Saving money becomes lost art

By Jon Moffett

The recession causes consumers to save less and spend more.

Hank Belszek understands the importance of saving money. Having grown up in the Great Depression, the 82-year-old Youngstown resident remembers learning the value of money from an early age. Now retired, Belszek has seen economic hardship on multiple occasions.

Belszek recalled growing up in a two-bedroom house on Wayne Avenue on the South Side with his parents, sister, four aunts and an uncle. He and other kids in the neighborhood would receive a few cents for doing mundane chores such as packing boxes for businesses. And no matter how little the reward, Belszek was always grateful.

“A nickel was something for us kids,” Belszek said, remembering his youth. “We’d get a penny candy and be quite satisfied.”

Belszek’s daughter, Marie LaCivita, 55, of Liberty, said her father taught her how to appreciate things such as family, neighbors and hard work.

“They were satisfied with what they had,” she said. “Today, too many people want more than what they can actually afford, yet they go out and buy it anyway.”

The current recession has affected more than just what people spend. According to the Commerce Department, the savings rate in the United States is at its lowest point since the Great Depression.

“The extent of the problem can be gauged by the massive number of delinquencies and foreclosures that we are currently seeing in our country,” said Bob Steele, vice president of deposit services with Home Savings.

“The Mahoning Valley is no different, and in some ways may be worse,” he added. “The Valley has been fighting to gain more jobs and increase the average income over the past several years. It has been a struggle for many people to save during these times.”

Dr. Todd Porter, professor and economics department chair at Youngstown State University, said the struggling economy is forcing many people to make tough choices with their finances.

“Typically, people tend to save less in economic downturn because their income is going down,” he said.

According to the Bureau of Economic Analysis, an agency of the U.S. Department of Commerce, the average consumer put aside 3 percent from earnings in 2001. By January 2008, that savings figure had dropped to .10 percent, which means consumers only saved about 10 cents for every $100 earned.

“We definitely think if you’re an individual or a family that is economically secure and are saving adequately, you should absolutely be spending and stimulating the economy,” said Rose Garr, communications director for America Saves campaign, a subsidiary of the Consumer Federation of America, a non-profit organization created to help educate consumers.

“But if you’re in a low-to-moderate-income household ... we definitely encourage you to reassess your spending and find ways to save more.”

America Saves, a nationwide coalition of groups aiming to help individuals and families “save and build wealth,” urges consumers not to live beyond their means and control their spending. That, in turn, will improve saving habits. Eliminating, or, at best, limiting the use of credit cards is one way consumers can ease debt.

Garr said the reasons people aren’t saving as much vary.

“Our best guess of it is that in the 1980s, 1990s and even a few years ago, even though the savings rate was dropping, people’s net wealth was rising,” Garr said. “Folks felt like they were wealthier, their net worth was up, and they felt saving a part of their income wasn’t as important. Now, there are a lot of people who are reassessing what their net worth is.”

Net worth is the difference between a consumer’s assets and liabilities. Assets include the value of homes, vehicles and bank accounts. Liabilities include money owed on credit cards, loans or mortgages.

Porter said because the value of assets is decreasing, people are looking to cash as peace of mind.

“When you have a period where the value of assets is falling, the best strategy is to hold cash,” he said. “... Holding on to cash is a good thing because the purchasing power is going up.”

LaCivita and her father own and operate Youngstown Plant & Flower Inc. on Rayen Avenue. The 10,000-square-foot facility has undergone two expansions and has seen financial highs and lows. LaCivita said the business has been banking with Home Savings for about 50 years and said she appreciates being treated as a person, rather than an account number.

During time with the company, she has learned how to budget her funds and maintain a financially secure lifestyle, both personally and professionally.

“I always figure out how much my budget is per month; how much is coming in,” she said. “I must look at our books on a weekly basis, just to see how money flow is coming and going.”

Belszek said having enough money in the bank to account for unexpected expenses, such as illness or injury, is comforting.

“It’s a tremendous feeling,” he said. “It gives you the sense that you’re doing the right thing and in case there is an emergency, you’re prepared to be able to take care of things.”

Steele said ideally an individual should have “at least the dollar equivalent of three paychecks in savings” for emergency use, such as car problems or unexpected medical expenses.

LaCivita said one of the biggest problems is people have access to near limitless forms of spending, such as credit cards.

Neither LaCivita or Belszek pay a finance charge on a credit card since they only use a card if they have the necessary funds to pay the bill.

Garr said people should work to pay off debt, even if it means sacrificing a few amenities along the way.

For more information on saving and the program, visit www.americasaves.org.