Artemis Strategy Group

Savings Motivations and Behaviors

Pink piggy bank with glasses standing on books next to a blackboard with untidy spending and saving message.

The ants and the grasshopper: Who’s motivated to save?

 Pink piggy bank with glasses standing on books next to a blackboard with untidy spending and saving message.

We all remember that fable about the ants and the grasshopper, right? The grasshopper has fun all summer while the ants busily save food for the winter. Then he begs for their help when he’s starving.

It turns out we all have a bit of both the ant and the grasshopper in us. But nearly half of Americans have little to no savings and an even larger proportion fear they are well behind in saving for their future, retirement-age needs.

We’ve had the pleasure recently of hearing the thoughts of someone who has spent a lot of time examining the different forces that influence individual saving in the U.S. compared to other parts of the world. Sheldon Garon, the Nissan Professor of History and East Asian Studies at Princeton, has written a compelling book: Beyond Our Means: Why America Spends While the World Saves. Professor Garon’s analysis spans centuries, focusing in particular on the institutional forces that shape nations’ cultural views about saving. He shows the government and private forces in the U.S. that may have influenced America’s historically low personal savings rates, and he shows how occasional unique efforts—like U.S. Savings Bonds during World War II—have brought more Americans into the ranks of savers.

The real culprit in Professor Garon’s analysis is the encouragement of credit in the U.S. starting around the Depression and World War II by private and government sources. His observations help us realize with some amusement that the most common characterization of Americans is as “consumers.”

The recent development even more directly related to long-term saving, however, is the seismic shift in the U.S. in who has the responsibility for long-term saving. As defined benefit pension/retirement plans have disappeared from the private sector landscape, the 401K and the language of defined contributions have become the norm. Individuals now are much more likely to carry the burden to plan and save for their own financial future, however far off it is and regardless of their current needs and financial capabilities.

Much of our work at Artemis focuses on those who have been more successful in accumulating, but for the last year we’ve been able to look in more depth at the savings motivations and behaviors of Americans across the board. Besides confirming a number of the points that Professor Garon highlights, we’ve been struck by the seriousness with which most people think about saving for the future. They don’t need to be told why it’s important. They do need to be reminded of how currently relevant it is to think about the future—bringing out the “ant” in yourself, so to speak; they need more information and guidance on how to manage their financial affairs; and, for those who aren’t “sophisticated investors,” they need more tools that make it easy to begin and even easier to continue that saving.

One interesting source we like that addresses many of these needs comes from a new U.S. Treasury program that offers tips on saving and guidance to the government’s own offerings: www.treasurydirect.gov/readysavegrow.

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