You can calculate your savings rate by simply looking at your budget. If it is negative, then you have a savings negative rate. If it is positive, then you are ahead of most consumers in America. 

In January 2007, the United States Commerce Department revealed the savings rate for 2006. Unfortunately the news was unfavorable. In fact, it was quite alarming.

2006 consumer savings rate was

This means that we spent more of our net earnings than we earned. This level of savings marks the lowest rate in 74 years (since the Great Depression).

·      The unemployment rate is lower than expected. So, not only are we working, but we feel comfortable about long-term employment.

·      The stock market is doing well. This gives us hope for positive growth in the future.

·      Real estate values are still increasing. The real estate bubble doesn't seem as big as expected; so, my home will continue to appreciate at current levels.

·      The economy appears to be thriving. We continue to hear of record profits earned in Corporate America. 

·      Our positive attitude about the economy has helped us justify continued efforts to live above our means to maintain or improve our current lifestyles.

Why is there a substantial reason to pause?

·      It is reported that overspending is not for basic needs such as food and water, but for the items which we feel will support our current lifestyle.

·     At some point, the dipping will not be sustained.  What happens then?

·     There are approximately 77 million baby boomers lowering their savings and increasing their debt as they approach retirement.

·      Younger adults will get a late start on savings.

·      Inflation will continue to be a factor and could be higher than increases in income.

·      The savings rate has been negative for the last 21 months.  In 2005, the savings rate was -0.4%.  How long will your savings and borrowing capacity fund a negative savings rate?

The question is . . . where do you want to be?

There are only two ways to improve your savings rate.  They include earning more income or decreasing your expenses. 

For help on improving your savings rate, refer to your Financial Wellness Toolkit.  It will walk you through the steps necessary to decrease spending and increase savings.

Reminder

It's not what you make, but what you keep!!