How much money should I be saving?
If we look at the economic climate over the last 3 years, it is hard to argue the importance of savings. Over the last 30 years, the United States has become a nation of spenders rather than a nation of savers. Why is that?
There is not one thing you can point to that caused this change. It’s hard to argue that the cost of living has risen, especially in the areas of healthcare. I remember talking to an older gentleman several years ago and he told me when he was in his early 20s and was in college, he could almost support himself on a part time job. Granted he did live at home, but he paid for his college, transportation, and other necessities out of this part time job. He did not have health insurance and he said when he went to the doctor he just paid the bill. Could a student today do that? Not a chance.
However, we cannot blame the shift from saving to spending just on the rise in cost of living. Because of easy access of money through credit, we can over extend ourselves very easily. That mentality has also caused us to become impatient when we want things. Why save for it when I can buy it now and pay it off over time? I want it now!
While I do not suspect prices will decline, I do know that credit will be harder to come by in the future. Some people will be forced to save more money simply because they do not have access to credit like they did. Statistically in the last year, people have increased savings, which is a good thing. Even though spending does stimulate the economy, it is not your job to do that as a citizen. Or if you disagree with that statement, at least wait until you have adequate savings before you go carry out your patriotic duty.
How much should I save is a good question. Each situation is unique. The person who is just out of college who loses their job after 1 year but has the option to move back home for awhile probably does not need to save as much as a 45 year old with a wife and 2 kids whose parents are deceased. Each person should access their situation and be able to answer the question “how much should I be saving?” At the end of the day, I hope you understand the importance of finding this answer.
If we look at the economic climate over the last 3 years, it is hard to argue the importance of savings. Over the last 30 years, the United States has become a nation of spenders rather than a nation of savers. Why is that?
There is not one thing you can point to that caused this change. It’s hard to argue that the cost of living has risen, especially in the areas of healthcare. I remember talking to an older gentleman several years ago and he told me when he was in his early 20s and was in college, he could almost support himself on a part time job. Granted he did live at home, but he paid for his college, transportation, and other necessities out of this part time job. He did not have health insurance and he said when he went to the doctor he just paid the bill. Could a student today do that? Not a chance.
However, we cannot blame the shift from saving to spending just on the rise in cost of living. Because of easy access of money through credit, we can over extend ourselves very easily. That mentality has also caused us to become impatient when we want things. Why save for it when I can buy it now and pay it off over time? I want it now!
While I do not suspect prices will decline, I do know that credit will be harder to come by in the future. Some people will be forced to save more money simply because they do not have access to credit like they did. Statistically in the last year, people have increased savings, which is a good thing. Even though spending does stimulate the economy, it is not your job to do that as a citizen. Or if you disagree with that statement, at least wait until you have adequate savings before you go carry out your patriotic duty.
How much should I save is a good question. Each situation is unique. The person who is just out of college who loses their job after 1 year but has the option to move back home for awhile probably does not need to save as much as a 45 year old with a wife and 2 kids whose parents are deceased. Each person should access their situation and be able to answer the question “how much should I be saving?” At the end of the day, I hope you understand the importance of finding this answer.