Did you know the personal savings rate is up over 6% as of July 2010? That’s nearly triple the lows of less than 2% in the last three quarters of 2007.
This means that when the economy nose dived into recession, a bunch of people across the nation got a massive wake up call and they stopped spending like it’s going out of style (despite record low interest rates). It’s unfortunate that it took a major recession, stock market crash, and high unemployment to get us to save more money, but I think we should take what we can get here.
It’s interesting that we haven’t heard a whole lot about the high savings rate with all the clamoring about consumer spending declining rather than increasing. All we hear about is how the economy is bad, and people need to spend more to bring it back. I would argue that saving more and spending less isn’t a bad thing. We’re recovering from a nationwide overspending hangover and it’s going to take time to get back on our feet. In fact, we might just grow the economy at a more controlled pace if people keep savings a top priority in their lives and spend when they have money, not when debt is available. It’s a novel concept to save up for major purchases but it works so much better than depending on debt.
Matt Wegner is a personal finance, career, small business and leadership coach dedicated to teaching his clients the tools for L.I.F.E. (Living In Financial Excellence). Start enjoying L.I.F.E. at financialexcellence.net.