when I see a report like this, I always wonder does the government really want us to save. americans' buying in the last 15 to 20 years has funded tremendous economic growth in this country. also, when you think about our parents and grandparents, there is so much more out there that we feel we cannot live without. cell phones, computers, two cars.
Why are American's savings rate so low?...Because who the heck put money in savings accounts anymore? Americans stash away hugh amounts of money in mortgages and retirement accounts which this article correctly points to the Nest-Egg index. The savings rate argument is bogus/misleading. Let the French and Germans get their 1 percent interest in savings accounts.
I read a little article in a Sierra Club magazine last night (can't find a link - but I did not try all that hard) about a guy in California who got a group of people to join him in a pledge to buy nothing for a whole year. No used stuff either - only the essentials like food and drink. It was interesting because he had an equal number of people who emailed him in anger as in admiration. In reference to your above comment, apparently many Americans think it is "patriotic" to purchase stuff at an enormous rate and were quite unhappy with the goals of the aforementioned group. The guy interviewed thought it went well, although it was quite challenging. Just a weird anecdotal story.
I have teacher retirement for myself, but am buying a $50.00 patriot bond for my son every month. I was tol they would mature(double) in 10 years, so when he is 8, I will stop buying those and maybe look into some long CD's. Nothing agggressive. Just a steady source of interest.
Exactly. If you're spending your money on booze, partying, vacations every few months, and luxuries, then yeah it's easy to see why you're broke. Of course there are those that just don't make enough to save as well. Everybody's in a different situation. The other aspect of saving that works is : start early. The whole "family, kids, etc." thing about not being able to save is a cop-out. Like no "families" are wealthy. I work with people making $50-$60k/year and whose husbands/wives make somewhere around the same amount who talk about living paycheck to paycheck and wait for their next check to be deposited. Give me a break.
From everything I've read, your opportunity to save more may go up, but you rarely do. In other words, as your income rises, so does your spending. You used to buy a Toyota Camry, but now you get the Lexus, for example. Or at least that's the general trend. I saw this happen during the economic "boom/bust" cycle of the 90's and early 00's.
One person earlier said he saves 60%? You have to be making at least 100k combined to do that, which only 15% of the US house holds are in that bracket. Yes, money management is important, but definately the more you make the easier it is to save. I bet I can save a lot more if I make 50k more per year. (oh we currently save about 25-30%)
I don't know that you have to make $100K to save 60%. When I was living off savings and rental property income because I didn't feel like working, I lived on less than $24K per year for several years. Admittedly, I was single, but adding a second person probably wouldn't have doubled my costs (some of the big costs were pretty well fixed. Two people could've lived in my apartment for the same rent. Utilities would've been roughly the same. Even adding a second car payment wouldn't have necessarily put us over the brink). Now, the difference between, I guess $80K and $100K really isn't that big, I suppose, so I'm not entirely sure what my point was. I do think it is easy to expand one's spending when one's income increases. When I was married the first time (at age 18), we started out making roughly $20K combined and got by. We didn't have any credit, and the one car we had was paid for (a gift from my father). By the time we divorced almost five years later, we had more than doubled our income and were having trouble paying all the bills. We hadn't added any family members or anything during that time, but we found a way to not only spend the extra amount we were making, but had run up credit card debt and had two car loans and lived in a bigger, more expensive apartment. It ended up being a mess. A mess I blame on my ex-wife because she's not here to defend herself. But I think that happens to a lot of people.
This is a very interesting topic and I have no idea what stance I take thus far. Im fairly young, still in school, and just now starting to find a way to work my way up. I calculated that if I worked full time with my salary right now I'd be in the 35-40k range, which isn't bad for someone's who's degree is in progress. I always thought that whatever money I'd make, I'd spend, regardless. I would lease a nice car (I mean why not? It's only about 5-7k each year), I'd live in a nice upscale apartment (800 rent - I'd probably find a roommate which will then drop it down to about 650), utilities won't add up to more than 550 a month, and then from there I just live the life. I mean what else is there to say. More importantly, what else is there to do with the extra money? Of course I would have a decent savings account just in case anything was to go wrong. I might be missing something very important, but I think its really easy these days to live a high class lifestyle. Of course the key is to remain single as long as possible. If all goes as plan, I'm only spending 22-27k a year. Thats including everything. Even if you give or take 3 grand, I'm still saving roughly 10 grand a year. And yes, I recently purchased a 61'' HDTV! I had no idea what else to spend my money on!
lol. Also assume you'll live 20+ years past your working years. Multiply that by around $15-$25k and that's how much money you'll be spending while possibly not earning much of a salary. And don't forget car insurance, health issues, the cost of gas for your pimpmobile, etc. Oh, and I had to chuckle at $800/month rent equating to "upscale". I lived in a middle-class apartment complex in Irving, Tx. a couple of years ago and paid more than that for an 800 sq. ft. apartment. Also, I'd ask someone to shoot me if I drove a car that costs $500-$600 month and I lived in a home that's $800/month. Something ain't right about that.
My wife and I have been saving quite a bit of her paycheck... putting it into fund matching 401k, IRA, and some limited exposure stocks... one mutual fund for the long haul... We are about to have both cars paid off (2004 Aveo & 2006 F-150), and pay off our 20% house note (we bought no down on a 80/20 2-loan split)... and all other bills will be paid (furniture for new house, home depot acct, etc.) Basically in '07 we will only have our house note and insurance, with utilities and gas/food/clothing expenses. And we will be adding more to the savings plans, as well as more to the kids' 529 accounts. We sometimes intentionally act like we have no money to "go out" with friends, just to make sure and not touch our savings, etc. Last I heard, that was called disciplining yourself to a budget. But trust me, (now married 10+ years) there was a time early in our marraige that we lived way above our means. Glad we noticed.
I just throw most of my money I earn (80%?) into my ING account. I live in the city so I use public transportation and I get by fine
My dad's last W-2 had him at about $175,000. We live in a fixed up house in a not so nice neighborhood. He spends about $950/mo on mortgage. He has a 05 Yukon XL and a 06 Ford F-350 Super Duty. My mom doesn't work, but gets about $2000/mo "allowance", which she basically blows on shopping...then keeps on spending. It's riduculous to me that they claim to not have enough money to put me through college, let alone to put in a savings account. Don't ask me where the rest of that money goes.
