It is a misconception that Americans are incapable of saving. They did for decades. Some use that to play the best slot game malaysia while some go to salon or shopping.
When personal-finance columnists discuss America’s poor saving habits, they frequently begin with psychological factors that make it difficult to plan for the future. Behavioral psychology serves as a convenient scapegoat for a variety of flaws. However, the savings rate has recently fallen, and the human mind hasn’t changed since the Ford presidency. During the first Reagan administration, the bottom 90% of households saved 10% of their income.
Others argue that the country’s low saving rate is due only to American exceptionalism. But it’s also a fallacy that the United States is the only one in its opposition to conserving the environment.
So, why are Americans unable to save money? Three factors should be considered in a thorough response:
(1) Because the phenomenon is novel, it must have a new cause.
(2) The source of the global drop in savings among rich countries must be global as well.
(3) There must be something “unique” about America because the poor and middle classes are so ill-prepared for retirement.
Point 1: When Americans’ earnings stopped rising, they stopped saving.
The golden age of American saving coincided with the golden age of American wealth growth. This makes sense: saving money is simpler when there is more money to save.
Point 2: Houses were purchased with debt by the poor and middle classes.
In the United States, the 1990s were a tremendous decade for income growth. However, the personal saving rate dropped by more than 5%, the most in any decade within the last half-century.
What occurred in the decade of the 1990s? Mortgage debt became a reality. One likely explanation is that during the stagflationary 1970s, many Americans abandoned their savings habits, and when real wage growth resumed, many of them took advantage of the credit bubble to purchase suburban homes, vehicles, and furnishings. Because of the massive increase in housing debt, the bottom 90’s saving rate has turned negative. For millions of people, the housing bust was excruciating.
Point 3: They spend rather than save.
They are into entertainment like casinos, movies and more. Even things that can bring them money. People in Malaysia have been indulging in the best slot game Malaysia.
Americans spend more on “visible commodities” such as clothing, shoes, jewelry, timepieces, hairdressers, health clubs, and vehicle parts than whites. Even after adjusting for income, they discovered that minorities save less and spend more on these conspicuous consumption goods than whites. However, the story was not solely about race. Whites in low-income states spent a bigger percentage of their income in visible items than whites in better-income states.
Point 4: Rising income inequality has worsened
There is pressure to maintain wealth with wealthier neighbors. They even observed between the state’s wealthiest households’ earnings of bankruptcy filings in that state. It wasn’t only about growing housing prices; however, after controlling for that, their findings were solid.