Being Smart about Saving

It appears that the age of indulgence is over. This most recent economic downturn seems to have made a lasting impression on people – and their spending habits. Cutting coupons, joining warehouse clubs, and even checking thrift and consignment shops before making a purchase are just a few of the ways that people are trying to save money. But when it comes to health and retirement, you should be careful about being penny wise and pound foolish.

Protect Your Good Health

Findings from The Hartford’s 2009 Benefit Landscape study indicate that people are making potentially risky judgment calls in order to save money, including postponing doctor visits and deciding against elective surgery. In fact, 21 percent postponed elective (non-essential/non-critical) surgery, 18 percent admitted to putting off a trip to the doctor’s office, and 11 percent chose not to fill certain prescriptions.

While elective surgeries are “elective” for a reason, and some prescription drugs treat symptoms, not the malady itself – making these decisions on your own is a bit like playing healthcare roulette. That’s why the most troubling finding is that 18 percent of people decided not to go to the doctor, as a way to save money. When broken down by generation, we saw 23 percent of Baby Boomers (born between 1946 and 1964), 19 percent of Gen X (born between 1965 and 1979), and 18 percent of Gen Y (born between 1980 and 1991) skipping doctor visits.

Your annual physical is one of the most important things you can do to remain in good health. And it can relieve stress by providing you with some peace of mind as well. What’s more, if you are thinking about skipping an elective surgery or not filling that prescription – discussing this decision with your primary care physician is crucial.

Don’t Forget About Your Future

In addition to findings regarding selective healthcare, The Hartford’s 2009 Benefit Landscape study also found that many people have stopped making contributions to their retirement plans. In fact, nearly one third (32 percent) of respondents reported that they have stopped making contributions.

When broken down by generation, we saw 35 percent of Gen X (born between 1965 and 1979), 33 percent of Baby Boomers (born between 1946 and 1964), and 28 percent of Gen Y (born between 1980 and 1991) stopping their contributions.

While foregoing contributions to a retirement plan may be the only answer in certain cases, it shouldn’t be an easy decision. For example, if it can help you avoid taking on additional debt over a finite period of time, it may be the right decision.

However, you shouldn’t see it as an easy fix to increase cash flow for incidentals. And you should speak with your benefits administrator to understand whether you can simply lower you contribution – and, if you do decide to stop, how easy it is to re-enroll. What’s more, you should also understand what the true impact to your take home pay will be before you make your decision. Because retirement contributions come out of your pay on a pre-tax basis, you won’t see a dollar-for-dollar increase in your net paycheck.

Small Changes that Make a Difference

There’s a site by Trent Hamm called The Simple Dollar, and it’s worth a visit. Here are a few ideas from his list of “100 Great Tips for Saving Money.”

• Sign up for every free customer rewards program you can
• Make your own gifts instead of buying stuff from the store
• Write a list before you go shopping – and stick to it
• Invite friends over instead of going out
• Drink more water
• Give up expensive habits, like cigarettes and alcohol
• Be diligent about turning off lights before you leave
• Go for reliability and fuel efficiency when buying a car
• Air up your tires
• Start a garden
• Carpool
• Do some basic home and auto maintenance on a regular schedule
• Don’t speed
• Read more
• Use a brutally effective coupon strategy

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.

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