February 22, 2010. Retrieved online: February 22, 2010 from Brook Stockberger, Las Cruces Sun-News
There’s no time like the present
LAS CRUCES — With the economy still wresting its way out from under the recession and with unemployment on the rise for the past year, people have decided it’s a good time to squirrel away some money.
In fact, the Bureau of Economic Analysis reports that the U.S. Savings Rate for 2009 was the highest it had been in more than a decade.
Do you want to want to saving? This week is a good time to take the plunge. Sunday saw the start of America Saves Week and there are a variety of tips available online at Web sites like americasaves.org and feedthepig.org.
Mary Fernandez, 43, recently moved to Las Cruces from California. She said part of her new life in southern New Mexico, she hopes, will include better control of her finances.
“I don’t have a whole lot of money to spare, but I like the feeling of having some set aside,” she said. “That’s easier said than done sometimes.”
She knows she’ll need to buy another car sooner rather than later, but when she pays her bills each month, there is not much left.
Vivian Moore, a Las Cruces accountant and financial planner, said you need to treat your savings as if it was another bill to be paid.
“The first thing every financial planner tells you is to pay yourself first,” she said. “Whether it’s in a company’s retirement or in a saving’s account, the first bill you pay is to yourself.”
“Once you pay yourself then you can pay your other bills,” she said…
Paradox of thrift
… But, ultimately, is all this saving a good thing for the economy? Some experts believe that better saving habits might delay economic recovery because, as people save more in a tough economy, they spend less.
Economists call it the “paradox of thrift.” What’s good for individuals — spending less, saving more — is bad for the economy when everyone does it.
Jim Peach, who teaches economics and international business at New Mexico State University, refers to it as “fallacy of composition.”
“Saving may be very good for me and you as individuals, but the fallacy of composition is: if everybody does it, then we’re not consuming and incomes may be lower,” Peach said.
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