put that first $10 into their passbook account.
Many credit unions have contests throughout the year for children. Make the prize a savings account with an initial deposit.
Will all this work? Will future generations save and invest more? I’m not certain, but we need to do better in providing them education on savings and the opportunity to save at a young age. What better way to start than with something that has worked before?