Young People Don’t Save
Ah… interesting article in the Wall Street Journal from Monday. It seems that young people are very, um, thrifty… heh. Right. It seems that the most recent data shows that those in the under 42 sect (I am assuming this includes all adults and doesn’t take children into account) have saved -17% of their income this year.
Spend, Don’t Save, Your Way to Riches
Realize that capital gains are not counted as savings, and dividends and rental property income are treated as income, in addition to expenditures for education being considered the same as other types of consumption. Nonetheless, this doesn’t bode well for the near term future of our great nation. So how are we going to get ourselves out of this mess? It looks like the consensus view is spend, spend, spend — so that everyone can get rich (that is, everyone in China). Whew… I hope any readers of this site do not fall into the -17% or below category.
As the article says:
People who expect big returns, low interest rates and low inflation may figure they can meet their goals with paltry savings today — or none today and a little tomorrow. This wastes the advantage of a longtime horizon for reaping compounded investment gains.
These folks haven’t had a deep economic downturn to underscore the importance of saving over spending. As the economy has slowed, young people have spent more, not build up cash cushions. Let us know how that works out.
Couldn’t agree more myself.
