In the most recent months during the economic recession Americans have begun to save their money once again. For many years the personal savings rate was on the decline, and it actually fell into the negative territory for a short period in 2005 and 2006. How is the personal savings rate calculated? It is calculated by subtracting taxes and spending from personal income. During the period of 1959 to 1984 Americans never had a personal savings rate below 7.2%, but since that time it has never been back to 7.2%. The majority of the last ten years the rate has hovered around 2% or so.

While the American government, as well as other governments around the world are certainly hoping that you will go out and spend you money now, there is no doubt that it is wise to build up your savings. The sad thing is that it shouldn’t take a recession the magnitude of the one we are currently experiencing to get people to understand that they need to keep their spending under control.

One of the most important things that any individual throughout the world can do is to remember the lessons we are learning today and continue to apply them in the future. Quite frankly when consumers continue to spend above their means there is bound to be a bad ending for the global economy. Historically it has been during periods of booming economic growth that individuals decide to step out and spend more than they really should be, but I certainly hope that this recession teaches the lesson that saving money isn’t simply something to do during a recession. Saving your money is something that needs to be done constantly and while it can be a very tough thing to do, those who do it will end up ahead in the long run.