Young savers can learn from their elders' mistakes

By Steve Rosen
The Kansas City Star

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For years, even though she knew better, Bessie Mays remained a spender, not a saver. She carried 11 credit cards, was deep in debt and even deeper in worry.

But two years ago, the 62-year-old mother of six, grandmother of 11 and great-grandmother of four paid off the last of her credit card debt — finally ridding herself of the financial stress that came with years of being behind on payments and living paycheck to paycheck.

"Not having any money saved is very stressful," said Mays, of Kansas City, Mo.

What changed her mind-set was the guidance she received through the Kansas City Saves program. Kansas City Saves is part of the nationwide America Saves organization that promotes saving money, credit repair and other free money management assistance programs.

Through March 1, the Kansas City group joined with similar organizations nationwide to hold events that highlighted the need to improve saving and spending habits during these tough economic times.

Disciples of the program, including Mays, were eager to engage and recruit more savers to the cause, especially families with children that need to develop sound money-handling habits. Their message: Despite the economic challenges of today and the often-dreary national savings rate, developing the savings habit can be a life-changing event.

It certainly was for Mays, who is candid about her experience with credit card debt and how it feels to have come so far back from the financial abyss.

The longtime hospital secretary joined the savings program about 15 years ago after an advertisement caught her eye. At the time, Mays was scared about how deeply in debt she'd fallen. She loved to shop. "It was a time when I needed to get out of debt and do something about the stress," she said.

Mays started attending free Kansas City Saves workshops and working with a counselor who helped her switch to lower-interest-rate credit cards and develop a repayment plan. Mays also set up an automatic payroll deposit of money into a "rainy day" savings account and started contributing to a 401(k) retirement account at work.

Most importantly, Mays learned to say no to the pressures of spending excessively on birthdays, at Christmas and for money-sponges like going out for lunch or dinner.

Over time, these small steps, along with support from her husband and family members, helped her trim debt, repair her damaged credit, shop smarter and build some financial stability into her life.

The end result? Mays was able to retire from her hospital job two years ago.

"I now have good credit," Mays said. "I feel like I have power ... I have leverage."

What can young savers learn from Mays' success? Plenty, it seems to me:

Shop smart. Don't go to the grocery store without a list, compare prices and avoid impulse buys. "Respect your money," Mays said.

Mays recommended that parents require their children, when it's age appropriate, to make a list of their needs before going shopping. "Put the responsibility on the child to be mindful," she said.

Create a budget. As Mays put it, how can you say you can't save if you don't know where your money is going? Track every penny spent, take advantage of free or inexpensive offers and tightly control your entertainment spending.

Pay yourself first. Once you stick to a budget, then it becomes easier to implement a savings and investment plan. Set up automatic payroll deposit, sock away any bonus or raise money and diversify your investments.

Hold the plastic. There's no rush for children to have their own credit card, especially if they can't track their debit-card purchases or balance their checkbook, Mays said.

Set goals. "Once a year, I write down my vision for saving money, and I put it with the bills so I can see it all the time," Mays said. "I'm planning to succeed, not fail."

Mays offers a final message. No matter the difficulties of living paycheck to paycheck, don't give up trying to save. Practice and patience can pay off. No one knows that lesson better than Mays.

E-mail Steve Rosen at srosen@kcstar.com.