In Dr. Laura Schlessinger’s blog a few days ago, she wondered what happened to the habit of saving money. For a student of the world, and how it has become a more difficult place, it’s a more than fair question. The statistics are chilling: while we were able about 8% of our income in the 1980s, the figure today is less than 1%, and has even gone negative.
“Waste not, want not: my mother always said that.” Well, when I was growing up, my mother always said it. She started a savings account for me shortly after I was born; when I was older, she would tell me about growing up in the Depression. My parents saved and invested: they weren’t rich but they had a comfortable retirement. And my mother’s problem, when the end was near, was not that she was poor, but that there was nothing that she could spend her money on that would give her peace. (From time to time, when she really couldn’t take care of herself, she went to a nursing home, and hated every millisecond of it.)
For my part, when I was first making my way out in the world in 1983, saving money was not a problem for me. I deposited my paycheck in the bank, paid the rent and my bills, took $40 from the ATM at a clip, and watched my bank balance gently float skyward, even though I was barely earning $8/hour.
And then I got married (the first time) and faced the emergency of parenthood, and the wheels fell off. I’ll skip the really icky part, when I got divorced: you’re supposed to be broke when you split up.
Since then, I’ll be able to drop $50 or $100 in my savings account, but only occasionally. And then something will happen, and the money will come back out. For now, I have an excuse: I’m building my business, and my personal income is not up to where it was when I was in my last job.
But before I went into business for myself, saving was difficult, if not impossible. I think I know why, even though these sound like weak pretexts rather than good reasons:
- Futility: Let’s say that you want to buy an apartment. Here in Brooklyn, they’re not cheap: let’s say $400,000, not to load the case. If you have to put 10% down, that’s $40,000, and if you can save $100/month, you’ll need about 30 years to accumulate it. If you can scrounge $400/month, it will still take a good few years. (Perhaps I was foolish not to take advantage of all the deals that were available a few years ago. But if I had, now I’d be bankrupt on top of everything else.)
- Wanting to do something nice: When my wife wants something nice, I have a choice: I can be the Blue Meanie and say we can’t afford it, or I can whip out the plastic. And when it’s the end of the week, and I can relax for a bit, it’s nice to go out for dinner. OK: when you do the math, it’s a few thousand dollars a year. But would it really be worth it to be a tightwad?
But beyond that, saving isn’t cool in the popular culture. The news guy every night tells us that the economy depends on consumer spending: while I don’t take it too literally (no: it’s not my partiotic duty to spend!), it’s unfortunately true as a practical matter. And the Robert Kiyosaki ‘Rich Dad, Poor Dad’ books suggest that the way to wealth is not through doing and saving: it’s through owning. (But how you you get the werewithal to buy something so that you can own it? I guess that’s beside the point.)
I could save money. I could brown bag it for lunch, and ditch some of the restaurant meals.
Why is that so hard?