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Are you a spender or saver? New program aims to alleviate savings crisis in America

Posted at 11:30 PM, Feb 02, 2017
and last updated 2017-02-03 05:53:33-05

If you were caught in an emergency -- a car crash, sudden illness or a fire -- would your savings account save you?

Or are you one of the millions of Americans that aren't not saving their disposable income? A study by the FDIC, the entity that insures your bank accounts, found almost half of Americans don't have $400 in savings.

A new program at a store near you is trying to light the fire you need to actually start setting aside your extra cash.

Do  you have enough money in savings in case of emergency? Simple question -- easy to answer.

WPTV's Alanna Quillen wrote that question on a whiteboard and stood outside Walmart on Belvedere Road in West Palm Beach, inviting customers to circle "yes" or "no."

Customer Joel Perez contemplated a moment and circled "no."

"I'm trying to save money now because I just got married in August," he said. "I never thought I would get married to an immigrant, so we're working on trying to get  my husbands papers right now."

We learned everyone has a different way of saving.

"I wasn't born with money, so it was a struggle for us. We learned to take a dollar, and save 50 cents of that. If you don't have  a bank account, put it under the rug. Pennies, dimes, quarters, nickels and put it aside. They laugh at me, but when it comes up, I saved me about $200 to $300," said West Palm Beach resident Dorothy Corley. "All people think about is spending and spending. They aren't thinking about the next day. They think everything comes out on a platter."

Why it's hard to save money varies, but the number one reason we heard was kids.

"If you don't plan ahead, so many things come up in life where you just spend spend spend," said Palm Beach Gardens resident Paulette Taylor, who said she saves her money. "Save save save as much as you can because you never know when you're going to need it."

Taylor didn't budget for a hike in childcare costs this school year. She had no choice but to tap into her savings.

"It's kind of hard for me to save money so I have it set up so that when I get  my direct deposit every check, I have a certain amount that goes into a  secret account... so that I don't look at it, I don't touch it, and it's just for emergencies only," she said.

"It's expensive..children are needful things," said Carol Pate, a Belle Glade resident who has saved money with her husband for decades. "You'd be surprised about all the extras you can do without...I know we were. Those designer clothes... That neat car."

"It's difficult, it's expensive nowadays -- especially when you've got a baby on the way and everything, but at least for us, we  try to see what we can put away," said young mom Karina Balestena.

Walmart has come up with an incentive for its customers to save.

"Everything is expensive today so who doesn't want to save money?" said customer Diana Racher.

The idea is simple: Save money to win money.

"I don't know if they have a plan within themselves to save money so we just created this program," said Jose Zebede, co-manager at the Walmart on Belvedere Road.

Walmart calls it the Prize Savings program. The idea is to get customers to save money in what the store calls a 'Savings Vault.'  That vault is the main attraction on the Walmart MoneyCard app.

Stash, as it's called on the app, or save any amount and users earn an entry into a monthly drawing. Participants can win cash prizes from $25 to $1,000 and they can enter up to 500 times each month.

"Makes you want to keep saving because every time you put money in you get entered to win more money, so it's like a little game," said Taylor.

"It forces you to save which is really good and it's also good to build a little nest for the future, so I think it's a good idea," said Perez.

Walmart believes if people have the chance to win money, they'll save more.

"Let's say during the holidays you want to buy your kids Christmas presents -- you have that little bit of extra money that you earned and you saved," said Zebede.

Walmart's Savings Vault comes at a time when there's a savings crisis in America. The company says they created the program in response to jarring statistics by the Federal Reserve Board of Governors, which says 90 percent of households have less than two percent of their disposable income saved.

Northwestern Mutual financial expert Bill McKernan believes Walmart's savings plan could be the beginning of a new trend.

"That statistic is kind of alarming because I would've thought that it would be a little bit better than that, but I think that for the most part it's adopting a philosophy to pay yourself first and then spend second," he said. "Whatever it gets you to do that, if it's the convenience of having the prizes and the Walmart card, I think that's great."

But experience tells McKernan that once people start saving, to keep saving comes down to discipline.

"Exercise, eating right, getting enough sleep, saving money kind of all go hand-in-hand it's just a matter of being disciplined enough to do that," he said. "Everyone knows the value of saving money, it's just where you kind of hold that on your priority list of things to do."

McKernan tries to teach people the 50-30-20 rule.

"You take your household income, the actual number that you're actually depositing into your bank account. You look at the total number in a given month, and 50 percent of it should be allocated towards fixed expenses, being your car payments, mortgage, rent, electricity or anything that's fixed," he said. "The 30 percent is just for you to spend or do anything you want with. And then the 20 percent is saved."

For shoppers, it comes down to organizing and prioritizing your financials.

"The economy and the way everything is headed, every single last penny counts," said Perez.

"Always put a little bit to the side and find out what your needs and wants are. Try to focus on the needs more than the wants," said Balestena.

The program is still in its early days. It kicked off in August and has been promoted more heavily since December.

But it's catching on. Walmart says since the program launched, usage of the MoneyCard Vault is up more than 130 percent. MoneyCard Vault users are, on average, saving 35 percent more.

Fifteen hundred customers have won cash prizes. When the program first started, the average customer savings balance was $413. By December, that figure is $572, a 35 percent increase.