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Advisers steer shift to savings
Robin Grier consults with client Annett Walden-Mason at her office on Pilgrim Mill Road on Tuesday. - photo by Autumn McBride

How to get started

The following are some tips for boosting savings:

Pay yourself first — Join a retirement plan at work that automatically deducts money from your paycheck. You can also have money automatically transferred from a checking account to a savings or investment accounts.

Create a spending plan — Unlike a strict budget, a spending plan is a guide to help take better control of finances by tracking where the money goes. In a spending plan, list expenses, compare them to income, and then make changes based on priorities.

Start small — Save loose change. Setting aside just 50 cents a day for one year can garner $500. In the long range, aim to have an emergency savings of six to nine months of living expenses.

Emergencies only — Use credit cards wisely so as to not take on too much debt, and to minimize interest charges.

Source: Community Bankers Association of Georgia

The days of big spending and high debt seem to be over, or at least on hiatus.

In recent years, with the economic downturn leading to job losses and pay cuts, it seems most people have become more focused on paying down debt and increasing their savings.

Rock Hunt, president of Community & Southern Bank in Cumming, said he’s seen a definite shift in people’s approach to debt and savings over the decades.

“Having been through several different economic cycles in the ’70s, ’80s, ’90s and now a new century, I’ve seen a population that was not adverse to carrying a lot of debt,” Hunt said. “It was used to leverage growth.

“But if you become too dependent on leverage from debt, you can end up being overloaded and that debt burden can affect you in a negative fashion.”

Hunt said today he’s an advocate of “de-leveraging.”

“Credit should not be used as a method to finance lifestyles,” he said.

Hunt advises customers to pay off credit cards quickly by allotting as much household income to them as possible since “credit card debt is typically the highest cost.”

Kim Wall of Georgia United Credit Union called the shift in thinking about where money goes “the new normal.”

“As the recession continues, we’re definitely working with our members more to help them adjust,” she said, noting there has been increased interest in finding new ways to save.

“Customers are making saving and budgeting priorities. While some lifestyle changes might not be permanent, we hope the fiscally responsible attitude is.”

Robin Grier of Grier Financial Services in Cumming hopes so too.

She said she also encourages her clients to pay off credit card debt quickly.

“Look at the interest rates you’re paying and see if you switch to a lower rate and consolidate [credit card debt],” Grier said.

Besides working on debt, Grier said another of top piece of advice is to “pay yourself first.”

“Before you get your paycheck, have a portion of it automatically deposited into savings,” she said.

Hunt agreed, adding that when saving, an account of at least six months worth of household income is best.

“After you reach that, you also want to think about retirement and college [for children],” he said.

Greir said having a plan in place for later life is important since “retirement doesn’t just happen.”

“Years ago people would go to work for a company their entire career and have a pension to live on after they retired,” she said. “But that’s not typically the case any more.

“Retirement takes a lot of years of getting ready since it can last up to 30 years.”

While retirement savings are important for everyone, Grier said how those are handled can vary greatly.

“It’s not a canned thing,” she said. “We as advisers have to look at what is right for every individual.”

Todd Burkhalter with Catalyst Wealth Management agreed that saving for retirement and everyday emergencies is essential, so much so he advises his clients to not lose sight of it even when paying down debt.

“Some financial advisers tell people to pay down all their debt first, whereas we might approach it a little different,” he said. “There still needs to be some level of savings while paying down the debt.”

Burkhalter said having a financial “cushion” is vital because life-altering events can happen at any time and when least expected.

“Our philosophy is to pay yourself first,” he said. “Don’t let paying off debt distract from doing that.

“As soon as you stop thinking about savings and don’t have a cushion, that’s when your car’s going to need new tires or something’s going to break.”

Burkhalter said he tells clients to set up a “wealth coordination account,” where at least 15 percent of one’s gross income goes every time they get paid.

“Often people just don’t save because they don’t know where to save, and then their money just goes away,” he said. “Setting up that account is the initial first step to building wealth.”

Besides saving, Burkhalter also tells his clients to “give and live.”

“Give to your church or charity of your choice. Save in your wealth coordination account, and then live on the rest,” he said.

The No. 1 piece of advice Burkhalter offers is just to do something, he said, noting that the biggest factor preventing people from increasing their savings and paying down debt is inaction.

“Just get started by doing something,” he said.

Wall, of the credit union, advised the same.

“Get started,” she said. “No matter how small you begin, don’t wait, just do it immediately.”