Posted by Mike Smith :: July 23, 2007 @ 7:11 am

It probably should not be a surprise that in a country with a federal deficit nearing 9 trillion dollars, the savings rate of the average citizen is also less than zero. While there are many reasons as to why the savings rate is so low, the result is that far too many people are not saving enough.

Savings comes in many forms and means much more than cash in the bank. Investments, retirement accounts, and accumulation of real assets are all additional ways to save. Savings are simply all of the means that people have to hold and preserve value and wealth.

A popular method to help people save is called “pay yourself first.” The idea is that if you consider savings to be one of your regular monthly expenses, then you're more likely to do it each month. Automatic savings plans that deduct money from your paycheck are just one example of this method.

Many people who feel unable to save are weighed down by high-interest credit card payments and other types of consumer debts. Even though the individual purchases that they have made were within their means at the time, cumulatively they become overwhelming. Adding on fees and interest can quickly make this problem unbearable. If the “pay yourself first” method of savings seems impossible in your situation, consider consolidating your high-interest credit cards with a person-to-person loan through Lending Club. The money that you save in interest can be the seed money for your new savings plan.

People struggling to pay their bills each month often have a hard time thinking about savings. They have enough to worry about just trying to keep up with their bills. By thinking about saving, you can break that thought cycle and begin your transition out of debt and into a much better financial situation.