One of the lost arts of our society is the art of saving money. The United States has one of the lowest saving rates in the industrial world. According to the US Department of Commerce (Bureau of Economic Analysis) the U.S. savings rate is 2.7% as of March 2010. Our culture teaches us from children the value of consumerism and immediate gravitation. Our major news outlets report when consumer spending increases as if it were something to be celebrated. It is in America’s best interest to promote consumer spending due to the fact consumer spending accounts for over two thirds of economic activity.
According to Nielsen, last year advertisers spent $117 billion on marketing all with the intent of having consumers purchase products and services. Our spending is so out of control that according to creditcard.com the average United States household has $15,788 in credit card debt. According to the Federal Reserve, the total U.S. consumer debt is $2.45 trillion (as of March 2010). When you mix high debt burdens, declining wages, and little to no savings you create a disaster waiting to happen. Many people are going through the disaster right now. Many baby boomers have realized they have not saved enough for retirement. A poll conducted May 6, released by the Volunteers of America study on Caregiving and Aging surveyed 1,200 adults, male and female, and found that two-thirds of boomers said they have not prepared adequately for the future.
Baby boomers are also being forced out of the work place or to take jobs that pay a very low wage. An article from AARP.com, Forced to Retire by Carole Fleck states “The persistently weak labor market has kept them unemployed. The average duration of joblessness for workers age 55 and up, expanded from 20 weeks to 36 weeks between December 2007 and February 2010, according to AARP’s Public Policy Institute (PPI). Consequently, it’s no wonder that the number of “discouraged workers”—those who gave up looking for jobs—is increasing. Among older workers, the numbers rose from 53,000 to 287,000 in the same period.”
The baby bombers are a futuristic look of what will happen to younger individuals if they don’t save money. As a culture we need to promote the idea of saving money and living below your means. Not saving is just as dangerous as not wearing a seatbelt while driving. Not saving can cause financial death and can lead to insecurities that can cause stress and severe health problems. All it takes is one unforeseen financial disaster like a medical expense or unemployment to realize that saving money is protection.
Having money saved provides you with a sense of protection for unforeseen situations. Money saved also allows you to cut borrowing expenses by borrowing from yourself instead of a credit card. Saving provides you with a sense of financial purpose and achievement. As well as allowing you to see a direct link to working and building wealth.
By saving your money you literally look at the fruits of your labor. Saving also allows you to take advantage of investment opportunities that present themselves. Saving is one important thing you can do for yourself.
One of the reasons saving and building wealth is difficult for some is because it is a new paradigm. Therefore one should consider finding like minded individuals and create a support group encouraging saving and wealth building. Now more than ever is the best time to bring savings back and build wealth for generations to come.
Article by Nars Dargenson
Nars Dargenson is a financial consultant and the webmaster of narsbusiness.com. His website, Narsbusiness.com, is a site created for the purpose of encouraging wealth building and entrepreneurship.
Nars has written 33 article(s) for us.
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You know…I really enjoy these financial literacy postings…
I try to save and when it seems I have put a little bit away something comes along and sucks it all up.
Peace, Love and Chocolate
Tiffany