Americans are abysmal savers! We are being beaten in the “savings race” by many other countries whose citizens seem to intrinsically understand and appreciate the importance of saving. But does that mean Americans don’t want to save?
There was a recent article on CNN Money that stated 76% of the American population lives paycheck to paycheck. Stop and think about that for a second. That means that 76% of the population is living on a knife’s edge and that people are still blissfully unaware of what’s happening with their finances.
The article cited the growing rate of inflation and the increasing costs of basic necessities as some of the main reasons for our lower saving rate. Basic necessities like food, housing, and utilities are getting more expensive, while the average median household income has actually gone down over the past couple of years to about $50,000 a year. Many who left feedback in the comment section of the article, agreed with the author’s explanation of why Americans don’t save. However other argued that many people simply don’t know where their money is going every month.
Unfortunately, financial education has never been widely taught in US public schools. Many do not even know how to write a check or balance their checkbook. Therefore, many people are woefully unaware of what they are spending each month. This produces a huge problem at the end of the month when you “realize” you’re broke. Keeping records of what you spend, and on what, will help you figure out how much you are spending on average every month. Some people use excel spreadsheets, but I just keep a running tally of what is coming in and what is going out each month. It gives me the reassurance I need to know that I can pay everything on time.
Living a simpler life also helps you save money in the long run. For me, cutting down on eating out has really put money back into my pocket. I now cook meals in advance to cut down on food costs. Adopting a more minimalist wardrobe and only buying what I need has also helped me save precious dollars. I now only have 5 pairs of shoes, which makes life so much easier!
Cutting back on my lifestyle, tracking expenses and budgeting weren’t things that I did naturally. I was in credit card debt to the tune of $5,000, before I finally got a clue and began adopting new frugal habits that helped me finally pay off the debt and start saving.
So what does does this all mean? It’s no secret that Americans are not saving enough, but how does that impact us? Well, it’s hard to be happy and emotionally secure when you’re financially insecure. The worry of knowing where your next meal will come from, or how you’ll get to work if your car needs repairs you can’t afford to make, is pretty daunting. But the good news is, your neighbors may not be saving, but that doesn’t mean you can’t begin paying off debt, saving and securing your own financial future. It is much better to have a full bank account (and the security that money provides) than a new car that will only impress other broke people living paycheck to paycheck.