Four Reasons We Spend More Than We Should

Americans are not saving money. Our national personal savings rate has been less than 1% since 2005, when our savings rate was actually negative; its lowest point since the Great Depression. If we are not saving, then we must be spending more than we ever have. But why?

In his new book, Going Broke: Why Americans Can’t Hold On To Their Money, Connecticut College Professor of Psychology Stuart Vyse explains our unstoppable spending.

1. Availability of Products and Services

Before Wal-Mart and Costco, we used to shop in small local shops that stocked small quantities of what peopled needed. Now mega-retailers stock acres of products from around the world. Even when the stores are closed, virtually anything in the world can be ordered online.

2. Availability of Credit

It seems hard to believe, but credit cards are a recent phenomenon. Just 30 years ago, most consumers still paid cash, or with store credit like layaway. Now credit cards are so common, lenders fight tooth and nail for your debt, making it easy to shop until you drop – instead of until you’re broke.

3. Instant Gratification

Another pitfall of easy credit, you can buy now and ask questions later. If you were saving for a big purchase with cash, you would have plenty of time to find the best deal, or perhaps even realize that you don’t need the purchase after all.

4. Shopping is Effortless and Impersonal

Years ago consumers would had to leave the house – and perhaps drive some distance – to go shopping. While shopping, it might have occurred to other shoppers or salespeople that a big purchase was out of a shopper’s budget. There was even a stigma attached to credit cards – it meant you couldn’t pay cash!

Today we can shop online, and sales clerks may barely acknowledge you in a store. And credit cards are more common than cash: paying with cash may even attract attention. Ever try making a large purchase with cash recently?

My Take

It seems to me the core reasons we spend and can’t save can be tied to globalization and the over abundance of credit. While I understand the economic attraction to both, I am fearful of the long-term consequences of a society addicted to easy credit and non-stop shopping. What do you think?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


  1. I think one of the main reasons we seem to be spending more is the transition from defined benefit to defined contribution plans as the means for retirement savings. Pre-tax deferrals into 401Ks, don’t count as savings in the governments calculations that result in the negative savings rate reported. I discussed this, and a few similar problems with the calculations in a post over on the Lending Club blog at

    I certainly don’t want to dismiss the problem, because it does exist, but there are other factors to consider, namely how we calculate what “saving” actually means.

  2. Excellent post! Thanks for sharing it. I plan to include your article in my weekly carnival review this Friday.

    Best Wishes,

  3. Nice post my friend! My wife and I were talking about this the other day. Does anyone remember when stores offered “layaway programs”? This was a good idea for the American consumer, since a person actually had to save up and pay for the items in cash; versus simply slapping down a piece of plastic without regards to cost or consequences.