Incentives to save could help reduce poverty
August 20, 2005
There are an array of factors that contribute to why some families across the United States -- and arguably other parts of our world -- are spending more than incomes dictate, and saving less for retirement and emergencies.
At the most primitive level, economic development is a catch-all phrase for wealth accumulation, borrowing for homes and other household assets is at an all-time high, and long-term interest rates are quite low across the world. These factors -- when coupled with the ease-of-borrowing and a wealth-dominates-economy mindset -- place our citizens in positions that require financial focus and discipline.
The national savings rate, currently at zero percent for Americans, is the sum of private savings and public savings where there is a budget surplus or a budget deficit. Broken down, the U.S. Department of Commerce calculates this rate by taking into account food and clothing expenditures from after-tax income. Within this rate too, though, families are greatly benefiting from diversified investments and as such -- with such significant gains on home investments -- do not feel the immediate need to save.
In America specifically and other wealthy communities across the globe generally,more encouragement to individuals and families to save more can be accomplished by focusing on our governments finances – the goal of saving now for the expectation of taxes rising later.
Our nation's savings rate desperately needs to increase, and you can help.
I encourage you to join me in ensuring that low and moderate income communities are included in our conversations around eradicating poverty through developing sound economic self-sufficiency models. In addition, by increasing savings plan opportunities for our historically underserved economic development friends, the benefits lie within results for long-term health care and educational excellence access and equality for all citizens – not just those with the financial resources to not focus on saving now.
Henri Thompson is managing partner of Henri' Thompson LLC and a graduate of Johns Hopkins University.