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

while I tend to agree with those who espouse the "instant gratification" theory and its first cousin.."fiscal irresponsibility"...I would add a perspective that is often overlooked-in my opinion-that I believe has wide ranging implications....

for the last two, but especially, the last generation...there has been limited if any family contact with someone that lived through the "great depression"...up to just recently, there has been a grandparent, a parent...someone in the family that could offer a word of moderation ...having lived through that most [financially] challenging time....

that voice no longer exists in most households...and in the few where is does...it is often overlooked as the voice of experience and moderation....after all...it was a different world then....wasn't it???? too easy to ignore the trials of the past under the glut of consumer friendly "toys" of today...

so...easy credit [at usury rates]...self centered and self absorbed persons with little self control....a society that is built on a throw away mentality...and an infantile need for immediate gratification

all without the cautionary words of those who experienced/lived through those tough times

Answer 2

You are talking about saving money? People have gone far beyond that point . Not only are they NOT saving money they are actually spending tomorrow`s income today, by recklessly using the paperless money , the card.

In the good old days you and your family decided what to do with your earnings, how to save and why to save. No longer now. Today you have surrendered the power and authority to your govt. It is they who decide what you do. In the USA the Balance of Payment position is so bad that the Govt. owes alot of money to a lot of countries and their people!. Amazing but true.

You cannot equate Europe and the USA . Europeans are far more careful about their future. Everyone knows that the USA is the world`s biggest consumer and the whole world is producing things for the USA`s constant apetite. The moment this consumption goes down the world economy will go into a tailspin. hence , everyone is keeping the wheel running.

But, quietly, Europeans are creating an equivalent big consumption group by unifying the whole of europe. At that time , even if the USA economy fails ( sooner than later) Europe will not go down with the US.

When you buy more things than you need you can never save.

As an Asian I have seen the amount of wastage that the average American family does. Europeans donot do that.

Answer 3

In the USA, most people are just getting by, in spite of what you see on TV. Americans are fond of having luxuries they cannot afford on incomes which are in decline. Other than that, a lot of us 'own' homes, which means a lot of our income is diverted to investment, also to include retirement plans. I'm not sure the 'savings' metric is indicative of anything more than the fact that we are investing our 'excess' earnings rather than 'saving' them. My savings account contains about $5. Negative savings could also imply various forms of debt.
The best answer I can offer is that we do not perceive "money" to be the best investment option... actually, I think different metrics are being employed. It is true that most Americans borrow money at an alarming rate compared to their incomes, which would lead to a negative savings, but if that borrowing finances sound investments, the returns are presumed to be better than the interest charged on the debt, which means Americans not only are 'saving' money, but we are MAKING MONEY.
I can only speak for myself: My lack of 'savings' does not mean I am ignoring the imminent demise of social security and medicare.
The worst case (which I hold very near and dear) is the decline of the American worker, which means that expenses are so high both for workers and companies, that Americans (the middle class) can no longer afford services. The result I anticipate is that the lower class (people with nothing to lose) will suffer sufficiently to demand redress from the plutocracy (people who are obscenely wealthy and who exercise unfounded control over our government) while the strength and the patience of the middle class continue to be tested.
It can't end well. Something has to change.

Answer 4

I think most of it is due to the fact that everything costs so much. Many Americans make too little money to save it. I would even say it is infeasible for most Americans to save money. It is expensive to live in America. You are virtually forced to buy a car, then you legally have to pay insurance and taxes and you have to pay for your house/apartment. It also comes down to personal ideology. Do you care about now or the future. Once you are old, you can't have any fun with your money anyways. Also, many people are just not good at saving because they spend their money on things little by little. Monthly bills are a good example because you think it's only $30/month, but in fact it is $1440 over 4 years. That is why so many companies want to set up monthly payments.

Answer 5

well, one reason is because the majority of Americans are greedy and not disciplined. they will spend their hard earned (or not so hard earned) money on frivolous things.

another reason is because of taxes. yes, taxes. if joe blow were to get a huge paycheck one month, he would probably invest it in a car, boat, land, stocks, etc. Why????? because then he won't be taxed so heavily on that money!!!

The American tax system makes the problem much worse.

if there was only a sales tax, and not an income tax as well as all other forms of taxation, the USA would have a high savings rate.
granted, if the sole income of the government was through sales tax, we would be buying some expensive stuff. but that's better for the lower middle class citizen. they will want to save some money for a rainy day, and they will be more inclined to save up for retirement.



that's just what i think......

Answer 6

Everyone wants to keep up with the Joneses! We just don't realize that the Joneses are pennies away from declaring bankruptcy. It's funny I should come across your question tonight; my husband and I put together a budget last month and I was telling him today that not buying whatever I feel like whenever I feel like it is making me feel poor, even though I know that the money we are saving is going into our retirement fund and our son's college fund, as well as saving for meaningful things like nice furniture, bicycles to ride around town and enjoy the fresh air, and nice vacations like the cruise we took before we had our son. The other girls in my mommies group spend $20 on a shirt for their child, and I feel guilty if I spend more than $7. Who knows what their savings account looks like, though! I know I can take pride in mine!

Answer 7

Social Security and Medicare going to be gone? Where did you hear that? Yes, the "baby boomer" generation has begun to retire, but the large number of immigrant workers will take place of the retirees, enabling SS to pay those who retire now as well as in the future. As for the not saving part...beats me!

Answer 8

It's not American. Part of the American culture defines people on how much "stuff" they have. If a family has lots of "stuff" -- big house, fancy car, TV that takes up a wall, etc. -- that family is defined as "rich" (which American's believe are "more important" than everyone else) even if they have 10's of thousands worth of dept and no money in the bank.

Conversely, a family with loads of money in the bank and not a lot of "stuff" they are considered "cheap" or a "hoarder" which places them lower on the social ladder.

Answer 9

maybe some people couldn't save because of the expense at home and bills, I couldn't save money because I have to give to my non-working mom and my teenage sister who's in her 4th year high school, got to pay for the bills and other expenses, when I about to save it, something comes up like my computer is busted I have to have it fix, or my sister need to pay something in school, I want to save but I just can't, If I have 280 in a month something comes up again and couldn't have anymore

Answer 10

because money was made to be spent but all its doin to the economy is giving individules addictions. Money is paid for all kids of addictions causing problems that we cant fix If sumome saves their money its cause their smart but dont have a life!