Remember the saying "Take care of the pennies and the pounds will take care of themselves"? Notice how I said 'remember' and not 'you know.' That saying seems to be obsolete now the way people act.
There's an article by newsweek and the New Zealand herald worth reading about saving. In 2005, NZ's saving rate was -14.8% of total income! Yes, on average we spend more than we earn. There's a trend around most of the world that shows savings have decreased. Our Grandparents and some of our parents would not be able to comprehend the amount of debt and little savings we have. So why is it that we have such a different mind set from our elders? I'll share a few of my opinions..
Easy credit: Credit cards are being advertised on tv as well as easy to get personal loans. Now you can even get home loans with no money down! They've been giving them out left, right and centre. The credit crisis in America highlights how many loans have been given out to people who could not afford it. This is a huge change from when people used to buy houses for cash. If it wasn't that easy to get credit, maybe we all wouldn't be in so much debt.
Consumerism gone mad: Petrol's expensive? What about water!? Water is put in plastic bottles and you're charged $2 for less than a litre. You could go home and get more for 5c, or just go to a tap outside and fill up an old bottle for free. You think people wouldn't buy this, but a lot of us do it on a daily basis. Since we're not handing over cash these days to pay for things, many people don't think about what they're spending their money on. Coffee everyday, a hamburger, lollies for a sugar fix, porn on the internet, these are usually impulse buys which shouldn't really be done. And do you need those $250 shoes? Your mind says yes but the 10% part of your brain you don't use is saying no...
Lack of education: Were you taught much about budgeting while you were at school? Probably not, and it's probably not a reason for a change in mindset either since your relatives were taught just as much. But with so many different ways of saving with no understanding of what is a good deal could be preventing us from wanting to save. And when you hear about people losing their life savings because they put their money into a failed finance company, you probably feel relieved it wasn't you. And even if you put the money in the bank, is it safe? Perhaps not with all these sub-prime loans floating about.
What can we do about this? Try and change our mindsets. Don't take up credit just because you can, save up a decent deposit before buying a house, try to cut out the majority of your small impulse purchases (only use cash to pay for things if it helps) and get educated. Does anyone have any thoughts on why we aren't saving, or how we can?
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