Utahns need to save

Let's cut to the chase: America's personal savings rate is abysmal. The nation's savings rate was negative 1 percent in 2006 — the worst showing in 73 years, according to the Commerce Department.

It means people are spending beyond their means, borrowing to finance their spending or dipping into savings, if it exists. Because the United States is so consumer driven, little thought is given to consequences of a "buy now, pay later" approach to personal finance. Eventually, the bills come due. With any luck, the next paycheck will cover that additional expense. But couple that debt with job loss or an injury at work and many households can quickly spiral into bankruptcy.

It's somewhat doubtful that the trend can be reversed. Today's youths have grown up in an instant-gratification world. They have more money to spend than any other generation, largely because their parents give it to them. New research has determined that (when adjusted for inflation) today's parents spend 500 percent more money on their children than just one generation ago.

Why save? It's a path to financial independence. Responsible financial management provides a cushion for emergencies and enables people to achieve certain goals such as buying a home or sending a child to college. It's constructive.

Out-of-control spending, on the other hand, is a road to ruin.

Although it's apparently out of vogue, there are a number of campaigns nationwide encouraging Americans to save. The Utah Saves program, which is supported by a group of private- and public-sector partners, provides free educational materials, a session with a "wealth coach" and other support programs to encourage Utahns to save. Some 1,000 people had enrolled in the program (www.utahsaves.org) by January 2006. Collectively, they saved about $450,000, with the average participant putting away about $140 a month.

No one is suggesting that saving money is easy. It's like any other life change that requires discipline. But the payoff can be substantial when one achieves sufficient financial security that one unplanned event, such as a major car repair, doesn't turn the household on its head, financially speaking.