National savings rate…epic fail

Wanna see something that will make you cringe? It’s a graph of the United States Personal Savings Rate. As of mid 2009, the savings rate had reached a 17 year high (6.9%) as Americans conserved cash due to the declining economy. If the savings rate is at a ‘relatively’ high point, you might be wondering why the graph would be scary… well, check this ‘ish out!

Shame on us America, and by “us” I mean you, and by “you” I mean anyone that helped contribute to this dismal savings rate. There are a couple interesting things about this graph. The first being that from the 1960’s to the mid 1980’s, the savings rate held steady between 8%-11%. But if you look from the mid 1980’s to just before 2007, the savings rate had PLUMMETED from around 10% to 0% (including one year with a negative savings rate). That’s just plain embarrassing America.

Another interesting thing that can be seen in the graph; periods of recession (included in the gray shading) almost always resulted in an increased US savings rate. This is particularly noticeable in this most recent recession where savings went from 0% to 6.9%. You know what this graph indicates? That Americans suck really really bad at saving their money, and even worse, we don’t learn our lesson. Sure we might save more during recessions, but the second the recession has passed, we are right back to our old ways… living paycheck to paycheck, racking up debt, and making a$$e$ of ourselves.

There is an old adage that goes “Fool me once, shame on you. Fool me twice, shame on me” Unfortunately for America it goes a little something like this “Fool me once, shame on you. Fool me twice, shame on you. Fool me three times, shame on you…” When are we going to learn our lesson? Unfortunately, the answer is probably not until it’s too late…a.k.a. China comes and takes us over.

Don’t worry though, being the revolutionary voice of personal finance that I am (you think I am right?), I have a solution… make the US savings rate an Olympic event!!!! If there is one thing we Americans love it’s sports and America. Just imagine, a live feed of the US savings rate in comparison to all the other major countries of the world, during the Olympics. It would be just as exciting as watching Michael Phelps win his 8 gold medals (Dear Michael Phelps, if you are reading this, will you bear my children?). Seriously though, the only way I can think of motivating my American counterparts to save is by making it some sort of competition. If they knew how badly we sucked at this thing (especially when compared to other countries) it just might spark a long term savings attitude. Ah, a boy can dream right?

Do you think this recent savings boom is gonna stick around? Did we REALLY learn our lesson this go around? How can we teach/instruct/force people to save more? Are you currently part of the solution or the problem? According to this poll I ran a few weeks back, it seems like most PDITF readers are doing their part to save a decent amount of their take home pay. Kudos to you.