The United States Savings rate for retirement is on decline for the third year in a row. Studies show that 43% of people have less than $10,000 in saving for retirement. I have noticed this trend in my own generation, as well as in my own life. Why is it so difficult for us to save for the long term? The answer resides in the fact that long term savings is the opposite of our cultural norms.
When was the last time you saved up tweets for a year, and then dispersed them all at once at the end of the year. How long does it usually take you to try the new restaurant up the street? A year? Two Years? Or the next friday night? Saving my logins to Facebook for over a year would be unheard of. Our culture runs at such a rapid pace that if you save for the long term, you’re guaranteed to miss out on the NOW!
New fashion styles go in seasons, giving you only a few months to quickly buy up the latest trends, or cross your fingers that your new favorite jacket makes it to the clearance rack. New technologies are upgrading so quickly that you two year old cell phone looks like it’s from the stone age. Our culture tells us to consume now, or miss out on the latest commodities. Buy now, or never experience true happiness.
Long term savings is boring. There is no instant gratification, there are no highs and lows, but just consistent discipline of putting money away for another day. You might as well wear a No Fun Badge on all occasions. As much as we all could try and spin it Long Term Savings is not cool.
The act of saving for long term items can be extremely discouraging, because your instant gratification nerve is not being stroked. The moment that Long Term Savings becomes cool is when you pay cash for your next car, you become debt free, you pay more than a 20% down payment on your house, or when you realize that you have over $2 million saved for retirement. That’s cool.
Although in the moment long term savings is a drag, a cramp on your style, and not cool to everyone around you. In the end it provides you more than the next gadget can provide, peace of mind and financial stability.
-Matt
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It’s crazy that 43% of people have less than $10,000 saved for retirement… that’s not even that much!
You make an interesting point about not saving tweets or facebook logins — we are a culture of instant gratification, it should be no surprise that saving is so hard.
Great post. Reminded me of this quote I just saw: “When broke people are making fun of your financial plan, you’re on the right track!” -Dave Ramsey
Whatever unsuccessful people are doing, I want to do the opposite!
YEah this is the culture we live in. People in parts of Asia save over 20% of their income year after year. Why can’t we do the same. Because we fuel our nation’s GDP with consumption. I am currently saving 10% of my income for long term aka retirement and 5% for short term aka emergency. I am not yet at the 20% mark but I will get their soon enough…
It’s hard to compare tweets and facebook updates to saving money. Tweets and status updates immediately lose their perceived value after a short period of time because of the same reasons you highlighted about fashion trends. In contrast, money loses it’s value much slower, where saving it does make rational sense.
But, I think your point is that we’re seeing people save less and less, which is true. Perhaps the instant gratification culture we live in has something to do with that. So the question remains: “How do we convey the idea of saving in such a way that is just as attractive as fashion trends?”
I recently listened to something like this on NPR. They also featured an author recently about the perks of waiting and even procrastination in life. A lot of the focus was on our culture of instant gratification. Not always the best way to go about life! Maybe we should all procrastinate a little bit more on getting out and buying stuff NOW