SAVING FOR A RAINY DAY

At the start of the holiday shopping season, people may seem more interested in spending than saving. But experts say the best thing you can give yourself is a plan to save money.

"We've become a nation of borrowers and not savers," said Joe Bradshaw, who teaches consumer education at Cape Girardeau Central High School.

According to the U.S. Department of Commerce, in 1981 personal income for Americans was $2.56 billion. Of that $2.2 billion was disposable income. That same year, personal savings, as a percent of disposable income, was 9.1 percent, a 35-year high.

In 1995, that percentage of money in savings had slipped to 4.7 percent while disposable income had more than doubled to $5.3 billion.

People are making more and spending more.

"There are a lot of different reasons why education takes place," Bradshaw said. "But one thing we want to teach these young adults is to be responsible citizens, and planning for their financial future is part of that responsibility."

It's a lesson some adults may need as well.

Saving can take place in any number of ways, from a piggy bank in a child's bedroom to elaborate stock portfolios.

The key is to start.

"Consider it a bill you pay every week or every month, a $20 bill at the bank that goes to your savings," said Tina Ballance, director of marketing at South East Missouri Bank.

Bob Etherton, with Edward Jones, agreed. "You should always pay yourself first." he said. "A good average figure for that is similar to a church tithe, 10 percent to the church and 10 percent to yourself. You can learn to live on 80 percent of what you make.

"If you spend everything, it may be fun, but you don't have a sense of accomplishment," he said. "If you pay yourself, you'll have a sense of appreciation for working."

In addition, a plan for the financial future is helpful. Individuals may look for ways to save for emergencies, for long-term financial goals and for retirement.

The rule of thumb is to have about three months salary saved up in case some emergency arises.

"You might have a medical condition, an accident, or lose your job," Ballance said. "These things are going to happen without any warning.

"We see the downfall of not saving," she said. "People are not able to make loan payments and it can be very serious."

Payroll reduction and direct deposit of money into savings accounts has proven successful for many people, said Michelle Lappe, new accounts supervisor at the bank.

Money goes directly to the bank, lessening the temptation to spend it.

Banks offer lots of ways to save money ranging from Christmas Clubs and savings accounts to Certificates of Deposits and other investments. Customers can shop around and ask for advice about what services best meet their needs.

Parents who would like to start their children on the habit of saving may find minimum balances waived for children.

In addition to emergencies, saving is important to finance things like children's college education or retirement.

For a long-term savings plan, individuals might consider a good quality mutual fund, said Etherton.

"With this type of investment you are going to far surpass the normal savings account."

On the other hand, money invested in mutual funds, which are groups of stocks, will be subject to fluctuations in the stock market.

The quality of the fund is important to research before investing. Returns can average 10 to 15 percent returns or more.

For individuals who have retirement accounts at work, Etherton said these too are great ways to save for the future. Or people may open their own retirement accounts.

Retirement accounts have restrictions on when and how money can be withdrawn. Those restrictions are in place to encourage saving.

"People have to set their own structure and their own discipline," Etherton said. "But after a year or two of savings, the rewards really start to happen. You will see your money earning money."