United States' Negative Savings Rate

[Arcadian83]

I have heard (please provide a good source if you happen across one) that Americans have a negative savings rate. On average we are spending all of our income and then some. Our savings rates haven't been this low since the Great Depression.

I have the impression that saving is good, and that spending for the sake of helping the economy is bull. So long as your money isn't under your mattress, and instead in a bank or investment, it is being financial capital which businesses use to buy and build things.

I would like to hear some informed opinion about whether or not this is a big problem, because I am not sure what to make of it. Is this something that the market will balance out, or are we begging for disaster? On the other side of the coin, could saving too much realistically be a problem?

 

[Bluemofia]

Reminds me of the quote: "It's patriotic to buy something you don't need! "

It sure seems like it over here with the trends that the majority teenagers are following. (BTW, I'm 16, and save everything that I get that I don't use to buy food or books with)

 

[toxicseagull]

as far as im aware most western countrys spend more than their income and the general population either has a pensions problem (to many old people not enough workers etc) or simply doesnt save and has obsene debts to pay, mainly on the credit card.

 

[Bluemofia]

Which is why I will avoid getting a credit card until I am at least 30 years old, and financially secure.

Unless if I must earlier.

 

[nihilistic]

Which is why I will avoid getting a credit card until I am at least 30 years old, and financially secure.

Unless if I must earlier.

You are kidding. I got my first credit card at 15 or 16.

 

[simonnomis]

Without a society of credit, Western economies would probably collapse. I really dont think the present situation is as entirely negative as some people seem to believe.

 

[Dionysius]

meh. we all have enormous national debts, so whats new.

 

[toxicseagull]

well depending on your country, credit cards may not be the main problem, i know the pension thing is causing severe headaches around the world. as heartless as it sounds. modern medician aint that great and humanity has lost its edge. we have become to in touch with case study's (through media or easy lives so we have such time to express and care) and not seeing the bigger picture. our persitiance on treating genetic disease is a black hole into which we pour resources time effort and money. and whilst i know its slighty OT, it is severly connected to money problems of economicly advanced countrys.

 

[Arcadian83]

I am having difficulty finding an unbiased not-sensationalized-media source on this topic. I do not consider any of the 'sources' I have found reputable enough to link. Google it if interested.

I have found opposed opinions which say that it only appears negative because it is not being calculated correctly: Education counting as consumption rather than investment for example. Also, if anything at all, the negative savings rate is a recent phenomenon of the past 10-15 years (only consistenly negative in the past 1-2 years).


Credit cards are fine, and a good idea to learn young so you can learn fiscal responsibility. Read some fine print and ensure there are no monthly fees. Then pay the entire bill each month lest you end up paying interest. Unpaid credit card bills = expensive loans.

 

[Chieftess]

Negative Savings Rate? I never heard of that... But, as far as finance goes, I don't have a credit card (and I'm 29), and all of my money is saved in a CD and in savings. Plus, I only buy what I need (and maybe a game or two on occasion).

 

[Arcadian83]

I don't have a credit card (and I'm 29), and all of my money is saved in a CD and in savings. Plus, I only buy what I need (and maybe a game or two on occasion).

I have a card mostly just to buy stuff online. Almost never big ( > $200) things either. Not out of security, but frugality.

I would consider doing a CD too, except I may need to buy a car soon, since my current one has been on its last leg for some time, now.

You've just mentioned what I think is the key to saving money: Instead of feeling obliged to spend some portion of your income, just ignore it and let it quietly accumulate. Instead of shopping on a regular basis, only buy things you specifically need when you need them. This is also the "reduce" part of "Reduce, Reuse, Recycle"

 

[Urederra]

But at some point you (general you) have to decide between buying a house/apparment or keep renting, and, at some point and under some circumstances you'll find more interesting economically to buy a house, and, unless you have enough money to pay off your whole house in one downpayment, then you have to ask for a mortgage, therefore you guys (and gal) will have debts to pay.

Futhermore, if you go to college/university in the US, you'll probably have to ask for a student loan that you have to pay off before thinking about buying a house. (well, you can ask for a mortgage before paying of your student loan, actually, but you'll be in debt until you are around 45)

 

[Kozmos]

You've got only one choice.....lower the science slider.

 

[Fugitive Sisyphus]

You've got only one choice.....lower the science slider.

I guess if Americans were forced to lower the luxery slider, they would riot. So to solve the education problem, we need more luxeries.

 

[Ramius75]

Its also funny where the Rupublican politician ask and make the common ppl spent money while they horde on massive investment and pass it on to their children and grandchildren. Making them lords of the USA.

 

[Fugitive Sisyphus]

Its also funny where the Rupublican politician ask and make the common ppl spent money while they horde on massive investment and pass it on to their children and grandchildren. Making them lords of the USA.

Huh? I don't understand what you just posted.

 

[Arcadian83]

Bush was the one I remember telling the American people to buy stuff to stimulate the economy, which I for one think is silly.

Spending money does not necessarily make you weaker. It depends what you spent it on, and more specifically if you got your money's worth and gained utility from your purchase.

Please do not get too off-topic (but about the sliders)
I am kind of hoping Jericho Hill will enlighten us about the original topic.

 

[Dionysius]

Huh? I don't understand what you just posted.

i think he means money hoarders are asking people to spend spend spend.
i think, anyway.

 

[Fugitive Sisyphus]

i think he means money hoarders are asking people to spend spend spend.
i think, anyway.

Maybe your right. Though I have heard that often as anti-Jew rhetoric and never as anti-Republican rhetoric.

If that is what Ramius is trying to say, people from both parties spend beyond their means and I have never heard of any correlation between debt and party affiliation.

 

[CIVPhilzilla]

Quite frankly people being loose with there money does help the economy. However, I am not very lose with my money, any money I don't need for immediate purchases (gas, food, Civ 4, etc.) usually gets banked (or better invested), I never buy new products, but rather buy second generation products at cut rate prices, make use of various sale websites like fatwallet to get the most out of my money. I know most of the things I have a first impulse to buy will end up being useless to me in two weeks and I'd be better off with the cash.

I have also avoided the biggest monetary draw for a person. (a girlfriend)