sabrinathecat
Explorer
Sounds like a lot of people have horror stories of parents or grandparents taking it too far. Have we now gone too far the other way?
Planning Ahead, or Living For The Moment?
Probably.At one point, it was typical of middle-class American and Japanese families to consume about 70% of their income. In the 1930s, Americans started consuming more, and in postwar Japan, that trend was mirrored. Now, it is common for middle class Japanese families to consume into the low 90% range of their income, and a growing number of American households are consuming in excess of 100% of their income.
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WayneLigon
Adventurer
Many more people than you might think are at best 1-2 paychecks away from a homeless shelter. After the whole idea of a savings account collapsed, there seems to be little point in it.
Kramodlog
Naked and living in a barrel
Huh?
WayneLigon
Adventurer
When I was much younger, if you had a savings account you could reasonably expect an interest rate on the order of 10%-12%. Almost everyone I knew had a savings account as well as a checking account because you could put in a moderate amount and have a decent second income supplement every month. My dad left us a little over 40K. That paid for my schooling, as it meant we got around $400 a month in interest which was around a semester of college then. That was a huge incentive to save. Now you can pour money into a savings account and you might get enough per year to have a pizza party if you don't invite too many people. There's little incentive to save. My retirement account when I first started work earned on average about 18% a month. Now, I'm lucky if it doesn't lose money every month.
Homicidal_Squirrel
Adventurer
Keep laughing, and one ay Murika will invade Canada an implement our awesome healthcare system.
This time.
Kramodlog
Naked and living in a barrel
I understand what you are saying, but those were also times when interests rates were much much higher. Althought current bank profits do make me raise an eyebrow, but they do not make those profits by giving their customers money.
There are many other savings/investment vehicules, but they require much more time and personal invesments. I guess the general public might not be as familiar with them.
Maybe banks could be obligated to provite savings accounts with interest rates above inflation levels. Better than TFSA or RRSP for the general population.
Kramodlog
Naked and living in a barrel
Why? We already have a free trade agreement that lets you build a giant vacuum cleaner that will suck natural resources right out of Québec and pump it into the US. And you export to us "small guberment" policies.
delericho
Legend
Yep. Also worrying is that that same low interest rates have made it really easy to rack up big debts.
In the UK, at least, there are loads of people who are mortgaged to the hilt, and can just barely make the interest payments provided that interest rate doesn't go up. The big problem there is that the Bank of England base rate is currently at 0.5% where the long-term average is closer to 5% - it seems likely it'll be going up at some point.
We (that is, my wife and I) are in the process of rebuilding our emergency fund - between buying our flat, cars, a new bathroom, and paying for a third of the wedding, it's somewhat depleted. Once we've done that, we'll have to look into our investment options, because it's right enough that there's no point using a savings account if the rate of interest is less than inflation - that just loses money more slowly.
(But the point of an emergency fund, even if it does gradually lose ground against inflation, isn't really to build money; it's to have money available if you need it. As such, a good rate of interest is a secondary concern.)
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