(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
JS-1450
It’s great to be here at the VitoMarcantonioSchool to talk about something that so important for all Americans, and that’s learning how to save.
Benjamin Franklin, a wise man who played an important role in the founding of our nation, famously said that “A penny saved is a penny earned.”
Of course, a penny was worth a lot more in his day, so today we’ll say that “a dollar saved is a dollar earned.”
It sounds clever… but what exactly did he mean by that?
Think about it this way: if you have a dollar – from your allowance, or a birthday or for doing chores at home – and you spend it on candy or gum, you don’t have that dollar anymore. It was only yours for a short time. If you save it and don’t spend it, the dollar is yours for as long as you keep it, so you’ve earned a dollar that you wouldn’t have had otherwise.
If Benjamin Franklin was right – and I think he was – then each of you here today can start to earn money even before get your first job. And the money you save today will grow and grow throughout your life – now that’s pretty exciting.
There’s another expression about money that you might have heard. Have you heard your parents or maybe a big brother or sister say that some money is “burning a hole in their pocket”? They feel as though the money wants to get out of their pocket, it wants to be spent, it can’t be spent quickly enough. I understand that feeling and have learned that it’s best to put that burning money into the bank, and fast. That way it can’t burn me! If I spend it too quickly, I feel bad because it’s gone. In the bank the money is safe and it cools down.
And by the time it cools down you might realize that you don’t really need to buy the thing that you wanted so badly just a few weeks before.
The tough thing is, some people are born savers and some are not. Like with anything else, if we aren’t naturally good at it, we’ll have to try harder to get it right. Some people can spell a hard word but struggle to remember a friend’s phone number. Some people can hit a baseball every time it’s pitched, but can’t catch it consistently. Others have neat handwriting, but messy rooms. We’re all different; we all have different strengths.
We don’t have to work as hard on our natural strengths… it’s our weaknesses that take extra time and energy. And most of us need to use extra thought and energy on saving.
If you put your birthday money from your Aunt or Grandfather into a shoebox and hide it under the bed, you’re probably a natural saver. You’ve never felt money burning a hole in your pocket.
But if you dream about how to spend that money, if it’s burning a hole in your pocket, and then you spend it quick as you can… you’re probably someone who is going to have to work very hard at being a saver.
It doesn’t make you a bad person, it just means that’s not your strength.
But there is good news, even if you aren’t a natural saver: like with everything else, practice does make perfect, and the more you save, the better at it you’ll become, and the greater the rewards will be.
Unless you are the shoebox-under-the-bed type, it takes discipline to put money in the bank instead using it to buy something that you really want, but it’s worth it. Because if you put your money in a savings account in a bank, the bank will actually pay you for letting it hold on to your money. Now that’s a dollar earned – literally!
The money the bank pays you is called “interest” and over time it can really add up.
Knowing how hard it can be to save, to put that money in a safe place where it can be earned instead of spent, President Bush has done some things to make it easier for Americans to save.
He’s made it easier for people to save money for their health-care expenses with something called Health Savings Accounts (HSAs). And he wants to make it easier to save for retirement with something called Retirement Savings Accounts (RSAs). He’s asked Congress to that, and to make it easier to save for life’s unexpected expenses with Lifetime Savings Accounts (LSAs). In each case, the President is working with Congress to change the tax laws, so money can be saved before the government taxes it – it’s something you’ll understand better when you’re older, but the bottom line is that you’re able to save more money while sacrificing less.
The President understands that when we have a tough job, it helps to have an incentive to do it. That’s how he makes policy decisions about saving. He wants Americans to have an incentive to save; he wants it to be as easy as possible. Because he knows the rewards are great.
If you start saving now, and continue to save well throughout your life, you’ll always be more independent. You can buy your own car and your own house. You’ll be able to look forward to a day when the dollars you saved and earned are enough that you don’t have to worry about money.
A lot of your saving decisions will come down to figuring out what you really need to spend your money on versus what you want to spend it on. Our friend from Citigroup is going to talk a little more about needs and wants and give some advice on how to plan to save.
I’m so glad to have had a chance to talk to you today about saving – I promise that you’ll never regret becoming a saver.