A statistics professor in my masters’ program always said, “Trust God but for all other things get data.” Data does not lie. Statistics were shown on how well Americans are saving their hard-earned cash. According to statista, The Statistics Portal, the personal savings rate was 3.2% in January 2018 compared to 5.9% in January 2016. This source calculates the savings rate as a ratio of personal saving to disposable personal income. In 1960, the savings rate was 10.4%.
This leads me to wonder what is causing this negative trend. It can partially be a product of how people were raised. People that were born during the Great Depression grew up on getting by with little to nothing. When they did receive pocket change, they held onto it. Researchers believe that children form attitudes and habits around money by the age of 7. Those habits stick with them for life. This helps explains why adults in the 1950’s and 1960’s were diligent savers.
External factors also play an integral role in influencing people’s spending habits. To recover from The Great Depression, people needed to spend money to feed the economy. However, it took decades to get people spending without fear of another fiscal crisis. Fast forward to today and consider all the effortless ways to purchase. Technology has made instant gratification the real deal. In just one click or tap, you can have groceries, clothing, or new tires for your car delivered right to your door. The spend economy we live in has deteriorated the ability and will power to save money.
You didn’t get where you are today overnight, so you won’t be perfect at saving right away. That is ok. The important thing is to start slow by setting small goals. Once you have reached those small goals, the momentum will build. Track all spending no matter how small to help identify where the leak is. The small purchases happen more frequently and add up to more money being spent than you realize. Improving your relationship with money will not only create security but will also improve your overall well-being. It takes some work, but the benefits you will reap in the long-term are worth the effort.