Orange on Green: Save Yourself PDF Print E-mail
Written by Tom and Brad Cunningham   
Thursday, 20 May 2010 05:52

Orange on Green: Save Yourself
Don't miss out on the newest summer financial trend — saving. Learn how to become financially hip by transforming your cash flow philosophy.

The U.S. Household Savings Rates is on the move. Since 2005, when the country's savings rate hit negative for the first time since 1933, Americans have increased their savings rate to four percent. While this rate still has some room to improve, we're moving in the right direction.


What can be done to increase this rate?


Before we get to the steps, let us first provide a comparison. Members of our Orangefinancial community save an average of 16 percent of their household income. With that average four times more than the country's average, the difference is compelling.


We have found that the key to such variance all lies in cash flow philosophy. Many Americans today have prioritized their cash flow in the following order:


1. Income is generated.

2. Spending occurs (often not budgeted).

3. Debt is incurred as a result of non-budgeted spending. (The debt generally is tied to high interest repayments as emphasis is placed on directing cash flow to debt-reduction.)

4. Savings is allocated (hence the reason for four percent — it's not high enough on the list of priorities).

5. Protection is put in place. However, adequate protection is less likely a result of inadequate cash flow.


As we have taught members of Orange, adjusting this cash flow order is the reason for such a dramatic increase in savings:


1. Income is generated.

2. Protection is put in place. (Protection first reduces the chances of adding to debt when the unexpected occurs.)

3. Savings is allocated (with a target savings rate of 20 percent of household income).

4. Debt that is outstanding is reduced.

5. Spending occurs. (Because this is last on the priority list, budgeting is automatic because you only spend what you have left.)


You must adopt the concept wholeheartedly. Everyone in the household should be on the same page. You must live the philosophy of a saver every day. Below are a few ideas to help with fine-tuning your cash flow:


  • If you have outstanding debt and have not already, set up a debt reduction plan to eliminate it.
  • Analyze your protection components, and make sure you are bullet-proof.
  • Start saving today.
  • Make sure your spending comes last. If you don't have the money, don't spend it.
  • Analyze your expenses. Identify the difference between needs and wants. Be watchful because the marketing machine is powerful and will make you believe certain products are needs when, in actuality, they are wants.


Remember to be patient as this transition does not occur overnight. With a little perseverance, in conjunction with good habits, you will start to see your savings trend increase.


(1)Commerce Department of the United States - January, 2006.

(2) OECD (Organization of Economic Co-operation and Development) - Annex Table - 23 - Household Savings Rates by Country.

(3) Orange Average Savings Rate tracked daily for community – May, 2010.

Tom And Brad Cunningham -

Tom and Brad Cunningham are Cincy Chic's financial columnists, and they are the co-founders of Orangefinancial. If you want to share your comments or inquire for more information, e-mail them at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and This e-mail address is being protected from spambots. You need JavaScript enabled to view it .


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