Why are we so bad at saving?

[eliza61]

I don't really see a problem with # 2 and 3. If she is 18 and is driving by herself sometimes she probably needs a cellphone. My kids have Ipods that they got for birthday/Christmas. When did they become an ultra-luxury product?

It only becomes a luxury item when you start having $150/month bills because your are texting and taking phone pictures, which most young adults do. I've never brought into the 'it's a safety item" arguement, at least be honest, the number of kids that use their phones in an emergency is far and few between, not that it doesn't happen.
My son now has a prepaid cell phone that he pays from his allowance because instead of walking next door to his best friends house, he felt the need to text every 60 secs. It's amazing how many emergencies go away when you have to pay your own cellphone bill.

 

[Traveliz]

It only becomes a luxury item when you start having $150/month bills because your are texting and taking phone pictures, which most young adults do. I've never brought into the 'it's a safety item" arguement, at least be honest, the number of kids that use their phones in an emergency is far and few between, not that it doesn't happen.
My son now has a prepaid cell phone that he pays from his allowance because instead of walking next door to his best friends house, he felt the need to text every 60 secs. It's amazing how many emergencies go away when you have to pay your own cellphone bill.

Really though if you do a family plan it would be silly not to keep the college age child on it - we have phones (my husband and I) and have the plan we want -- for her to be on it also is another twenty a month with all the long distance/texting/pictures she wants.

If she went out and got that plan herself it would be close to 70-80.

And I totally buy into the emergency thing as you don't know when that emergency will occur. That said in her early high school years we did the tracfone also.

Liz

 

[Princess_Michelle]

.......

 

[mominwestlake]

I find it very hard to save and we don't have a lot of luxaries. The price of gas is high. Grocery prices are rising. Electric and gas utilities are rising. Everyone seems to be charging more and our income isn't going up that much.

 

[Irin997]

ITA!! Holy crap, DH makes more than twice what that family makes, and we're still waiting for house prices to drop so we can afford a house! I have NO IDEA how people make it in this area on less than $60K, and even that is pushing it.

Very, very delicately. $20k less than that here plus daycare costs plus my housing is 34% of my gross income. But, that's all that's available in the area I want to live.

 

[undertheradar]

There is no incentive to save. Interest rates are very low, taxes are collected on the interest paid and yet the banks are charging higher interest rates on credit cards. Add to this that the banks are borrowing money from the government at a discount and you start to uncover the reason. Yes, the instant gratification society have driven up costs in every area possible, there is a very small percentage of the population who live on strict budgets. Until there is federal and state incentive to add money to savings, people will continue to spend away.

 

[Toby'sFriend]

Most of us have grown up in an environment where bad things very rarely happen. Most of us have never seen people put out of their houses and banks selling all their stuff. Most of us have never seen people starve because they have no money for food. Most of us have never seen people die because they have no money to buy health care.

We live in a very insulated world where consequences of poor decision making are very rarely allowed to continue to their final resolution. Whenever that process starts, we expect our government to step in and fix it.

Soooo.....it is very easy for us to make the choice of immediate gratification, because we really don't fear the consequences.

 

[nowellsl]

There is no incentive to save. Interest rates are very low, taxes are collected on the interest paid and yet the banks are charging higher interest rates on credit cards. Add to this that the banks are borrowing money from the government at a discount and you start to uncover the reason. Yes, the instant gratification society have driven up costs in every area possible, there is a very small percentage of the population who live on strict budgets. Until there is federal and state incentive to add money to savings, people will continue to spend away.

Ain't that the truth! I finally got some money in savings only to see my interest rates go down and down and down! Oh well, I'm still saving but it is discouraging!

 

[mickeyfan2]

There is no incentive to save. Interest rates are very low, taxes are collected on the interest paid and yet the banks are charging higher interest rates on credit cards. Add to this that the banks are borrowing money from the government at a discount and you start to uncover the reason. Yes, the instant gratification society have driven up costs in every area possible, there is a very small percentage of the population who live on strict budgets. Until there is federal and state incentive to add money to savings, people will continue to spend away.

Most of us have grown up in an environment where bad things very rarely happen. Most of us have never seen people put out of their houses and banks selling all their stuff. Most of us have never seen people starve because they have no money for food. Most of us have never seen people die because they have no money to buy health care.

We live in a very insulated world where consequences of poor decision making are very rarely allowed to continue to their final resolution. Whenever that process starts, we expect our government to step in and fix it.

Soooo.....it is very easy for us to make the choice of immediate gratification, because we really don't fear the consequences.

Both of these are so true.

 

[momof3girls6712]

I am 28 and my DH is 28 and we have 3 kids. We both work (I work part-time while the kids are in school and DH works full time) but still have a hard time saving. We do manage to keep a modest savings account and still take vacations. I will be vested this year on my job so that makes me feel good at my age. We live in a very small 3 bedroom home that is in the middle of no where, because it was given to me by my grandmother. No mortage is always a plus. However, lately we have been debating the cost of moving since gas prices have skyrocketed. We each have to communte at least 40 miles one way for work plus we have to take the kids to school and pick them up (no busses available). Last month we spent 1500 in gas alone. I went back to college this semester in order to get my masters degree so that I can earn more and DH plans on attending in the fall for the same reasons. But at this point I can not work full time. Our youngest is autistic and requires me to be available on call. Trust me it is easy to say it is the wants of the younger generation that keep them from saving, but I feel it is just more costly now. It was easier to start a family and save years ago.

 

[BuzznBelle'smom]

To answer the OP's question, saving isn't nearly as "fun" as spending!

I think a lot of people are in denial about the bigger, long-term picture.

Just look at the mortgage "crisis" (and is it really a crisis? Aren't only ~4% of mortgages in default? What about the other 96% who are actually paying on time?). Anyway, the politicians are falling all over each other to "fix" the problem--using our tax dollars, of course. This is the government equivalent of using a home equity loan to pay off a maxed-out credit card--a short term fix that doesn't solve the real problems of overspending.

I also agree with Toby's friend that most people don't know a "real" financial crisis. How many Americans really know what it's like to not know if there will be food all week? Or if they could lose their house? Sure, there are some people in this country who have been through such things, but a real small percentage. I think for most people in the USA, a "financial crisis" is not being able pay for pizza delivery so you have to eat mac and cheese tonight.

Unfortunately, I think things have to get a lot worse before people wise up and then we can slowly make things better.

 

[jacobsmom]

DH and I are 28 and have DS8 who has special needs. We've almost finished paying off all our past credit card debt (no longer use those). We have to prepare for DS future as well as our own.

We know that it's up to us to provide for our future so we looked for an at home business (a plan B something to do besides work a job that doesn't affect your job) that we could help our friends as well as ourselves to make extra money doing what we already do (shop online basically), take advantage of the tax breaks that having a homebased business provides, and prepare for our future.

Beyond that I'm driving my cash paid mini van into the dirt before getting a new vehicle--it's nice to pay cash and not be making payments! And we have a nice house, the upstairs is a rental property. The things we have learned! I think the other thing to remember is that there is no job security. I have so many older coworkers who are upset because their husbands have been let go just before their retirements. It's not like it was back in my great grandparents/grandparents day! You have to think and work outside of the box and always be looking for opportunities to better your future on your own where YOU control the outcome.

 

[chicagodisneyfan]

Does anyone know the AMOUNT an average 35 year old should have in retirement savings by now?

Is it $200,000, $300,000, $500,000??? Just trying to see if we are on track.

I think we do well above average but am looking for a figure to see if we are on track towards a good retirement.

 

[STLDisney_Freak]

My sons H.S. is offering a budget type class for the first time next year. I made that boy sign up for it immediatley. even as we are trying to teach him at home, I figure it can't hurt.
Anyway I saw this article today at Yahoo news.

http://news.yahoo.com/s/nm/20080414/ts_nm/usa_economy_retirement_dc

Basically it says that Generation Xers (young adults between the ages of 27 & 42) don't expect to be able to retire.

Do you think we can change that?

I'm a Gen Xer and I can tell you that I certainly don't expect to be able to retire. Too much student loan debt, plus my mortgage. I'm saving everything I can for retirement, but I don't think it will be enough.

 

[tonilea]

I confess we have been very foolish with money. But, we are almost debt free and about to adjust our budget from paying off debt to saving. We should be able to save enough to retire fairly comfortably, not counting DH's pension and any Social Security we may or may not receive. I think we will get *something* in SS, but it is certainly not something we are counting on.

I really believe that saving has to be taught. My parents modeled the behavior, but didn't actively teach it.... oh, how I wish they had. I am not blaming them for my poor decisions, but I want to be sure we teach DS to save!

 

[pearlieq]

I think a lot of it has to do with people somewhat blindly emulating the lifestyle in which they grew up and assuming that because their parents could swing it, they would be able to as well.

A lot of people I went to school with grew up in nicer homes in an affluent suburb. And, by God, weren't they entitled to the same?

So they went to college, got a job, and then immediately bought houses and started families. And guess what? They can't afford a nice house in the suburbs and 3 kids. They're staggering under the cost of mortgages, commuting, daycare, energy, and health care.

Given that, and the shifting of our views on luxuries and necessities, we're in some trouble. An iPod and cell phone that texts and takes pictures are both definitley luxuries. We're running into trouble because people just don't recognize that anymore. Ask most people, and they'll count their cable bill among their "fixed" utilites.

 

[mumom95]

Does anyone know the AMOUNT an average 35 year old should have in retirement savings by now?

Is it $200,000, $300,000, $500,000??? Just trying to see if we are on track.

I think we do well above average but am looking for a figure to see if we are on track towards a good retirement.

I would like to know the answer to this also.

 

[mumom95]

Most of us have grown up in an environment where bad things very rarely happen. Most of us have never seen people put out of their houses and banks selling all their stuff. Most of us have never seen people starve because they have no money for food. Most of us have never seen people die because they have no money to buy health care.

We live in a very insulated world where consequences of poor decision making are very rarely allowed to continue to their final resolution. Whenever that process starts, we expect our government to step in and fix it.

Soooo.....it is very easy for us to make the choice of immediate gratification, because we really don't fear the consequences.

I couldn't have said it better.

 

[punkin]

Does anyone know the AMOUNT an average 35 year old should have in retirement savings by now?

Is it $200,000, $300,000, $500,000??? Just trying to see if we are on track.

I think we do well above average but am looking for a figure to see if we are on track towards a good retirement.

It depends (I know real helpful). Do you have a retirement plan at work? How much do you plan to spend in retirement? Do you have any children you need to pay for college?

I personally would like at least $2M in the bank when I retire if that was my only source of retirement income. It is NOT going to happen, but DH does have a small pension, I can use the equity in my house by moving to a lower cost area, I really do not believe that SS is ever going away in its entirety. We will just have to live smaller than I would like in retirement.

 

[Belle2667]

There is no incentive to save. Interest rates are very low, taxes are collected on the interest paid and yet the banks are charging higher interest rates on credit cards. Add to this that the banks are borrowing money from the government at a discount and you start to uncover the reason. Yes, the instant gratification society have driven up costs in every area possible, there is a very small percentage of the population who live on strict budgets. Until there is federal and state incentive to add money to savings, people will continue to spend away.

I wonder how long until we hear that banks are making "record profits"?!

DH and I have been saving for retirement since our very first jobs. Our goal is to retire at 55, 60 at the latest. The scary part is how in the world do we afford the healthcare costs 15 to 20 years from now? Just because of that, one (or both) of us may continue working full-time just to get the benefits. That sucks.