AP HEADLINE: 2005 Savings Rate at Lowest Level Since 1933
That’s right. Americans’ personal savings rate in 2005 was -0.5%. That is MINUS 0.5%!!! This means that, on average, Americans not only spent every dime they brought home, but they also drained their savings or turned to debt to support their addiction to spending. Unbelievable.
Let’s translate this to real money. The average person who took home $30,000 last year (after tax) SPENT $30,150. This information frustrates me. It tells me that Americans are not focused on the future.
IT IS A CRISIS!!!! We are called to do much more with our money than spend it. Proverbs 10:5 states, “He who gathers crops in summer is a wise son, but he who sleeps during harvest is a disgraceful son.” This is not an income problem. Most of us are blessed with more than enough income. We just are not willing to sit down and INTENTIONALLY direct our money toward savings. This is not sound money management. Without the protection of savings, debt is extremely enticing for the short-term, but it has horrible consequences for the average American.
What is the solution to this savings crisis?
Without knowledge, people will continue to be taught by those marketing “must-have-right-now” products. It is not difficult to budget and save. In fact, it is extremely simple. The math can be done by a 5 year-old on a calculator. It is not linear algebra. It is not geometry. It is not even multiplication or division. It is simple addition and subtraction.
Here it is: INCOME – EXPENSES = ZERO
Think about it. Have you tried this with your finances?
Have the willpower to say a two-letter word. NO! Say it often. It will give you power over your next potential purchase. Just say NO! Are you willing to sacrifice your ability to give to incredibly worthy causes just so you can have the next electronic gadget? Are you willing to sacrifice your ability to retire in order to drive around in an awesome car? Are you willing to sacrifice being able to send your children to college in order to have expensive furniture? Electronic gadgets, great cars, and awesome furniture are not wrong, but if you are sacrificing the things that matter most and spending ALL of your money PLUS 0.5% more, it is time to call it what it is – a crisis.