Our parents or grandparents who grew up during the Depression, learned to save as if their lives depended on it. Reality is an effective teacher. Yet the harsh lessons that scarcity taught have served this generation very well as many of today’s older seniors are self sufficient financially speaking.
But what if reality is deceiving us with its perception of plenty? Statistics have shown that personal savings rates have been in a freefall since 1990, dipping to rates below zero by 2005. Why? Survey respondents report that saving is not a priority and readily admit to using debt for such spending as dining out, vacations and other impulse spending. Car purchases typically top the spending list. Such spenders are often in denial about their debt.
The problem for debt spenders is that any personal or economic event is devastating. For examples, financial ruin can arise from interest rate increases, wage loss from disability or unemployment, and falling housing prices.
The best way to escape the debt trap is not to get into it in the first place. Even in the midst of prosperity, teach your children to save 10 to 20 percent of what they earn. Like the Depression-era generation, we should save as if our lives depend on it because, frankly, our lives do.
Hazel Fluke, Financially Speaking 