Why are people not saving money?

Question

The U.S. savings rate is in the negatives. Also, many other European countries are not faring so well. The only countries that has a high savings rate is Singapore, China, Japan, and South Korea. What is wrong with us? Dont we realize social security and medicare is going to be gone? Are we all ignoring this?

Answer 1

GREAT question..

Here's a few reasons I think people are not saving:

1) False sense of security.. ie.. it's not until a persons life falls apart does he/she suddenly realise a need for security.. we live in such selfish times, that most people think they are bullet proof until they get shot..
2) False personal self image- the main reason I would say.. people thinking they need every new material mod-con when in fact they don't.. people following fashion trends or trying to fit into a social/cultural group.. all costs money..
3) Lack of ambitions.. - many people simply are not interested in saving as their lives have become so ordinary that they are happy to live day by day and without any stress..
4) LOW INCOMES- the obvious one.. but it's actually very true on a macro-economic level.. with sky high petrol prices, fruit and vege prices, not to mention rising interest rates and ultra high property prices and lump a million taxes and fines on top.. and bingo.. it's no wonder people are taking what little savings they have and loosing that at the casino..
5) Economic system failing! in a nutshell we are living on the basis of economic theories postulated hundreds of years ago.. we need an update.. to begin with we need a new industry called "environmental cleaning" and then we need ot re-claim the fields so the people can eat healthy again and get rid of junk food for the poor.. and gassed apples in super-markets.. i recently bought fruit at coles and franklins and it sat on my counter for 3 months before it discolored!! this is not normal!! expensive and low quality.. why would people be encouraged to be a part of such a society anyway.. partly why our crime rate is spirally upwards..

Answer 2

Its not in the culture! We live in a consumption culture. But not only are americans not saving, we are spending more than we earn. Check some of the answers above, they talk about not being able to save because they have to pay credit cards and dinning out! They live "paycheck to paycheck", but they do hit the malls on the weekend, dine out 5 times a week, go on vacations they can only afford using an overused credit card. Im not judging anyone, but the debt culture is much more big than the saving culture. Its appeals to have everything now, dont worry about tomorrow... im good right now, ill be fine later on. Financial planning for more than 1 month is boring... "i need that new dress for the Smith´s party next week", thats fun! Asian countries have better education on saving, plus, their financial institutions are not that developed to offer credit so easily and with that, generate an atmosphere of consumption!
Yes! Most ignore, or simply don´t think about being old, or being sick. Both of them not only cost money, they also stop us from generating more money! People imagine how the new TV is going to look on the living room, but not the financial burden of a spouse having a long, terminal illness.
Studies show that we need to save around 8% of income during our productive stage, so we can retire at 60 and keep the same lifestyle until we die. Maybe eating at McDonalds is more of a priority today than planning for the future!
Good luck!

Answer 3

I dont think Americans are worried about saving right now. We have too much stuff that takes up all of our incomes and we dont really realize how simple it can really be to save a few dollars every month so that at least we will have a little something to live on when we retire. There is not enough information out there for Americans to be able to make decisions on saving etc. We need more information out and there and a actual plan of action to get Americans saving ther money or at the very least let them know that it really isnt that difficult to save a little every month. We all think oh my what am I going to have to give up in order to save something and it is not at all that bad. We just dont do it and I think that it is sad that we dont save more.

Answer 4

The last time I called a bank and asked what the interest rate on a savings account was they told me "point zero four." I had to laugh. Who would save money in a bank when the value of money over time is a negative? The government taxes our savings to boot! I do know why banks don't encourage savings........they can make more money from credit card debt!!!!!!!

Answer 5

No one has money left to save. Credit cards have become the normal way to pay for things and the bills have to be paid. Housing cost have skyrocketed. Goods are more expensive because they come from overseas. It costs over $10 to buy food for two people at McDonalds. Yet wages have not gone up along with costs. How are people going to save?

Answer 6

I would, but I , and many other Americans, just get by, so we can't really save when we don't have anything to save. That good ole' living from paycheck to paycheck lifestyle is so much more real than many people realize. The middle class are dealing with it more and more because everything is going up, but salaries and the minimum wage sure as hell aren't.

Answer 7

U.S government is taking care of old age needs by way of pensions. so it is not necessary to save. If any body in a position to do some business, the government is giving money to do business and help in all the way, so for the people in U.S, the saving is not much needed unless lack of funds in the government.

Answer 8

For one thing in those other countries things are too expensive to buy anyway so people save for a rainy day. Yes, we have just had it too good. Of course in China and S. Korea, people don't make enought to spend.

Answer 9

Because people need to be educated about money. Theyve never been taught in the school system here in the US. As someone who started a business, Ive done all sorts of self educating about alot of things...especially money and finances.

Answer 10

Eat drink and be merry for tomorrow you shall die.

That's the prevailing philosophy, I think, where people don't save. And just plain unthinking.