Can We Change our Spending / Saving Culture?

The personal savings rate is the ratio of personal savings to disposable personal income. Disposable personal income is the amount of income left over after taxes have been paid. Personal savings is the amount of income left over after personal consumption expenditures and debts have been paid.

The U.S. Department of Commerce's Bureau of Economic Analysis has kept a record of the personal savings rate since 1959. Since then, the personal savings rate has averaged 6.98% with a standard deviation of 2.75%. In the past 20 years, Americans have saved at a much lower average of 4.18%.

During the same twenty-year period, according to statistics released by the Federal Reserve Bank, consumer credit outstanding increased in the United States from $751.9 billion to $2.78 trillion (excluding mortgage loans).

Finally, according to the International Trade Association, the latter half of the twentieth century, the service sector has been both the largest and the fastest growing component of the U.S. economy. Following World War II, the service sector accounted for about 60% of U.S. output and employment. Today, the service sector's share of the U.S. economy has risen to almost 81 percent.

This three factors over time, along with the ease of obtaining credit through credit cards and lower lending standards, have created a significant change in our consumer culture from a “save- to-spend” to a “buy-now-pay-later” mentality. And since the U.S. economy is so dependent on consumer spending, how can our culture reverse its addiction to immediate gratification without going through a number of struggling years as we collectively build savings today in order to buy stuff tomorrow?

And when it comes to our children – the next generation of consumers – can this change in culture be realized or are they sentenced to a lifetime of debt and struggles?

Take a look at this video clip on the commercialization of children and tell me what you think.