People who feel a sense of control over life’s events are often happier, cope better and are more resilient in times of stress than others, according to LSU AgCenter family economist Dr. Jeanette Tucker. One of the best ways to take charge of your finances in today’s uncertain economy is to set a savings goal, Tucker says.

“Nobody wants to feel the stress of knowing that they are only a paycheck or two away from financial disaster because they lack money to fall back on,” Tucker says, noting that a consumer advocacy group, the Consumer Federation of America, found a strong relationship between having spending and saving plans and maintaining emergency funds.

“Saving provides a financial ‘backstop’ for life’s uncertainties and increases feelings of security and peace of mind,” Tucker says.

A study by the Northwestern Mutual insurance company found that savings is linked to increased happiness.

“Actually, what the study found was that people who are planners and do future-oriented things, such as setting goals and saving money to achieve those goals, feel happier and better about their lives than those who don’t make plans,” Tucker explains.

Planning, not wealth, was key for saving money, according to the family economist. Low-income individuals who made a spending plan with goals were far more likely to have saved money for emergencies than were those without a plan.

Economists and psychologists attribute findings like these to the sense of control that people have when they plan ahead and know what they need to do to get from where they are now to where they want to be.

Conversely, people are especially unhappy in situations where they perceive themselves to lack control.

“It is, therefore, no surprise that commuting ranks high on the list of things make people most unhappy,” Tucker says, explaining that commuters never know from day to day what traffic gridlock, accidents and weather-related hassles they’ll encounter.

Tucker encourages nonsavers to change their behavior and make savings a habit.

“Doing so will improve personal financial security and that of our country,” she says.

“So how do you get started as a saver or ramp up your current level of savings?” Tucker asks. She advises making “SMART” goals. Explaining the acronym, she says goals should be:

– S (specific): determine dollar amounts, dates and resources to be used.

– M (measurable): determine regular amounts to be set aside weekly or monthly.

– A (attainable): know the goal is doable within your financial situation.

– R (realistic): have the resources to achieve the goal.

– T (timebound): establish a specific timeline for accomplishing the goal.

It’s a whole lot easier to save for a SMART goal than to save for savings’ sake, according to Tucker. She offers an example: if you want to save $3,000 by next year, you’ll need to put aside $250 per month ($3,000 divided by 12) or $57.69 per week ($3,000 divided by 52).

Once you’ve established an adequate emergency fund, you can consider saving “seed money” for higher-yielding investments, such as stocks, bonds and mutual funds.

“Take charge of your finances today by establishing the savings habit. You’ll be glad you did,” Tucker says.

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Contact: Jeanette Tucker, at (225) 578-5398 or jtucker@agcenter.lsu.edu
Editor: Mark Claesgens, at (225) 578-2939 or mclaesgens@agcenter.lsu.edu