A surprising statistic about the decline in personal savings rate of consumers in America was shared recently in a report published by Nerd Wallet. The study shows a sharp decline in savings rates post the 2008 economic crisis. Through the end of the third quarter of 2013, the consumer savings rate in the United States was 4.9% – down from 5.8% in 2008 – a 10 year high mark.
The savings rate is defined as total personal savings deposits as a % of disposable personal income, (i.e. income less taxes and personal spending). While less than 5% in 2013 sounds low, just wait – American savings rates had bottomed out to a dismal 1.5% in 2005 – the lowest savings rate going back over 40 years!
So why aren’t we saving more? Many consumers follow a 10% of income tithing rate to support faith based or other charitable concerns, but Americans on average contribute less than half of that into their savings accounts – why? While there are many other factors to consider like debt service ratio, investment performance and opportunity, or material changes to asset valuations which may impact the savings patterns and behaviors of consumers in America – the answer will be different for each of us.
In a recent article by Mandi Woodruff posted on Yahoo finance, 5 research proven strategies are shared to ramp up your savings plans. Good advice to follow particularly as move deeper into the New Year. Spend time with your local banking professional like one of the authentically local community bankers at DNB First. Your banker can help you establish or enhance your savings plan.
In the early 80’s the national average for consumer savings rates exceed 10%. This was the highest savings rate going back to 1962. Set a personal savings goal, and then work to exceed it – you are benefitting yourself in the long run.
Vince Liuzzi – Executive Leader Greater Philadelphia Community