Mind Over Money

“But I can’t save any money.” It’s an excuse I hear a lot. Sometimes it’s a whine. Other times I detect a note of defiance. In the past few years, it has become increasingly frequent, as more and more Americans make less than we spend, eating up the equity in our homes, borrowing from our 401(k)s. The national savings rate is declining. And the situation seems to be getting worse.

The question is: Why? Why don’t Americans make saving a priority? We certainly know that saving money — like eating broccoli and strengthening our core muscles-is good for us. In the latter cases, we listen. Yoga and Pilates have never been hotter. And broccoli now comes as a baby vegetable, precut and bagged, and even in purple. Yet saving for tomorrow is still a largely ignored and unappreciated skill. There are three reasons for this.

One: Saving today is harder. “We’ve had an income transfer away from the middle class,” says Anthony Pratkanis, a psychology professor at the University of California, Santa Cruz, who specializes in financial issues. The typical household income has held largely steady around the mid-$40,000 range for a good half decade, he points out, while prices have continued to rise. “If you’re having to spend a disproportionate amount of income on food and gas, it’s hard to save.”

Two: Credit became too accessible. For years it was simply too easy to get your hands on money to spend. While banks at one time would not let you spend more than 36 percent of your total income on debt (including mortgage), they stretched that number to 55 percent during the housing boom. Why save when you could get that big flat-screen TV today — just like the one the neighbors installed — and pay for it with mortgage debt that was both cheap and deductible?

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