Americans Don't Save, Why?
| by Daniel J. M. Galpin | September 04, 2007
Many say Americans spend too much and don't save enough, in some cases this is true, but is it true regarding the average American? Additionally, it's said that 80% are spenders and 20% are savers. I personally happen to be the saver type, yet I have nothing saved, why? This has been true my whole working career. I've wanted to save, yet I've not been able to. I simply don't make enough money.
I realize by saying such, many will immediately say this is an excuse. I wish it was! The sad truth is that not only do I not make enough, but neither does the average American. The general rule is to save 10%, the pay yourself first theory. This is for later in life and may include a reserve for those rainy days. In my opinion, we should save 20%, 10% for retirement and 10% for repairs, emergencies, vacations and odds and ends that come up. That's what I'd do, if I earned enough.
So, am I alone? NO. The average American doesn't earn enough to save 10% let alone 20%. It's basic math, lets look at the numbers. According to the USA Today, Wednesday, August 30, 2007 the average American wage is: $29,544 a year. Their sources: Institute for Policy Studies/United for a Fair Economy; Forbes magazine; US Department of Labor's Bureau of Labor Statistics. The USA Today also reported on the same day, the average rent is about $830 a month, which included concessions such as free month's rent; the source: Marcus & Millchap Research services.
Taking an income tax of only 15%, using a standard deduction of $8,500 and deducting the rent mentioned above, leaves the average American wage earner with about $16,400 a year to live on. Now subtract the basics needed for living in America: $6,300 ($250 monthly car payment, $200 gas, $75 insurance) for automobile expenses, which does not include maintenance or repairs to the vehicle; $4,740 (utilities: phone: $75, electric, heat & air $200; garbage $35; water $25; cable $60) – I realize A/C is a luxury by many, most of the cost is heat and electric. My A/C costs about $450 a year or $37.50 a month, additionally cable is considered a luxury - $2.00 a day is cheaper than going out to the movies, bowling, the bar or other forms of entertainment; $3,600 a year for food, which is about $10 a day for three meals a day, toiletries and an occasional treat. $2,400 a year or $200 a month for miscellaneous costs such as personal property tax, car tax and registration, car maintenance: oil changes, brakes & tires, car repairs, repairs of other items owned, replacement of clothes due to wear and damage, etc. This doesn't include any source of entertainment, other than cable. This is merely working to survive. The total is $17,040 or a net loss of $640 a year. Again that's saving nothing! It's no wonder Americans don't save. The truth be told, who really wants to work merely to survive? This brings resentment towards the rich and government. Is it not reasonable for someone to work and expect some disposable income for fun, a vacation or even gifts to loved ones? This is why America is on the verge of financial collapse, not the subprime mortgage ordeal. For more on that, see my article titled: The Subprime Mortgage Disaster.
Has it always been this way in America? NO. In 1962 the highest paid households in the middle 20% of the American workforce was paid $6,800. It was $56,020 in 1998, a raise of about 724%. Note: that is household income not the average wage earner's income. In 1962 the average household only had one wage earner. In 1998 the average household had two wage earners, thus that $56,020 would have to be divided by 2 in order to equal the household income 1962, which was earned by only one worker. Therefore that $56,020 would actually equal $28,010 per household if there was still only one wage earner or a raise of 312%. Meanwhile, the cost of living rose 675%. At first glance without account for the number of workers per household the wage appears to not only keep up but grow with a 724% gain in wages compared to only 675% gain in expenses, yet the reality of two wage earners per household instead of one shows an actual great loss in American spending power. The cost of goods rose 675% while the individual income rose only 312%. The goods used to compare were the price of a candy bar, New York Times, postage, gas, hamburger, chevy (full size) and refrigerator.
It gets worse, in 1962 the highest paid worker in the lowest 20% of the national work force earned $3,000 a year, which is equal to $25,616 in a year in 2005. The average American wage is only $29,544, barely above the poorest 20% of the workforce only two years ago. If we add a 3% cost of living adjustment for the past two years, that $25,616 becomes $27,176. The average American wage earner today is on the virge of being in the poorest 20% of the national workforce! This might explain why the American economy is not good, as many Americans already know.
It seems odd to me that when we look at the average American wage, it is barely above the poorest 20% of all wage earners in the country. I mean, doesn't average wage imply the middle? It did when I was in math class in school. Logically we should be able to take the highest paid person and the lowest paid, add the two wages together divide by 2 and come up with the average wage or the middle mark, yet this isn't the case. Honestly, American wages have been intentionally suppressed by businesses claiming “competitive wages,” a code word for slave wages, so the businesses can buy up the competition, grow profits at an astronomical rate and pay enormous wages to their top executives. Interestingly the USA Today also reported the average CEO makes 10.8 million dollars a year, which is $29,589 a day 365 days a year. That's the average American worker's pay and they earn it per day, even on their days off! The average American wage of $29,544 on a 365 day pay scale is only $80.94 a day. Read more about this in my article: End CEO Pay Injustice!
Is it any surprise why Americans don't save? NO. Big business and our government has raped and pillaged the American worker and then takes our hard earned money and either buys more companies to repeat the process or gives it away to other nations and uses it to bring immigrants here from other countries, which in turn drives our wages down all the more! Don't get me wrong I'm all for legal immigration, but immigrants need to pay their on way; more on this in my article titled: Taxes Pay for immigrants.
JUST SAY NO to
DECORATES and REPUBLICANS
VOTE
INDEPENDENT
Dan Galpin for President!
You don't have to vote for me, but vote Independent!
http://www.dangalpinforp … galpin.com
I realize by saying such, many will immediately say this is an excuse. I wish it was! The sad truth is that not only do I not make enough, but neither does the average American. The general rule is to save 10%, the pay yourself first theory. This is for later in life and may include a reserve for those rainy days. In my opinion, we should save 20%, 10% for retirement and 10% for repairs, emergencies, vacations and odds and ends that come up. That's what I'd do, if I earned enough.
So, am I alone? NO. The average American doesn't earn enough to save 10% let alone 20%. It's basic math, lets look at the numbers. According to the USA Today, Wednesday, August 30, 2007 the average American wage is: $29,544 a year. Their sources: Institute for Policy Studies/United for a Fair Economy; Forbes magazine; US Department of Labor's Bureau of Labor Statistics. The USA Today also reported on the same day, the average rent is about $830 a month, which included concessions such as free month's rent; the source: Marcus & Millchap Research services.
Taking an income tax of only 15%, using a standard deduction of $8,500 and deducting the rent mentioned above, leaves the average American wage earner with about $16,400 a year to live on. Now subtract the basics needed for living in America: $6,300 ($250 monthly car payment, $200 gas, $75 insurance) for automobile expenses, which does not include maintenance or repairs to the vehicle; $4,740 (utilities: phone: $75, electric, heat & air $200; garbage $35; water $25; cable $60) – I realize A/C is a luxury by many, most of the cost is heat and electric. My A/C costs about $450 a year or $37.50 a month, additionally cable is considered a luxury - $2.00 a day is cheaper than going out to the movies, bowling, the bar or other forms of entertainment; $3,600 a year for food, which is about $10 a day for three meals a day, toiletries and an occasional treat. $2,400 a year or $200 a month for miscellaneous costs such as personal property tax, car tax and registration, car maintenance: oil changes, brakes & tires, car repairs, repairs of other items owned, replacement of clothes due to wear and damage, etc. This doesn't include any source of entertainment, other than cable. This is merely working to survive. The total is $17,040 or a net loss of $640 a year. Again that's saving nothing! It's no wonder Americans don't save. The truth be told, who really wants to work merely to survive? This brings resentment towards the rich and government. Is it not reasonable for someone to work and expect some disposable income for fun, a vacation or even gifts to loved ones? This is why America is on the verge of financial collapse, not the subprime mortgage ordeal. For more on that, see my article titled: The Subprime Mortgage Disaster.
Has it always been this way in America? NO. In 1962 the highest paid households in the middle 20% of the American workforce was paid $6,800. It was $56,020 in 1998, a raise of about 724%. Note: that is household income not the average wage earner's income. In 1962 the average household only had one wage earner. In 1998 the average household had two wage earners, thus that $56,020 would have to be divided by 2 in order to equal the household income 1962, which was earned by only one worker. Therefore that $56,020 would actually equal $28,010 per household if there was still only one wage earner or a raise of 312%. Meanwhile, the cost of living rose 675%. At first glance without account for the number of workers per household the wage appears to not only keep up but grow with a 724% gain in wages compared to only 675% gain in expenses, yet the reality of two wage earners per household instead of one shows an actual great loss in American spending power. The cost of goods rose 675% while the individual income rose only 312%. The goods used to compare were the price of a candy bar, New York Times, postage, gas, hamburger, chevy (full size) and refrigerator.
It gets worse, in 1962 the highest paid worker in the lowest 20% of the national work force earned $3,000 a year, which is equal to $25,616 in a year in 2005. The average American wage is only $29,544, barely above the poorest 20% of the workforce only two years ago. If we add a 3% cost of living adjustment for the past two years, that $25,616 becomes $27,176. The average American wage earner today is on the virge of being in the poorest 20% of the national workforce! This might explain why the American economy is not good, as many Americans already know.
It seems odd to me that when we look at the average American wage, it is barely above the poorest 20% of all wage earners in the country. I mean, doesn't average wage imply the middle? It did when I was in math class in school. Logically we should be able to take the highest paid person and the lowest paid, add the two wages together divide by 2 and come up with the average wage or the middle mark, yet this isn't the case. Honestly, American wages have been intentionally suppressed by businesses claiming “competitive wages,” a code word for slave wages, so the businesses can buy up the competition, grow profits at an astronomical rate and pay enormous wages to their top executives. Interestingly the USA Today also reported the average CEO makes 10.8 million dollars a year, which is $29,589 a day 365 days a year. That's the average American worker's pay and they earn it per day, even on their days off! The average American wage of $29,544 on a 365 day pay scale is only $80.94 a day. Read more about this in my article: End CEO Pay Injustice!
Is it any surprise why Americans don't save? NO. Big business and our government has raped and pillaged the American worker and then takes our hard earned money and either buys more companies to repeat the process or gives it away to other nations and uses it to bring immigrants here from other countries, which in turn drives our wages down all the more! Don't get me wrong I'm all for legal immigration, but immigrants need to pay their on way; more on this in my article titled: Taxes Pay for immigrants.
JUST SAY NO to
DECORATES and REPUBLICANS
VOTE
INDEPENDENT
Dan Galpin for President!
You don't have to vote for me, but vote Independent!
http://www.dangalpinforp … galpin.com
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