On her blog, Surviving Adult Children Living at Home, Christina Newberry recently shared an infographic from BillShrink.com about American saving and spending habits. The infographic points out that the average American spends 94% of their after-tax disposable income and that 43% of American families spend more than they earn. From the mid-1980s until the end of the recent recession Americans’ savings rate dipped dramatically to a low of just over 2%. Although the rate began rising after the recession bottomed out, Americans’ current 6% savings rate is still low and only 41% of Americans save regularly. Check out the five reasons given to explain why Americans can’t save money. You may be surprised to learn that not one of the reasons presented is outside of your control!
Why is saving such an important habit to develop? Living from hand-to-mouth makes it hard to keep bills paid and jeopardizes one’s future.
- Rising costs make it harder and harder to keep up your current standard of living.
- Even a small reduction in income can make it difficult to pay all of your bills.
- The temptation to use credit to pay for things you need or want increases.
- Even minor emergencies, such as a stolen wallet, a broken arm, or a blown out tire, become bigger challenges.
- Without savings, hopes of buying a newer car or your first house may just be dreams.
- Anticipated lower retirement income from Social Security and retirement plans for future generations makes saving for your own future even more important.
Don’t let your hard-earned money simply slip through your fingers! Set financial goals. Learn to budget. Separate your needs from your wants and tell yourself, “No,” when you can’t afford something. Develop your consumer skills to make your money go farther. Save for major purchases. Learn to use credit wisely. Start an emergency fund. Insure against major risks by purchasing health, auto, and renter’s insurance. Start saving for retirement now—it will get here a lot sooner than you think!
What other problems might result from having little or no savings? What tips for increasing savings can you share?