Savers and spenders march towards the financial mountain – Personal finance tips


Despite all the hoop-la and exuberance about the impending economic recovery, majority of the Americans still enjoy spending money more than saving. In fact, according to recent reports, the 2014 saving spending gap is one of the widest since the experts have been tracking the preferences of Americans in 2001. When you think about money, which comes in your mind first? Saving or spending?

As per a survey, here’s what the savers and spenders have to say.

  • 44% savers say they pay off their credit card balance in full each month but 32% spenders say the same.
  • When asked who carries a small balance one or two months per year, the rate was both 19% for the savers and spenders.
  • 22% savers and 28% spenders said they carry over their credit card balance almost every month and this has become their habit.
  • 14% savers and 20% spenders say they don’t have credit cards at all.

The above mentioned statistics presents answers by parents and adults on how they best described how they usually approach their credit card balances in the United States of America in 2014, split by self-identified spenders and savers.
How to decide whether to pay off debt or save money?
Are you in an enviable position where you have some extra cash in your savings account and some amount of debt? Are you asking yourself ‘Should I use the money to pay off debt or should I save?” Here’s a simple guide.

  1. Do you have an emergency savings account: Even if we have high interest credit card debt, we need an emergency account at our disposal and this is because emergencies can happen any time. We can’t count on our credit cards and loan sources to be with us when we need them. If one can fund emergencies through their own savings, this can also avoid the danger of building up more debt. So, even when money is pretty tight and you’re putting aside some money for a rainy day fund, paying off debt is often more important than saving.
  2. How much is your debt costing you: Majority of the people don’t make this simple calculation but you need to know how much your debt is costing you. Make a list of all your loans, mortgage loan student loan, credit card debt and auto loans and write down the interest rate beside each loan. Multiply the two digits and this is how much each loan is costing you per year. Also take steps to combine your debts through debt consolidation companies and reduce your burden of outrageously high interest rates.
  3. How much can your savings earn you: If you do end up saving money, where would you put it? Would you put it in a bank that earns you 1% return or less? Or would you put it in a money market fund that might pay you more? Well, in the present market conditions, it is tough to earn even 1% without taking risk and hence you should go for the low rate savings account.
  4. What are your financial goals: In case you have big plans that need a lot of cash, like starting off with a business, travelling around the world or buying a house, you would probably want to cushion your savings account. Of course, paying off debt can be helpful as this can help you move towards new financial adventures but you still need enough cash to make this big goals happen.

Hence, if you don’t want to be counted among the indebted people of America, take the required steps to stay on top of your finances. Be a saver unless it’s too necessary to spend money. Measure and weigh your decisions when it comes to saving money or paying off debt.


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