As the US economy emerges from the worst recession in decades, is now the right time to be spending or saving? As a nation, US consumers have saved less than 4.5% of their incomes. Compared to other countries around the world, this is relatively low. The Irish and the French save much more of their incomes, putting aside as much as 16% each month.
Why is it that the US is a nation of spenders, rather than savers?
Times have changed significantly since the 1960s, when the baby boomers were very much alive and kicking. Employment seems to be the biggest factor of why, today, the US is a nation of spenders and not savers. The term; “just getting by” has never been so apt. Americans are too busy keeping their heads above water to concern themselves with saving. Keeping a roof over their heads and food on the table seems to be their priority.
Unfortunately, one of the reasons why spending, rather than saving, is higher among Americans is debt. Most people have debt. It is the type of debt that Americans carry that is of concern. One solution that is proving popular among Americans is consolidation. But, does credit consolidation work? The product works there is no doubt about that. But, it cannot change the spending habits of the individual.
The reputation of America’s spending habits is well known and documented around the world. However, it seems that most of these spending habits go on to plastic. It is these spending habits that are having an impact on savings levels within the US. More spending and lending means fewer people in the US are saving for a rainy day or their retirement.
According to the latest research, the average 50 year old has less than $50,000 in savings. This figure will get less and less in years to come. This could mean that there will be an enormous issue in how the US manages their senior citizens in years to come. The harsh reality is that people will not have enough money to survive in later life.
How Can People Make The Switch?
Changing people’s habits is one of the hardest things to do. People are going to need to want to make the change and will ask; ‘what is in it for them’? A suggestion is that the US Government should provide incentives for existing savers that allow for them to save more. In addition, they should also look at creating a new incentive to appeal to spenders. This will help them switch their habits from spending to savers.
Another way people can make the switch is to be more accountable for their spending habits and to take control of their debt. It can be a defining point in someone’s life, being able to take stock of their finances and start to repay the debt that they owe.
As a nation of spenders, Americans need to realise that the more they spend on today, the less they have for tomorrow. It seems that Americans need educating and reminding that unless they save they will have a very sorry looking future.