Why Americans Don’t Save Money

father and daughter putting coin in piggy bank

According to a 2015 Pew Research study, Americans are set apart from those in other countries by their belief in hard work and in their general optimism. This extensive study which surveyed people in 44 countries, found that the majority of Americans believe in individualism – the attitude that success is not just the luck of the draw, but something that is obtainable through hard work. In fact, when asked on a scale of 0 to 10 about how important working hard is to getting ahead in life, 73% of Americans said it is was a “10” or “very important.” This is quite astounding when compared with a global median of 50% among the 44 nations.

Americans are also more optimistic than their counterparts. When asked by an interviewer how their day was going, about four-in-ten Americans (41%) described their day as a “particularly good day,” this nearly doubled the share of those in Germany with that outlook (21%), and was 5 times higher than those in Japan who expressed the same feelings (8%). Those in the UK that answered with a similar sentiment was a higher number, but still just 27%.

With a belief in hard work, and a general feeling of optimism, one might wonder how this translates into money matters, particularly the savings account of the average American. Sadly, apparently not much. The 2015 GoBankingRates survey that put the internet on fire and financial planners on the edge of their seats revealed that 62% of Americans have less than $1,000 in savings, and around 21% don’t even have a savings account. So, with all the belief in controlling one’s destiny through hard work combined with a greater general sense of well-being compared with those in other wealthy countries, where is the disconnect? Let’s look at a few reasons why Americans have a difficult time saving.

We Aren’t Taught to Save

Unless you had financially savvy parents teaching you about personal finance while you were growing up, or were lucky enough to have courses offered at your local high school, chances are you had to learn about money the hard way. While finance is a part of our everyday life, according to the Council for Economic Education, only 17 states require a course on personal finance and 20 states require an economics class as a high school graduation requirement.

If we don’t learn the basics of debt, budgeting and saving when we are young we will most likely learn it through the school of hard knocks when we get older. This could also explain MetLife’s recent findings that “49% of employees are concerned, anxious or fearful about their current financial well being.”

We generally aren’t that good at teaching the “whys” and “hows” of saving and it’s connection to our emotional health. Just understanding how consistently saving even a small amount of money over time can bring some financial clarity to an unknown future can help begin the process of controlling our financial destiny. This is the beginning of replacing anxiety over finances with a positive outlook towards one’s financial future.  Just look at how compound interest can have a dramatic effect on your money with our saving interest calculator.

We Have Access to Easy Credit

As soon as your college students enters the world of higher education,  there is a good chance he or she will be solicited by a credit card company. The astronomical costs of college combined with a lack of financial prudence, can open the gate to financial hardship for so many young adults who get saddled early on with credit card and student loan debt. The low introductory credit card interest rates make it difficult for the typical “starving college student” to resist the tempting offers. Soon, these young adults are trapped in a world of late payments, finance charges, and balance transfer fees – with any extra money going toward paying down debt instead of building a savings account.

The average student has not only accumulated credit card debt, but student loan debt as well, and without a carefully followed financial plan, the debt cycle continues into marriage and beyond. The best way to minimize debt is to only enter into it with extreme caution.  Our student loan payoff calculator helps you to gauge student loan pay off with anticipated future income.

We Like to Live for the Moment

The act of saving is really a process of deferring gratification. It is setting aside money to be used for a determined or undetermined purpose in the future. However, it is in the nature of many of us to live with a carpe diem attitude – living for the day without thinking about tomorrow. We buy into the “no interest for 30 days,” promotion or extended payment plans because we think in terms of what we can get today, not about the financial repercussion that our purchase(s) will have on us 30 days or several years from now.

Without visualizing the financial impact our debts will have on us just a few months or years from now, it is even more difficult to consider how our lack of financial preparation will affect our 70-year-old selves. This is perhaps one of the reasons that 73% of consumers are dying with outstanding debt according to data provided by We simply want to live without the restrictions that come from our obligation to take care of our future self.

We Live Above Our Means

Americans work hard, and we also play hard. We live in a country and at a time where every possible material item is at our fingertips. The latest phone, the newest car, the week long trip to the Caribbean are all possible with a short-term loan or credit card. We travel with our kids for their competitive sports, and hire a personal trainer with our renewed gym membership. We think it is all normal because when we look around us everyone seems to be buying and doing the same things. It just seems to be part of the American lifestyle.

But what is also part of our lifestyle is a very small contribution of our income to personal savings. Consider and compare the 4.5% personal savings rate of Americans to France’s 15.4%.  Our desire to obtain or keep up a certain lifestyle can come at a substantial cost, or perhaps better stated an opportunity loss, for personal and retirement savings and emotional peace of mind.

While there are many other reasons that American’s have a difficult time savings – some due to circumstances beyond our control such as illness, unemployment, or the difficulties that come from perpetual poverty – for many of us, we can do better. We can take the qualities of rugged individualism that make us hard workers and rely on our optimistic natures to turn a corner in our spending and saving decisions. We can watch our work pay off in the way of compound interest through long-term investments and feel optimistic not just in our circumstance today, but looking towards a retirement full of happiness and security with and for those that we love. We can choose to live and be differently now so that we can live with peace of mind in retirement.

Begin your journey toward financial freedom today. Use our calculators to help you budget, save and invest in your future. Ensure you are on the right track with your savings by trying out our retirement planning calculator.  Simple steps today will help you feel optimistic about your financial future.