It may not surprise you that most respondents to a recent poll by MoneyRates.com and GetRichSlowly.org reported that they came up short of their savings goals in 2009. What may surprise you, though, was that the primary reason given for the shortfall was not the economic recession.
Last year was supposed to be the year Americans “got religious” about saving money. Luxury items were out, and the credit card lifestyle became less attractive as credit became both more expensive and harder to get. On the surface, you could even argue that it was a good year for savings, as personal savings rates rose on average in 2009.
However, the poll results make an important point–doing a better job of saving money does not necessarily mean doing a good enough job. Savings rates are up, but from pitifully low levels. It will take even higher savings rates to get most people on track toward retirement and other key goals.
The troubling part about the poll is that the main reason why people reported coming up short–habits of overspending–won’t fade away with the recession. The economic downturn did not foil as many savings plans as the simple fact that people spent too much.
Savings Poll Results
Over 700 people responded to the poll, which was posted on MoneyRates.com and GetRichSlowly.org in late November and early December of last year. Of the respondents, 54 percent reported falling short of meeting their savings goal in 2009.
Of those who did not meet their savings goals in 2009, nearly two-thirds (64 percent) said it was because they spent more than they meant to. Thirty-six percent said they saved less than their goal because of the economic downturn.
To look at the poll optimistically, at least 46 percent of respondents did meet their savings goals in 2009. In other words, the glass was almost half full. In a year of rising unemployment, rollercoaster financial markets and low bank rates, that’s a pretty good achievement. Also, while 54 percent of respondents did not meet their savings goals, we can hope that many of them at least made some progress toward those goals.
Implications for Savings Rates
Both MoneyRates.com and GetRichSlowly.org are websites dedicated to helping people accumulate and manage savings. Visitors to those sites are already conscientious about saving, enough so to be seeking financial tips and the best savings accounts. It could be argued that savings performance in the general population may have been even worse than the results reported by visitors to these sites. In fact, the people who are in the worst financial shape of all may be those who failed to even set savings goals in the first place.
The main problem here is not a temporary economic setback, but the fundamental spending habits of many Americans. When people report spending more than they meant to, it suggests a certain compulsiveness–good intentions breaking down in the course of day-to-day living.
How do we bridge this gap? Financial responsibility should not be thought of as a once-a-year theoretical budgeting exercise. It has to be lived day in and day out. Setting an overall savings goal must go hand-in-hand with everyday savings discipline.
U.S. Bureau of Economic Analysis www.bea.gov/briefrm/saving.htm
The original article can be found at MoneyRates.com.