Create a savings plan for a specific goalDate posted: 1/11/16 06:15:00 AM
Nevin Adams, the director of the American Savings Education Council, is encouraging Americans to create a savings plan for specific items - such as funds for a new house or retirement - rather than a general savings account that would cover a broad range of objectives.
Adams told USA Today that he regards a general savings account as the worst way to try to save money.
"Savings is about paying yourself, so the best way to do it is to make savings a priority," Adams said. "Instead of treating it as what's leftover after everything else, it's the thing you do first because if you don't have a goal, it's easier to cheat on."
But some Americans are finding it harder than others to save for retirement. A recent survey from Allianz revealed that single parents throughout the country are avoiding saving for their retirement in order to save for their children's education.
The report stated that nearly 50 percent of all single parents said their children's education was the primary motivation for developing a long-term financial plan. While Adams would be pleased that this is a specific savings goal, just 26 percent of modern families and 39 percent of traditional families took this same stance.
Jan Cullinane, author of AARP's "The Single Woman's Guide to Retirement," told ABC News that single parents that are sacrificing their own retirement for education plans for their children have it all wrong.
"If you need to make a choice between saving for retirement or paying college tuition, choose yourself," Cullinane said. "Helping your child with college expenses is admirable, but don't do it at the cost of your own future."
Cullinane said saving for retirement is a better option because a child can always go to community college for two years before transferring to a four-year university, which could save the parent bundles of money.
Retirement before education
Katie Libbe, vice president of consumer marketing and solution at Allianz Life, the author behind the study, agreed with Cullinane's assessment.
"We find that a little disturbing because there are grants, scholarships and student loans to pay for education," Libbe told USA Today. "You can't get a loan ... or a scholarship for retirement."
Libbe said single parents need to take the reins and get their own personal finances in order before stowing away cash for education.
"They're struggling as the sole decision maker in the family, and they're putting their own financial futures at risk," Libbe said.
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