Saving is the "new spending."
People are eating out less often, collecting their change or holding off on buying a new car.
Savings have not been as much of a priority for most Americans in recent years, according to Steve Ayers, educator for the Champaign County unit of the University of Illinois Extension.
But the economy in the past couple of years has everyone more aware of the need to take control of personal finances, he said. Rather than spending more than they have coming in, households are trying to figure out how to save.
So, why should you save? And how do you do it?
One reason, as the recent economy has shown, is that a "rainy day" or "emergency" fund can help you get through unexpected emergencies, including layoffs, illness or injury. The ideal is to avoid adding to debt through a loan, particularly a high-interest loan, Ayers said.
Other reasons for savings vary according to the individual: one person may want to save for college, another for retirement.
Ayers and other experts say tracking expenses, setting a budget and having savings goals are important for people at all income levels. The keys are to understand your income and spending and set aside some money for savings, he said.
Saving is a conscious decision for one's long-term living and security, he said.
"It is difficult with our 'immediate gratification' mind-set," Ayers said.
So one strategy might be to "pay yourself first" through payroll deduction or start small with as little as $5 per week, he said.
"Another small step is to save your change daily and it is amazing how fast that can add up," Ayers said.
The economy in the last couple of years has made everyone more aware of the need to take control of personal finances, Ayers said. Champaign County organizations are participating in a national campaign called America Saves, which is designed to encourage people to "travel down the savings path."
"Taking control of your finances ought to be the No. 1 New Year's resolution," Ayers said. "The whole thing is living within your means."
Ayers said the first step in setting up a savings plan is to know where the money goes: Analyze how money is being spent. Comparing income and actual expenses makes developing a personal or household budget more meaningful, he said.
"Getting in the habit (of saving) is as important as deciding how much to save," Ayers said. "Pay yourself first."
Kathy Sweedler, consumer and family economics educator with the UI Extension program, said saving even $20 a week means more than $1,000 a year.
"I believe that practicing saving money makes us better savers," Sweedler said. "Once we get in the habit of saving money, then I think it's likely that people will continue to save."
She said one strategy is to have household members track their spending. That's even the $1-a-day coffee purchase on the way to work, which adds up to more than $300 per year.
Having a goal is important to saving, and writing goals down is also important, Sweedler said.
"If you know what your goal is, it's easier to save," she said. "Budgeting becomes an accomplishment tool rather than a punishment."
Brian DeLaney, CEO for Consumer Credit Nationwide, with offices in Davenport, Iowa, and Champaign, said, "The most significant thing is to have a budget and build savings into that budget."
Sometimes that means figuring out where your money is going now. Some things you're spending on now may better go into savings. Prioritize and make sure some goes into savings.
He said for most people there are generally two types of savings: a "rainy day fund" and retirement fund. The rainy day or emergency fund should be five to six months' income, to be used just in case you lose your job or get sick or injured.
DeLaney said most people can't put that much aside right away.
"I tell people to first set aside one month and then two months, and so on," he said.
Delaney said that savings for a "rainy day fund" should be simple and accessible, like a credit union account.
Once people get a month or two of savings accumulated, they can think about putting some into a certificate of deposit, he said. For a larger savings goal, such as a retirement fund, people should talk to a professional financial adviser, Delaney said.
Land of Lincoln, which is primarily known for providing legal services, also provides financial and debt management training for low-income households.
Valerie McWilliams. managing attorney at Land of Lincoln Legal Assistance Foundation for over 25 years, said the agency has a foreclosure prevention program and also does financial education and credit counseling.
Among her savings tips are to set up automatic debits from your paycheck or checking account into a savings account and making sure that you don't take that money back out every month.
People qualifying for an earned income tax credit should consider using that money strategically to reduce debt and put some money aside for a "rainy day" account, McWilliams said.
People need to educate themselves before making big spending choices – like cars, houses, insurance and retirement accounts.
"And not just from someone trying to sell you something," she said. "Seek out help from someone good with money to help you look objectively at your income and expenses."
McWilliams also said, "Never, never, never get a payday loan or title loan."
Matt Reese, program manager for the Partnership Accounts for Individual Development at Land of Lincoln, said the program offers matched savings up to $2,000 for low-income participants.
The office will also provide general budget counseling for anyone, he said.
"The most important thing is to start saving now; start saving right away," Reese said.
Reese said most financial advisers he has talked to stress the need for an emergency savings fund.
That can generally be three-months worth of take-home pay, he said. That's the average amount of time most people who are laid off are out of work.
Ideally, Reese said, the saver's emergency fund is separate from his goal savings fund.
Reese said it's important for everyone to regularly assess his finances and make any necessary adjustments in spending or savings.
Other agencies that will offer counseling include Central Illinois Debt Management and Consumer Credit.