A great article here about the savings rates of most industrialized nations and how they are progressively getting closer and closer to 0% of net household income. New Zealand and Australia even have a negative rate (yikes!). They are borrowing to maintain their styles of living.
The article cites the example of Japan having a very high savings rate, but that had a major role in their recent economic slump.
What do you think? Are savings good? How much do you save?
1 comment:
I think it's wise to have a stash of easily-accessible savings in case of emergency. Three to six months of expenses, depending on who you listen to. Leave it alone, tuck it away in a savings account (EmigrantDirect is paying 3.25% right now).
After that, I think short term savings is good for things like vacations, major household purchases, etc. - but only if you're getting investments taken care of first. I consider it to be "deferred spending money" as opposed to true savings. That's why I think it's crucial to be disciplined and throw money into a 401k, IRA, and short-term trading account FIRST - then, if there's cash leftover, put it into Savings.
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