Why You Should Be Saving Money

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As of July 2019, the national savings rate in the U.S. is approximately 7.7% of household income, down slightly from 8.0% in June.* The rate has been steadily increasing since hitting its all-time low of 2.2% in July 2005. I am excited to see that people are starting to make wiser decisions when it comes to their finances; but when we look at other developed countries, we start to see the greater picture of our spending relative to some of our global neighbors. The countrymen of Switzerland store away 13.5% of their monthly pay. The French manage to save 14.94%. Our Mexican neighbors sock away 21% of their earnings. When it comes to savings, though, Asian countries put the rest of us to shame. Japan saves 34%, South Korea comes in at 34.6% and China tops the list at 36.10% of monthly personal household income being saved.*

I would argue that the U.S. economy, as well as the unemployment picture, are the best they’ve been in approximately 20 years. CBSnews.com reported that in March, one million more jobs were available than people actively seeking employment. There were approximately 7.6 million job openings and only 6.6 million people looking for work! This is unprecedented. In my opinion, the current employment environment – with a rate at 3.9% or below for 14 straight months – may be changing the balance of power from employer to employee. Wages could likely continue to increase with supply and demand pressures potentially creating opportunities we have not seen in quite some time.

I believe that as a nation, we need to start reshaping our culture, start focusing on personal responsibility, and begin making the decision to use this recent economic up-turn to create better habits in regard to saving money. The more we save on our own, the less dependent we will be on the government. The more we save on our own, the less of a burden we could potentially be on our family in the future. Saving more money on our own will create opportunities to be a blessing to others by sharing our abundance and giving to those in need.

People in China are saving their funds at 36%! I can imagine that in a communist society, saving at that level is a way to protect yourself against negative government-controlled policies, like the new social credit system that they are implementing. Essentially, it is a social and economic reputation system, and the ultimate “Big Brother is watching” behavior manipulation. China believes that by 2020, it will be fully implemented and if you don’t follow the rules, you will be completely cut off from all social and economic engagement.

According to the Social Security trustees’ report, Social Security funds will have depleted by 2034 to the point they will pay only 77% of funds promised to recipients. President Trump’s administration, in the name of economic expansion and military spending, is right now taking on more debt at a faster pace than any of his predecessors. He hopes that we will have an economic boom so large that taxes paid on the future earnings and more people working will help pay down the bloated national debt. I encourage MCM readers to ask yourselves “what if this strategy doesn’t end up working?” Taxes could then potentially go much higher, economic growth could flounder, and social programs may possibly be reduced.

I’m not trying to be Chicken Little here, but if we don’t start saving some of the excess that we are currently seeing and putting it away for the future, we only have ourselves to blame when we become completely reliant on the government for our daily necessities.

Start a savings program today. Put some measurable goals in place. Monitor your progress and start your path toward economic independence NOW! The only downside I can see is the need to deny yourself in the short term, so that you can benefit in the future.

*tradingeconomics.com


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OLV Investment Group is independent of Sigma Financial Corporation and SPC. *It is not possible to invest directly into an index. Past performance is no guarantee of future investment performance. This article is for informational purposes only and should not be construed as investment advice.

 

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