Americans Can't Save?

Today, I heard something remarkable on the radio. It was commentary made by Robert Reich on NPR. He made the claim that the reason Americans don't save money is because they can't save money. He quoted numerous reasons for his claim, including higher costs of living, higher energy costs, global competition causing wages to drop, etc. I'm sure there were many people listening in their cars, cheering him on as they thought of their weekly crunch of trying to pay bills, and never getting any further ahead in life. I could argue against his points, with such facts as the extremely low inflation rate over the last several years. However, by doing so, I would miss the opportunity to point out the false assumption that he used as his starting point: that rising costs and dropping incomes automatically translates to an inability to save money. He may be winning points with his listeners who are struggling to make ends meet, but he's not doing them any favors. He is providing them with excuses, and thereby enabling them to continue down the slippery path they are already well along.

We all know the stories of people who lived through the Great Depression and learned to squirrel money away every chance they got, protecting themselves for any future emergencies. I've heard people jokingly ridicule their grandparents' spending habits, as they show off a shiny new $40,000 car that was just recently bought -- on credit, of course. I'm not trying to imply that no one should enjoy spending money, or that they should deprive themselves of that $40,000 car that they just have to have. I am, however, suggesting that our priorities are backwards. Our grandparents would have made sure they had saved enough money for an emergency prior to buying that fancy car. They would have made sure that they never spent more than they had, and would only buy that fancy car if/when they could afford it. They would have put SAVING first.

I've not yet met anyone who only buys those things necessary for survival. Saving is not about how much you make, or how much the cost of living increases. It's about priorities. It's about spending less than you make, no matter how much or little that is. It often means sacrificing. It means not buying what we really want so we can protect ourselves from an emergency.

Americans don't have an inability to save. They just don't place a high enough priority on it.