Tips for increasing wealth and financial literacy
Yahoo Finance’s Alexis Christoforous and Meredith Ryan-Reid, SVP and Head of Financial Wellness and Engagement at MetLife, discuss financial literacy amid the pandemic.
Video Transcript
ALEXIS CHRISTOFOROUS: During National America Saves week, we learn that the personal savings rate in the US soared to 20.5% from 13.4%, thanks in large part to those stimulus checks. Joining me now for a final installment of America Saves week is another Funding Our Future partner, Meredith Ryan-Reid. She is Senior Vice President and Head of Financial Wellness and Engagement at MetLife.
Meredith, good to see you here. I know you brought along with you some ways families can work together to increase their savings. And you say the first thing they should do is create an emergency fund, which we know can be tough for folks when they look at what's left over at the end of the month, after they deal with their overhead. How do you propose they go about doing that?
MEREDITH RYAN-REID: Hi, Alexis. Thank you for having me, and thank you for focusing on this really important topic. I know it's not easy, and I know there's a lot of traditional advice and guidelines out there about what people should be saving in their emergency fund. Usually, it's about six months of your expenses, for example.
But one of the things that we've learned in partnership with some terrific nonprofits, including the Financial Health Network and Common Sense Lab, for example, is that one of the things that people can do is think about precommitting any sort of windfall they might be expecting, so whether that's a stimulus check or taxes. Every year-- we're almost upon it, right-- many Americans get tax refunds.
And we found that people who precommitted those funds toward a savings goal were much more successful at hitting their targets. So one of the things you can do is think about a goal, think about something you want to commit to in advance, so that you're prepared and you can take action to do it and you don't get caught up in, you know, the Monday through Friday, where it gets really hectic and it's hard-- it's harder to save.
ALEXIS CHRISTOFOROUS: And I like this one. You say cut corners even when you don't need to, right? Because we sort of forget that we go on autopilot sometimes. There are subscription services that we have that we don't necessarily need or even use. There are lower cost options for things in our lives that we don't take advantage of, right?
MEREDITH RYAN-REID: Completely. And, you know, I think of this in terms of, you know, successful diets and other wellness programs. The key is preparation and time. And I've found, just personally in this pandemic, my husband and I have focused on these things so much more because we actually had the time, and we were both in the same room together, more so than we had been in our lives prior to this, where we were all traveling and running around.
So I think one of the keys for people is to sort of set that plan and look for things that are small. All those little things add up. Subscriptions is a great example. There are actually some companies out there that will help you locate those subscriptions, cancel them for you. There are a lot of them hiding in your favorite-- you know, your iPhone or your Android.
Take a look at what's being charged. You might not even realize you have something in there. You're probably not using it. And all of those things really add up. They might look like little charges on a weekly or monthly basis, but they make a difference. And if you can put those towards savings, it's sort of a fun way to do it.
ALEXIS CHRISTOFOROUS: That's true. Yeah, you don't think fun and cost-cutting in the same sentence, but you're right.
MEREDITH RYAN-REID: No.
ALEXIS CHRISTOFOROUS: You can have some fun with it. Talk to me about how you can get the whole family involved though, even the kids so they feel like they're part of it. And perhaps, you know, you increase their education when it comes to financial literacy and money and saving.
MEREDITH RYAN-REID: Yeah. And I think this is terrific. I could give, you know, a little personal insight here, too. I have a seven and 10-year-old, and we've recently started doing this. The idea of chores and an allowance have been around forever, but now there's a ton of great apps you can use.
There's ways you can, you know, gamify it so that it's fun for them. And certainly, if you put a little bit of Roblox on the line-- I know that works with my kids-- you might see them get a lot more engaged. Not only will they do their chores, but they'll really start to understand the concepts of, you know, saving for a goal.
Right now, my one daughter is saving for my other daughter's birthday, which made us pretty happy. But you have to bring them in when they're younger and they're enthusiastic about it, and it's amazing what they understand.
Just the other day, my daughter counted all of the coins she had been saving up, because none of us, you know, want to use coins anymore, right? So we give them to the girls, and they have their little cash boxes.
We took them to, you know, the supermarket. And they used one of the coin-counting machines. And they played a game about how much they thought they had and how close they could get to the exact number. So there's always, I think, sort of a game to be played that is also really focused on education. And, you know, that's a good way to get the whole family involved.
ALEXIS CHRISTOFOROUS: We did something really similar-- those paper coin, like, envelopes that you bring to the bank. Hadn't seen them in forever.
MEREDITH RYAN-REID: Yeah.
ALEXIS CHRISTOFOROUS: We got--
MEREDITH RYAN-REID: I know.
ALEXIS CHRISTOFOROUS: --a bunch of them and put my daughter to work to fill them up, so great tips. Meredith Ryan-Reid of MetLife, thanks so much.
