The concept of living “paycheck to paycheck” entered the popular lexicon in the aftermath of the financial crisis nearly ten years ago. Once people stopped living beyond their means and started paying down their debts, they found that they had little money left over at the end of the month to put away for a rainy day. Although people are saving more today than they were in the run-up to the Great Recession, they’re still only saving a fraction of what they used to save in earlier decades – including the 1980s.
So what’s behind all this? Why aren’t people saving like they did in the past?
One answer is that it is a generational thing. So many people have grown up relying on credit from banks and building societies that they have essentially forgotten how to save. There’s a culture of being able to have everything now and work for it later, rather than saving up in advance. [Read more…]