According to the latest Smart Money magazine, who nabbed the stats from the World Bank, the United States’ savings rate is only around 10% – MUCH lower than many other countries like India (28%), Switzerland (32%) and even China (51%!!!). Scary, huh?
There’s a whole bunch of reasoning behind it which I’ll share here in a sec, but needless to say we all gotta kick it up a notch if we’re serious about living a comfortable life later! I don’t even know how you could live off of 10% in retirement, do you?! Unless you’re gonna drastically cut your lifestyle, or your bringing home pimp daddy amounts right now, it’s probably best to start saving much MUCH more. Maybe even 25%? (I think 20% is the “norm” advisors usually suggest, but we all know there’s never a magic number since we all live so differently. And plus some months we can easily save more, and others a lot less – so as long as you are *paying attention* and doing your best at all times, you should be able to beat the average any day. Especially since you have the upper hand reading this blog! (haha… just kidding… sort of ;)))
At any rate though, we as a nation have to remember to save save save!! Even though our economy keeps telling us to spend spend spend so we can get out of this recessional mess we’re in (which always seems so counterproductive, doesn’t it? I swear, if we were all better about saving and not going overboard in the beginning, we wouldn’t have gotten so hardcore off the track in the first place! And I count myself for adding to that trouble too – I’ll freely admit it.)
While it doesn’t do much to physically help us save more, check out some of the reasons below why the other countries are better at this than us… Not only does it help put things in perspective a lot more (always good to remind ourselves how BLESSED we are to be living in the States!), but it’s also incredibly fascinating. If you’re in to that stuff, anyways ;)
- Vietnam (28%): “In countries like Vietnam, where insurance against risk is largely unheard of, household savings often become an important part of preparing for the worst; any costs incurred by a natural disaster or an illness would come out of a family’s pocket.” How about THAT for an emergency fund? Pretty scary stuff…. imagine having no health insurance? Or life, house, car, etc etc? (Actually not sure about the car and all of that, but it still puts things in perspective) Having a nest egg like that could do wonders to anyone’s situation.
- Brazil (15%): “… Brazil’s recent economic boom has also fueled a hunger for consumption; people often borrow to get what they want, even if it means financing a car at 30 percent interest.” Wow. Though much can be said for a lot of Americans too, huh? ;) Which is why it’s not surprising both our nations rank so low on the scale here.
- Switzerland (32%): “Swiss citizens enjoy strong government safety nets, including a solid pension system.. Costs like medical and child care are covered, and many dual-earner households are able to put discretionary money into the bank or investments.” It doesn’t hurt having a 4% unemployment rate too!
- India (28%): “Many families save to amass dowries for their daughters…” as well as protecting themselves from future hardships in the same way as those in Vietnam do (aka making your own insurance). Imagine if you had dowries to consider?
- China (51%): “China’s savings rate took off after the country liberalized its economy in 1992, as more Chinese aspired to accumulate assets like homes and cars… The savings culture also derives in part from the government’s population-control policy.” Since China has way more men than women, the families w/ boys are saving a ton more to make sure they’re “marriage material.”
How much are YOU saving these days, percentage-wise? Have you calculated it recently? I tend to go all over the place being self-employed, naturally, but back when the 9-5 was kickin’ I’d range anywhere form 30% to 90% – all depending on what my goals were at the time (mainly, maxing out my 401(k) and Roth). If I can save or invest 10%+ this year I’d be in goooooood spirits my friend!
PS: More of the article from Smart Money can be found here.
(Photo by buggolo. Reminder by J$)
Featured savings tip
You already know that banks pay $$$ for the privilege of holding your money…it’s called interest. But maybe you didn’t know this: that so-called interest can be as little as .01%. If your cash savings aren’t sitting in a high interest savings account that earns you at least 1%, you’re basically saying “no” to free $$$!
Now, obviously the 1% interest you get with a high interest savings account like the one at Discover bank won’t make you rich, but that extra 1% compounded over 30 years can grow into a *big* pile of cash. And if you wanna hit lofty $$$ goals, you should be looking for every edge possible.
Here’s another way to look at it: if you leave $50,000 in a regular savings account, that’s almost $500 you’re just throwing away, each and every year you don't setup a high yield savings account! Will you do 5-10 minutes of work right now to earn an extra $500/year for years to come?
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