Getting paid $50,000 to raise the savings rate

The best way to increase the savings rate is higher paying jobs, or just good jobs.

The yawning gap between pay for execs and lower employees is higher than ever before.

The person who wins this contest will be able to save a good chunk, but the person who makes as much in a year as the contest pays out, will not be able to save much.

It is important for most families to save and invest for retirement and/or other needs. BUT, the over all savings statistics are very misleading. They do not include pension contributions and subtract them when they come out. They also do not include investments. The highest savings rate in the world has been Japan which has been in a 20 year recession according to GDP measurements.

Therefore, I would ignore this statistic. Under the current monetary system, it is the deposits in commerical banks that count. This allows them to create more new money. Hopefully, they will start lending more otherwise we will be in a very dormat economy for years to come, like Japan.

Mark S. Pash, MBA,CFP progressive-economics.com

CORRECT!

I agree with this post… median wages need to go up… because they were stagnant for 30 years, people had to borrow more and save less to maintain their standard of living…

But if you want a policy or program to raise the savings rate, aka disposable income after spending… here is an idea…

Don´t do anything yet…. We are in a recession environment… If people save more, there will be less spending, and more deflationary pressures and more unemployment…

Consumer spending is good now especially that the govt is deciding to be fiscally responsible (or irresponsible?) and cut spending… GDP is relying on people to spend and not save…

Mark,
Japan doesn´t actually have a high savings rate… Here is a paper from 2006 showing that the savings rate in Japan had fallen to 3% by 2004…

http://www.mof.go.jp/jouhou/soken/kenkyu/ron164.pdf

What is the savings rate currently in Japan? 0.5% …. here´s the link…

http://answers.yahoo.com/question/index?qid=20100516100656AAkzSFe

Historical Savings Rate Chart

http://www.topdatacharts.com/FederalReserveCharts/personal-savings-rate

What do you know about these matters?
You are trying to describe the Universe in some words.

http://japan-russia.jimdo.com/

The same ‘quality’ things with ‘specialists on Japan’ discussions .

I believe education will be needed, and not a quick 2 year fix, but a fundamental, institutional change to the way we are taught about money.

Compare the savings rate to nutrition. Everyone knows they should save money, just like everyone knows they should lose weight or eat better. But it’s hard to get people to change their patterns, and habits. (For a great view on this watch Jamie Olivers food revolution.) Most people know they need to change their ways, but don’t know how, or think change is too hard.

We’re addicted to credit cards, overspending, and not saving just like we’re addicted to fast food, it’s quick, easy, and painless in the short term, and by the time the consequences hit us we just think they’re a fact of life, we adjust to the negative, and keep going on the path that we’re on.

Per Dan’s comment above: I disagree that increasing pay will have a significant effect on savings rates. People who want to save will find a way to save, people who don’t, won’t. Even if you can’t afford to save today, the next time you get a raise, it’s pretty painless to save some of it, and only spend some of it. Where I believe the real solution lies, is figuring out how to motivate people to do what they know they should, even though change isn’t easy.

-MBirchmeier

The savings rate in recent years been a little lower. But, it proves my main point. The savings statistic is bogus!

Mark S. Pash, CFP

The system should be a government policy, and those earning beneath X$ should not be applicable. The system is applicable to all who are over 21 and earn a annual income over X$.

The new savings rating system should be divided for 3 brackets of income:

- The lower bracket will compose of all workers who earn government benefits of any kind, with a minimum income of X$.

- The middle bracket will compose of all who do not benefit from the government and have maximum income of Y$.

- The top bracket will compose of all with an income higher then Y$ and lower then whose salary are already paid in part shares.

The lower bracket includes those with benifits and a minimum income of X$ income. For the lower bracket to increase personal savings rating, the government must control benefits before being handed over, for example by placing the money from benefits in a ‘benefit acount’( merged with the individual’s current account and with a savings account with a 1:3 ratio) for individuals. In the current account, individuals are rewarded by taking out/spending less.

For the middle bracket, consider each individual as a worker. A new mini financial tool should be born: some sort of rating for every outlet or shop, on the streets or online. Just like big incomers, workers should receive 50%(variable to acceptable living standard) of income in $ and the rest in rating value. To calculate the rating value of an outlet, multiply 50% of employee income mean by annual(depending on pay interval) revenue increase (in %). This also increases productivity.

For the top bracket, workers must earn more then Y$ and not be affected by a 50% share income (after which the system no longer applies). In this bracket, it is much easier to enforce saving, by increasing interest on 5+ year savings accounts and forcing a variable % of revenue to these accounts.

NOTE: the values of X, Y and certain percentages have not been defined yet due to lack of data, and will be updated.
NOTE: A part about students should be added, because that was the whole idea at start..
NOTE: I am only 16, so this may not much sense.