Why Don’t Americans Save More Money?

A recent report revealed that Americans are saving only 2.3% of their after-tax income. While not unprecedented, this is a historically low number. To demonstrate how quickly Americans’ savings rate has fallen, we were saving 7.5% in December of 2021.

Why is this such a big deal? A lack of savings inevitably leads to future financial problems. You can almost count on it. A lack of savings creates havoc when an unforeseen financial emergency hits. A lack of savings leads to the inability to make large purchases, like cars, without significant and costly debt. A lack of savings creates income problems in retirement. A lack of savings injures a person’s ability to protect their financial priority—generosity. Minimal savings predictably leads to major, future money issues.

As mentioned, the savings rate was higher in 2021. However, Americans are traditionally not known as big savers. Why is this the case. Here are ten suggested reasons:

1. We don’t understand the wisdom of saving for the future.

A lack of financial literacy will reveal itself in a country’s financial practices. Unfortunately, financial literacy is currently incredibly low in the US. Therefore, some simply do not understand the wisdom of setting aside money for future purchases or emergencies. Of course, Scripture tells us that saving for the future is wise. Proverbs 6:6-8, Proverbs 21:20, and many other verses discuss saving resources for future needs.

2. We don’t have the financial margin to save.

Financial margin is the difference between the amount you make and the amount you spend. There are many reasons why Americans have very little financial margin every month, some of which will be discussed later in this article. Sometimes, a lack of financial margin is completely out of a person’s control—they were hit with some unexpected medical bills or they were laid off. But sometimes, it is the result of a person’s actions or inactions. The next few points will further elaborate on this.

3. We don’t budget.

One of the surest ways a person can reduce their ability to save is by avoiding budgeting. A budget is a plan for your money. It is a plan directed by you. It puts you in control of your money. The absence of a budget leads to the presence of financial disfunction. One of my pastors, Blair Graham, said that a budget is one of the most powerful stewardship tools available. I agree. Some will say they don’t budget because they don’t “do” finances. This is not true. We all “do” finances. It is just a matter of how well we manage the resources God has entrusted to us.

4. We are love stuff, experiences, and convenience.

To quote the 1980s hit by Madonna, “Cause we're living in a material world. And I am a material girl.” Americans love their stuff, experiences, and convenience. For many in the United States, their hope is place in material goods and experiences—their car, house, and vacations. They view these momentary things as items that will provide lasting satisfaction, contentment, purpose, and admiration. Of course, such promises are quickly revealed to be untrue. This love affair with worldly stuff and experiences corrodes financial health. More importantly, it reveals a heart that is not placing its full hope in Jesus.

5. We desire immediate gratification.

I recently needed replacements for four toilet flappers. We’re crazy like that at our house. It was late in the evening, but I saw on Amazon.com that I could have the parts delivered to my house between 4:00am and 8:00am the next morning. I was amazed.

We live in a time when the ability to act on our desire for immediate gratification has never been easier. While this certainly has its benefits (I can get toilet flappers delivered quickly), the ability can create problems. We no longer must pause to consider whether a purchase is wise. We just click the “Buy now” button. We don’t even need to consider whether we have the money in our bank account. We just swipe the credit card. The result is that we spend more and save less than we should.

6. We don’t know where to put our savings.

A lack of financial knowledge can lead to decision paralysis. Some Americans simply do not know where to place their savings. No one has taught them. If this is you, short-term savings (needing the funds within 5 years) and emergency funds typically go into a savings account or high yield savings account. These accounts can often be found at a bank. Longer term savings, like your retirement savings or college savings, are often invested in accounts geared toward those purposes. For example, retirement funds can go into a IRA, and college savings can go into a 529 Plan.

7. We don’t know how to save.

Again, a lack of financial knowledge leads to decision paralysis. For some Americans, they don’t know how to save. Like the above point, no one taught them. For most, saving is simply setting us a monthly, automatic transfer from a checking account to a savings account. A person can do this through their online banking site.

8. We think everything will work out in the future.

Some Americans have little concern for the future. They assume that, somehow, everything will work itself out. This is a dangerous mindset that leads to future struggles. The consistent, top financial regret of retirees is not saving enough. Reality caught up with them. Everything didn’t work out. Their earlier decisions had an impact on their later years.

9. We don’t connect our savings with our ability to live generously.

We save to give. There is logic behind such a statement. According to Scripture, our financial priority it to give generously. Therefore, every other money decision must be made with the intent of supporting and accomplishing the priority. Otherwise, it wouldn’t be a priority. Financial emergencies will happen. Big purchases will happen. Retirement will happen. We save so when those things occur, we won’t be tempted to back off our generosity. We cover the emergency, pay for the car, and keep giving.

10. Some of us are in a financial position where we cannot save.

It would be unwise and heartless to not acknowledge that some Americans are truly in situations where they cannot save. They are facing extremely difficult challenges, often that are no fault of their own. They don’t like where they are and desire to move forward in their finances. For those, I pray the difficult season is short, the help is abundant, and that they continue to hold tightly to Christ, placing their full hope in Him.