Rich People Save; Poor People Don’t

[Jefferson23]

By James Kwak

It seems obvious. Yet it’s often lost, both by the scolds who lecture Americans for not saving enough and by the self-appointed personal finance gurus who claim that anyone can become rich simply ye saving more (and following their dodgy investment advice). Saving is sometimes seen as some kind of moral virtue, but from another perspective it’s just the ultimate consumption good: saving now buys you a sense of security, insurance against misfortune, and free time in the future, which are all things that ordinary people don’t have enough of.

Real Time Economics (WSJ) links to a new survey being pushed by America Saves (which appears to be a marketing campaign run by the Consumer Federation of America, which seems not to be evil*). According to the survey, there are significant differences in savings rates and accumulated savings between lower-middle- and middle-income households. And that’s treating all households in the same income bracket as being alike, leaving aside differences in family structure, cost of living, etc.

I’m all for living within your means and saving for retirement and all that. But it’s a myth to say, as America Saves does on its home page, “Once you start saving, it gets easier and easier and before you know it, you’re on your way to making your dreams a reality.” The underlying problems are stagnant real incomes for most people, rising costs (in real terms) for education and health care, increasing financial risk due to the withdrawal of the safety net, and increased longevity (good in some ways, but bad if incomes aren’t rising and you want to retire at 65). That’s why households are showing up at age 64 with less in retirement savings than they had just last decade. And why, if you feel like you’re not saving enough, it’s probably not your fault.

in full: http://baselinescenario.com/2014/02/25/rich-people-save-poor-people-dont/

[Auntie Bush]

1. How the hell can poor people save if they have no money?

[Jefferson23]

3. Yep, one of his points...evidently, the right blames the individual, not the system. n/t

[RC]

13. Get a 4th or 5th job, just so you have some extra money to save. /sarcasm

Then maybe you can put a 10% down payment on that $250,000 house you've had your heart set on. You know just like hard working rich people.
More than one, just in case --->

[L0oniX]

2. Save money ........so others can take it from you.

It used to be encouraged for people to save money. Now we have asshats like Bush telling people to spend because it's good for the economy. Crazy shit.

[Jefferson23]

4. He and his cronies have made saving near impossible too. n/t

[Wounded Bear]

5. The bottom line:

* But America Saves itself is supported by a bunch of financial institutions and trade associations like the Investment Company Institute, which have a vested interest in getting people to entrust more money to them.

Much like "education," it's all being pimped by people who want a slice of your pie.

[enlightenment]

6. Fascinating website.

Thank you for posting the link.

[Jefferson23]

16. You're very welcome. n/t

[jsr]

7. Assuming poor people have something to save

[Avalux]

8. Poor people can't. I know firsthand.

How was I supposed to 'save' money when I barely had enough (and often didn't) to feed my daughters?

And now that I actually have some to save, it's a race against to the clock to have enough for retirement. The only way I can make money so I have enough is to invest in the stock market. Simply saving won't be enough. It's gambling, nothing more, and there's a good chance it might be taken from me.

[Jefferson23]

11. Exactly the point the author was making..it is too difficult for too many Americans. The risky

business of the website he is critical of, America Saves, is pathetic. I did not link to it in the OP.

[LiberalEsto]

9. The banks pay such miserably low interest on savings

that it's almost not worth saving.

Oddly, they think nothing of charging outrageously high interest on credit card debt.

I wonder why that is.

[kdmorris]

10. Being poor means that you have nothing to save

Even if you manage to have a few good months and save some small pittance - your car is going to break down or your food stamps are going to get cut or your daughter is going to outgrown her brand new shoes or break her arm. And that money then gets used to overcome those immediate and pressing issues instead of for retirement.

[msongs]

12. interest rates of 0.000000000000000000001% do not encourage saving nt

[shraby]

14. Banks want at least a hundred dollars base in a savings account to even open one,

some banks want more. Most poor people can't even open an account. Also if it isn't "active" enough to suit them, they will charge x amount per month until the account is gone.
At one time, children could open an account and put their little savings in it until it finally amounted to something.
My brothers and I each had one from taking bottles back to the store for the deposit then put it in the bank.

[Jefferson23]

17. Yes, far too many obstacles, odds are stacked against you more than ever since that time. n/t

[Iggo]

15. Rich people can. Poor people can't.