Are you a saver or a spender? Why should you care?

savings ratesRecognizing your bad habits will help you on the road to better understand how to correct them. The problem is, most people don’t even see a problem to begin with. The fact is, most people under 30 or 40 are spenders, and have pushed saving aside for the latest TV, iPhone, shoes, purse, clothes, car, or whatever the latest trend may be. To their credit, this may not be their fault, consumerism and advertisers have done their job and created a need when there really wasn’t one. It’s only the consumers fault when they recognize what they’re doing, and don’t change their habits.

So, are you a saver or a spender? Do you even have a savings account? Do you look at your checking account as a spending account? Most people look at their checking account balance as how much they have left to spend, and they shouldn’t. You must set aside money separately to build a savings and investment nest egg for your future. It makes sense to setup a savings account separately, and most companies with direct deposit allow you the ability to have a portion deposited to savings and the other to your checking (this way you don’t even miss it).

The point in writing this article is awareness, to make you aware that you’re probably a spender, not a saver. If you’re questioning what constitutes being a saver or spender, wonder no more; A good rule would be that if you’re  not putting aside at least 10% of your income into saving, you’re a spender.

As shown in the graph above, at one time not long ago (20 years ago we had household savings around 7-8% in the US) we were closer to a nation of savers instead of spenders, and if you look back 20 years before that, the US savings rate was at or above 10%, see below.

savings rates historicalSo why should you save versus spend? Do you want  to always have to work for money, or would you rather have your money work for you? Most people don’t even understand this concept or way of living, and are forced to always work for their money. Most of the wealthiest people start off in life like you or me, working hard for money. The difference though, they take a small portion of their money and save and invest, earning money on their money, forever and ever, providing an additional income of which they will never have to work for again. You may question “how will I ever be able to save, I can barely meet my bills.” If you’re saying this, you need a budget, and better get started sooner than later – you’re going to be buried in debt before you know it. Even the worst situations can be overcome, with time and patience and understanding. But don’t delay, get started now with the help of this site or something similar.

Now that you are aware, maybe you should consider making the choice to put something aside every paycheck, and become a saver.


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