Its status as a bystander in the cultural shift
to instant gratification has changed only modestly.
As a financial principle that served earlier generations
saving was considered essential before making a purchase
of something special you wanted. Then came the seventies
and the explosion of credit cards became a tsunami through 2007.
We are all familiar with what happened next.
“I want it all and I want it now, thank you very much”
become the call that echoed throughout the malls.
Today, when a household’s debt is 150% of its disposable income
saving as a financial principle has surely eroded to the point
where it is non existent among no less than a third of the population
who have nothing put away for retirement.
I bet 50% of people fifty and over couldn’t make it
through the first year of any forced retirement (unemployment)
given their current consumption pattern and the value of their assets.
Now what?
I travel on both sides of the US/Canada border and I haven’t seen
an empty shopping mall parking lot yet. But we’re told saving is making a comeback.
The speed of this reversal to thrift relative to the pace of debt accumulation, its total dollar amount, and what it will take in income saved to whittle it down is a huge concern.
Spending less is the surest path to that victory.
Earning more would be nice, too but that doesn’t look very promising
in the immediate future. Cutting back on consumption and redefining
your wants versus your needs now remains the best strategy
for instant gratification if saving is what you want.
This could be the fight of your life.
Copyright 2010 William M. MacKay
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